Free Trade Agreements (FTAs)
International trade is an integral part of the U.S economy, accounting for more than one-quarter of our gross domestic product and supporting more than 12 million U.S. jobs, including 1 in 5 manufacturing positions.
All exporters – both large and small
companies – benefit from efforts by the U.S. Government to lower
foreign barriers to U.S products. With the implementation
of NAFTA, exports to Canada and Mexico by small and medium sized
enterprises (SMES, with 500 employees or fewer) and large firms
rose significantly relative to the rest of the world. The
share of SME exports to Canada and Mexico increased form 24
percent in 1992 to 30 percent in 2002. The share of large
firms’ exports to hose two countries rose from 26 percent in 1992
to 36 percent in 2002.
What Free Trade Agreements stand to do for U.S. business:
Help U.S. companies enter and compete more easily in the global marketplace.
Contribute to leveling the international playing field.
Encourage foreign governments to adopt transparent rule-making procedures, as well as non-discriminatory laws and regulations.
Strengthen business climates by eliminating or reducing tariffs, improving intellectual property regulations, opening government procurement opportunities, and easing investment rules.
Four pending Free Trade Agreements – to Peru, Colombia, Panama, and Korea – could have massive impacts on trade. Congress is expected to act on these agreements in September.
In 2006, the United States exported 2.9 billion in goods to Peru. An FTA with Peru would allow duty free access to key sectors such as agriculture, construction, automotive, and healthcare.
The United States exported 6.7 billion in goods to Colombia in 2006.
The FTA with Panama would facilitate upgrades to the Panama Canal, further increasing the flow of goods between countries.
The FTA with Korea holds enormous economic potential, representing the largest FTA since the original agreement with Canada that led to NAFTA. Korea has a trillion dollar economy and is among our most active trading partners.
Currently in Negotiation:
Thailand
Botswana (SACU)
South Africa (SACU)
Lesotho (SACU)
Swaziland (SACU)
Implemented Free Trade Agreements:
Dominican Republic – CAFTA (March 1, 2007)
Bahrain (August 1, 2006)
Guatemala – CAFTA (July,1 2006)
Honduras – CAFTA (April 1,2006)
Nicaragua – CAFTA (April 1, 2006)
El Salvador – CAFTA (March 1, 2006)
Oman (January 19, 2006)
Morocco (January 1, 2006)
Australia (January 1, 2005)
Singapore (January 1, 2004)
Chile (January 1, 2004)
Jordan (December 17, 2001)
Mexico – NAFRA w/Canada (January 1, 1994)
Canada – C-USFTA (January 1, 1989)
Israel FTA (January 1, 1985)
Namibia (SACU)
Malaysia
For more information on Free Trade Agreements please explore these links:
http://www.tradeagreements.gov/
Impacts of Foreign Direct Investment in the U.S Economy
One of the benefits of Free trade agreements is the encouragement of Foreign Direct Investment in the U.S Economy. Listed below are some of the many benefits of Foreign Direct Investment:
Foreign Direct Investment Creates New Jobs: U.S. affiliates of foreign companies (majority owned) employ more than 5 million U.S. workers, or 4.4 percent of private industry employment. An additional 4.6 million U.S. jobs indirectly depend on foreign investment in the United States. Between 2002 and 2006, nearly 2,900 new projects were announced or opened by foreign companies, yielding $82 billion in investment and about 170,000 new jobs.
Foreign Direct Investment Boosts Wages: U.S. affiliates of foreign companies tend to pay higher wages than U.S. companies. Foreign companies support an annual U.S. payroll of $335.9 billion, with average annual compensation per employee of more than $65,000. Average compensation per employee within these companies has risen every year since 1992. U.S. subsidiaries of foreign firms pay 32 percent higher compensation than the private-sector national average.
Foreign Direct Investment Helps U.S. Companies Penetrate International Markets and Increase U.S. Exports: U.S. companies can use multinationals’ distribution networks and knowledge about foreign tastes to export into new markets. Approximately 19 percent of all U.S. exports ($169.2 billion) are generated by U.S. subsidiaries of foreign companies.
Foreign Direct Investment Strengthens U.S. Manufacturing: 33 percent of the jobs related to U.S. affiliates of foreign companies are in the manufacturing sector, a sector which accounts for just 12 percent of overall private sector employment.
Foreign Direct Investment Brings in New Research, Technology, and Skills: Affiliates of foreign companies spent more than $31 billion on research and development in 2005 and $121 billion on plants and equipment.
Foreign Direct Investment Contributes to Rising U.S. Productivity: The increased investment and competition from inward investment leads to higher productivity growth, a key ingredient that increases U.S. competitiveness abroad and raises living standards at home.
Foreign Direct Investment Contributes to U.S. Tax Revenues: In 2003, foreign affiliates paid $19.1 billion in taxes, which represented 11 percent of U.S. corporate tax revenues.
For more information on Foreign Direct Investment, please visit: http://www.investamerica.gov/