April 9, 2014
By Christopher Douville
This year Congress is debating a piece of legislation called Trade Promotion Authority (TPA). This legislation would set priorities for U.S. trade negotiators and allow trade agreements to be approved by Congress without amendment, a provision necessary for the United States to conclude high-standard deals with trading partners. Importantly for Wyoming, TPA sets the stage for U.S. exports of products and services to compete on a level playing field.
You might not realize it, but Wyoming’s economy is increasingly linked to international trade. According to one recent study, nearly 63,000 jobs – one in six of the state’s total – are dependent upon trade, up 33 percent since 1992. In particular, Wyoming’s soda ash industry – based in the Green River Basin – relies on sales abroad to make up for lagging domestic demand.
Soda ash is a chemical raw material required to manufacture commodities such as glass and detergents. Due to its unique natural deposit of trona, the raw material for soda ash, Wyoming could supply world demand for approximately 400 years. High-quality soda ash from Wyoming is sold around the world and total U.S. soda ash exports have exceeded $1 billion the past three years. Wyoming’s exports make an important contribution to lowering the overall U.S. trade deficit.
Despite the success of Wyoming’s soda ash industry in the global marketplace, we cannot afford to stand still. Foreign competitors are seeking to exploit every advantage to increase their market share. China, for example, is now the world’s largest producer of soda ash, using government-granted tax advantages and other subsidies to gain a foothold in markets traditionally served by U.S. soda ash.
The best way to ensure the continued growth of Wyoming’s soda ash industry is to guarantee equal treatment for U.S. exports through new trade agreements. For example, Vietnam recently imposed a 2 percent tariff on U.S. soda ash, but Chinese soda ash benefits from a duty-free tariff preference under a trade agreement between Vietnam and China. If the U.S. were to conclude the Trans-Pacific Partnership (TPP) free trade agreement (FTA) and implement it under TPA, then U.S. soda ash exports to Vietnam would gain the duty-free preference China currently gets. This is no small matter in an emerging market like Vietnam, where U.S. soda ash exports saw a nearly 60 percent increase by value in 2013. The elimination of Japan’s 3.3 percent tariff in the TPP FTA would also be a major boost to U.S. soda ash exports.
The importance of trade agreements to Wyoming’s export economy is clearly demonstrated by trade data. The Commerce Department notes that trade to America’s current FTA partners accounts for 51 percent of Wyoming’s exports. Exports from Wyoming to these markets grew by 90 percent over the past decade, with NAFTA, Australia, Chile, Korea, and Colombia showing the largest dollar growth.
Without TPA, however, the U.S. trade agenda will stall, and negotiations such as the TPP may come to naught. Wyoming’s industry and exporters would lose out to foreign suppliers, ceding ground in the fight to maintain high-quality jobs and investment in America.
Wyoming’s congressional delegation has long promoted U.S. soda ash exports by supporting market access-opening trade agreements, restoring fair royalty rates, and securing commitments to lower tariff barriers, to name just a few things. I commend their forward-thinking on policies that will increase economic opportunity and jobs. I urge Wyomingites to voice their support for Trade Promotion Authority in the coming debate.
Christopher Douville is President of the American National Soda Ash Corporation (ANSAC), the export association representing three major U.S. producers of natural soda ash.