New Democrats Back Third Way Trade Report

Group Urges Tougher Stance With Countries

Posted July 27, 2010 at 7:06pm

Pro-business Democrats are urging Members to crack down on possible violations by some of the United States’ largest trading partners, as well as pushing for tough enforcement measures in ongoing trade talks with South Korea.

In a new report, Third Way argues that countries such as Brazil, France, Argentina, Australia, Japan and China are unfairly restricting access of American-made products. The new report, “Why We Need Fairer Trade: How Export Barriers Cost America Jobs,” comes as the White House attempts to finalize a free-trade agreement with South Korea in time for President Barack Obama’s trip there in November.

“These barriers are keeping our very competitive manufacturers, in particular, and our competitive service providers from really maximizing their potential,” said Third Way’s Ed Gerwin, an author of the report. “At the end of day, if we’re going to have growth, if we’re going to have new jobs, we ought to find people to buy the stuff that we make.”

Third Way is releasing its report today, but in an advance copy provided exclusively to Roll Call, the group details how “foreign governments unfairly shut out American products and services” from domestic producers such as John Deere, Harley-Davidson and Campbell’s Soup.

Third Way’s new study is being endorsed by the New Democrat Coalition, a 70-Member pro-trade House caucus. In a statement, New Democrat Coalition Chairman Joe Crowley said, “America can’t afford to sit on the sidelines and continue to watch business opportunities and good jobs pass by because of unfair foreign trade barriers.

“This report reinforces the need to refocus on exports to help drive economic growth, opportunity and competitiveness for American businesses and workers,” the New York Democrat said. “With 95 percent of the world’s potential customers living outside the United States, this should be a priority.”

In an interview Tuesday, Rep. Adam Smith (Wash.), a New Democrat Coalition vice chairman, said that cracking down on France, Brazil and other established trading partners will only fix half the problem in trying to meet Obama’s goal of doubling domestic exports by 2015. In addition to encouraging his colleagues to bring the gripes of district-based businesses to the attention of the Office of the U.S. Trade Representative, Smith also endorsed another key aspect of Third Way’s report: anticipating potential loopholes in an evolving free-trade deal with South Korea.

“If we want a rules-based trading system, then it has to be a rules-based trading system,” Smith said. “It can’t be something that individual countries are able to game the system and harm us. Enforcement is a critical piece of it, but it also has to be part of the trade agreements that we’re negotiating.”

It remains to be seen, however, whether lawmakers will take Third Way’s lead.

The Ford Motor Co. continues to work closely with the White House and Congressional negotiators to hash out what the corporation would consider effective deterrents for the South Korean government.

While the automaker hopes ongoing talks will ultimately mean more of its cars in South Korean showrooms, a Ford official on Tuesday said negotiators “need to use the FTA to fundamentally change the mindset of the Korean government on imports.”

“They need to be invested in facilitating the free flow of goods into their economy — just as they enjoy that benefit, frankly, into the U.S. economy,” Ford executive Stephen Biegun said Tuesday. “That’s what’s the real conundrum about this FTA is how to develop the enforcement mechanisms.”

Foreign governments also enact protectionist measures on American-produced agricultural products such as apples, Oreo cookies, candy, Goldfish crackers and canned soup. India is one of the worst offenders, according to Third Way, slapping hefty duties on the popular snacks that can exceed 60 percent.

“In many cases, these high fees effectively bar otherwise competitive U.S. imports,” the report claims.

The same is true for American-made manufacturing products.

“If you’re an American itching for a motorcycle, you can hit the open road today on a brand-new Harley-Davidson ‘Fat Boy’ for just about $17,000, including taxes, license and registration fees,” the report claims. “But if you’re a Brazilian, a Vietnamese or an Indonesian, that same ride will cost you [almost] three times that much — between $40,000 and $50,000. The difference isn’t due to high overseas shipping costs or because a motorcycle license costs more in Brazil or Indonesia. Rather, it’s the result of the many discriminatory taxes and duties that foreign governments levy on American made Harleys to stifle competition with their local motorcycle producers.”

In the case of John Deere, the French government puts unreasonable equipment demands on its imported lawnmowers and seizes American imports at its ports, Third Way says. As a result, the Moline, Ill.-based company is required to install additional protective equipment on its mowers and “make untested and potentially unsafe modifications” in the name of protecting French lawn-equipment producers.

The report also alleges widespread intellectual property theft by counterfeiters, particularly in China. The group cites outside research that alleges roughly 10 percent of the world’s pharmaceuticals and 60 percent of computer software in some regions are rogue facsimiles.