Trading Up

There's always a charged atmosphere around the approval process for free trade agreements (FTAs), because so many different parties have so much at stake.  What makes the FTAs currently before Congress unique is the overwhelming support for them across all facets of U.S. industry.

It's no secret that the Korea FTA, in particular, would present major benefits to the U.S. high tech economy.  The FTA would reduce Korea's domestic preference programs, especially for wireless technologies, where U.S. suppliers have marked advantages, while putting not a single U.S. job at risk because of the high cost of labor in Korea. Other terms negotiated with significant feedback from TIA and its members include the elimination of onerous licensing requirements and burdensome customs procedures. Opening a new market to U.S. products with no ill effects back home is an opportunity too good to let pass, and TIA is working actively to educate Congress on its benefits. 

Here are some statistics from the state of California alone, home to more than 100 TIA member companies that employ over 250,000 workers and generate $172 billion in annual revenue. In 2006 California exported nearly $7 billion in goods to Korea, despite the current trade limitations. However, several major Korean firms enjoy significant success in California, including SK Telecom, LG Philips, Samsung, POSCO and Hanwha.  While these Korean firms have fairly open access to our markets, with only very limited tariffs, U.S. manufacturers face the exact inverse – limited access with high tariffs. 

Clearly, this is just one example – Korea-California trade is only one small piece of an ever-growing international pie.  While the entire U.S. communications market was valued at $923 billion last year, with 9.3 percent growth, the worldwide market now totals over $2.1 trillion and is growing at 11.2 percent. It's obvious that U.S. vendors are counting on Congress to set the table for them to participate in that explosive growth.

The difference between passing the Korea FTA and its counterparts in Central America and not passing them is the difference between getting the job done and failing to do so. It's the difference between trading in protectionism and trading in innovation; between trading down and trading up.

Thank you,
Grant Seiffert
President,
Telecommunications Industry Association