New Free Trade Agreements Cause Controversy

In mid-October, Congress passed three long-awaited free trade agreements—a bipartisan effort aimed at using foreign trade to drive America’s economic growth. With the addition of South Korea, Colombia and Panama in this deal, the United States now has free-trade agreements with 20 countries.

Source: New York Times

The New York Times reported the passage of the trade deals has important foreign policy and political ramifications. The U.S. has now solidified relationships with strategic allies and President Obama claimed a victory for pushing through the first trade agreements to pass Congress since Democrats broke a decade of Republican control in 2007. Proponents also predicted that these free trade zones will reduce prices for American consumers and increase foreign sales of American goods and services. These two snap shots from PIERS show South Korea in particular has a great deal of import/export activity.

However, these moves have angered trade unions, which fear job losses to foreign competition, and economists project the overall benefit to the sluggish economy to be marginal.

Further, as PIERS sister company The Journal of Commerce (JOC) reported yesterday, the signing of the free trade agreements has actually caused a 65 percent increase in the Merchandise Processing Fee (MPF), a fee created in the early 1990s to cover Customs and Border Protection’s costs  for import entries. Critics say the fee has never been used for this purpose but instead has helped offset the costs of Medicare in the past. In this case, the fees are being used to cover the costs of the free trade agreement’s passage, the renewal of two other government programs—the Generalized System of Preferences (GSP) and Trade Adjustment Assistance (TAA).

After blindsiding importers with this increase, the industry has no choice but to cope with the new fee. The National Retail Federation’s international trade counsel, Eric Autor, told JOC that importers could reduce their costs by consolidating shipments. But that’s not always possible—a significant number of import entries fall below the new maximum, $140,000 in value (previously $230,000).

What do you think of the new free trade agreements? Use the comment box below to sound off, or join us on Facebook, LinkedIn and Twitter to discuss your point of view.

 

 

 

About these ads

Tags: , , , , , , , , , , , ,

One Response to “New Free Trade Agreements Cause Controversy”

  1. U.S. – Panama Free Trade Agreement Goes Into Effect October 31st « PIERS Says:

    [...] last year, a bipartisan effort aimed at using foreign trade to drive America’s economic growth (as stated in an earlier PIERS blog). Panama needed to amend its tariff schedule and property regulations before the pact could take [...]

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Follow

Get every new post delivered to your Inbox.

Join 1,128 other followers

%d bloggers like this: