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Ehlers is one of the more moderate Republicans. He has disappointed me.
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The United States has worked toward long-term policies lowering worldwide trade barriers. There are essentially two important benefits to this technique. First, it opens new markets for U.S. companies. American companies are the most efficient and productive enterprises in the world, and 50 years of mostly sustained economic growth has proven the benefits of free trade between the United State and its trading partners. Second, stronger economic ties between countries fosters good diplomatic relations. This is an often overlooked benefit of trade, but nonetheless an important part of international relations. Countries that share in the benefit of trade have more incentive to work out disagreements diplomatically rather than using other avenues, particularly over issues like labor standards, environmental protection and human rights.
The House recently debated and voted on the DR-CAFTA and it was passed by a vote of 217-215. The Senate also passed this legislation. I voted to approve this trade agreement for several reasons. First, it will encourage free and fair trade and boost opportunities for Michigan's exporters. Right now, products imported from the Dominican Republic and Central American countries are duty-free, while the products produced in the U.S. and exported to these countries are assessed with substantial tariffs. With DR-CAFTA, 80 percent of U.S. exports of consumer and industrial goods will become duty-free immediately, with remaining tariffs phased out over 10 years. In effect, we have leveled the playing field and opened new markets.
I heard from many constituents the misconception that the North American Free Trade Agreement (NAFTA) has caused job losses and therefore CAFTA will as well. I disagree with these statements. From the time NAFTA went into effect in 1994 until 2000, Michigan added 91,000 manufacturing jobs, an 11 percent increase. NAFTA imports rose during this same time period, as did U.S. imports from the rest of the world, but so did exports. Basically, our employment rose along with imports. While Michigan lost 103,000 manufacturing jobs from 2001-2003, that cannot be attributed to NAFTA. Manufactured goods imported due to NAFTA did not increase during this time but actually decreased about $13 billion from 2000-2003. Simply put, NAFTA did not cause the job losses we have seen in Michigan in the last few years. Those jobs have been lost to southern U.S. states, to China (which is not part of NAFTA) and to increased productivity.
CAFTA will eliminate tariffs placed on consumers in the Dominican Republic and Central American countries on autos and auto parts and manufacturing goods. This is significant because automobiles and parts constitute 51.9 percent of Michigan's economy and manufacturing goods are about 10.3 percent of Michigan's economy, with manufacturing representing 24 percent of employment in West Michigan. I believe CAFTA will put our products on a level playing field for fair competition in these markets and thereby promote the purchase of American made products, helping Michigan's economy and job sectors, especially in the automotive and manufacturing areas.
Let me say a word about agricultural products in the agreement. Despite more than $1.6 billion in U.S. farm exports in 2003, the Dominican Republican and Central American countries impose high tariffs and other barriers on most agricultural products, including those important to Michigan, such as dairy, soybean, corn, beef, vegetables, and fruit. A primary U.S. objective was to change the "one-way street" of duty-free access currently enjoyed by most of these countries and move to a "two-way street" so our products receive the same tariff-free treatment as their products do in the U.S. This will provide U.S. suppliers with access to these markets and level the playing field with other competitors.
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