International Trade and Development

WHEREAS, international trade and foreign investment are major contributors to the United States economy and help support millions of good-paying jobs throughout state and local communities; and

WHEREAS, U.S. exports account for nearly 13 percent of the U.S. gross domestic product and support an estimated 11.5 million jobs; and

CSG South

Since NAFTA’s implementation in 1994, trade between the SLC region and Canada and Mexico has changed dramatically. As officials from Canada, Mexico and the U.S. attempt to renegotiate the agreement’s stipulations, it is instructive for policymakers to understand the current position of their states’ exports and imports with these trading partners. A renegotiation could have significant ramifications across state economies, including in the agriculture, automotive, and manufacturing industries.

International trade was a frequent issue of debate during the 2016 presidential election and the results demonstrated a growing concern among voters around the impact of trade agreements and globalization. Many trade experts will point to Great Britain’s vote to leave the European Union in 2016 as the first indicator in the shift of global trade policy, and reevaluating the impact of international trade agreements. As federal leaders debate the direction of trade policy, states continue to expand exports and attract investments into their respective states; while continuing to improve the coordination with federal agencies to make the trade process easier for their businesses.

CSG Midwest
When the North American Free Trade Agreement took effect in 1994, it created the largest free trade area in the world at that time. By increasing trade and investment, reducing tariffs and addressing non-tariff barriers, the leaders of Canada, Mexico and the United States hoped to grow their countries’ economies and raise living standards across the continent.
“NAFTA worked, fundamentally shaping North American economic relations, driving integration between Canada and the United States’ developed economies and Mexico’s developing economy,” says Colin Robertson, vice president of the Canadian Global Affairs Institute and a former Canadian diplomat.
More trade with neighbors
In many measurable ways, NAFTA has been a major success. U.S. trade with its two neighbors has grown at a faster rate than its economic activity with the rest of the world. The value of U.S. exports to Mexico reached $231 billion last year, with Michigan ranking third among all U.S. states ($12 billion), and for the Midwest, the cross-border relationship with Canada is especially valuable. Canada serves as the largest export market for nine of the 11 states in this region (Kansas and Nebraska are the lone exceptions).
In states such as Michigan and Ohio, much of this cross-border trade centers on the automotive industry, where cars and their various parts are built via supply chains that send components across the border multiple times on their way to completion.
In fact, intermediate goods (not-yet-completed products) from Canada and Mexico accounted for half of all total imports from these countries. Free trade is essential to preserving these cross-border supply chains. According to the Canadian Embassy, trade with Canada supports close to 9 million jobs in the United States. The Mexico Institute estimates that nearly 5 million jobs in the U.S. depend on trade with Mexico.
But from the start, the three-nation agreement has failed to fully recognize how changes in North American trade would negatively affect certain workers and industries, says Christopher Wilson, deputy director of the Mexico Institute.

With the North American Free Trade Agreement (NAFTA) back in the news, the important trade relationship between Canada, Mexico and the states is in the spotlight. For 30 out of the 50 States, Canada or Mexico rank as the first or second largest export market. Here are some quick stats about state exports to these two trading partners and the jobs that rely on that trade relationship.

CSG Midwest
Within a month of President Donald Trump’s taking office, he and Canadian Prime Minister Justin Trudeau met for a White House visit in which they jointly agreed to strengthen cooperation on a range of issues, from regulatory reform and cooperation, to border efficiency and security. 
“It was important for building a foundation,” Stephen Brereton, Canada’s consul general in Chicago, says of this early meeting of the two federal leaders, “and the government ministers will move much of this forward.” 
In part, the February summit between Trudeau and Trump simply reaffirmed a commitment to some ongoing initiatives between Canada and the United States — for example, giving preclearance to cross the border for people who meet certain requirements and better integrating cross-border law enforcement.

The Council of State Governments has released its annual listing of the top five issues legislators will face this session in nine key policy areas, including education, workforce development, energy and the environment, federal affairs, fiscal and economic development, health, interstate compacts, transportation, and international affairs.

CSG Director of Federal and International Affairs Andy Karellas and Senior Policy Analyst Jack Cobb outline the top five issues in international affairs policy for 2017, including the impacts of macroeconomic policy, global trade, national security, conflicts overseas and global public health.

Foreign direct investment, or FDI, is a vital component of states’ economies, helping build new industries and supporting nearly 6.4 million jobs nationwide.

But attracting foreign investment is increasingly difficult, said experts during Thursday’s “Best Practices in Attracting Investment” session, presented by the State International Development Organizations, or SIDO, at the 2016 CSG National Conference in Colonial Williamsburg, Virginia.

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