Trade with South Korea good for Iowa

By Mitch Malcolm

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Since 1920, the Cedar Rapids area has been home to Kwik-Way Products, a chief manufacturer and innovator of car brake lathes and valve refacers for automobile engines. We are proud that all of Kwik-Way's products are manufactured in America.

However, we have learned that with a very specialized product line, we must look for opportunities to market wherever there is a demand - which is often outside the state of Iowa and even the United States. In fact, as an industry export leader for almost 50 years, we have customers throughout the world.

I recount the history of Kwik-Way Products to highlight the importance of U.S. international trade policy that, at best, is unclear. President Obama has called for the doubling of U.S. exports over the next five years to create and support 2 million U.S. jobs. This is a laudable goal and would likely provide additional opportunities for our company and our 50 employees.

The best way to jump-start this effort is for Congress to approve the U.S.-Korea Free Trade Agreement as soon as possible. For Kwik-Way, and other American businesses and farmers, South Korea is already a lucrative market - but it could be even bigger.

If Kwik-Way is already selling its products to Korea, you might ask: Why do we need a free-trade agreement? The answers are simple.

First, Korea has agreed to a free-trade agreement with the European Union and is aggressively negotiating pacts with other foreign competitors. Once the EU-Korea FTA takes effect July 1 - absent movement on the Korea-U.S. FTA - our products will be placed at a significant disadvantage. A European manufacturer will be able to undercut our prices consistently, which could lead to a long-term decline for our sales in the region.

Second - and more important - an enacted FTA with South Korea will create American jobs, grow our economy, and make America more secure. The U.S. Department of Commerce estimates that for every $1 billion in exports, 6,250 manufacturing jobs are created and supported in the United States. The Korea-U.S. FTA would increase U.S. merchandise exports to Korea by as much as $11 billion, which will translate directly into new American jobs and growth.

It is alarming that Korea is not the only market we are in danger of losing. Throughout the world, countries are forging trade agreements that exclude the United States. The World Trade Organization estimates nearly 400 such FTAs involving countries in all corners of the globe are scheduled to take effect by the end of 2011. Of this number, the United States is currently party to only 11 (with 17 countries). Clearly we are being left behind.

The longer the United States puts its trade policies on hold, the more we put American companies in danger of losing market share in vital growing markets worldwide. With 95 percent of the world's consumers living outside U.S. borders, it should be clear to U.S. policymakers - including Congress - that a key component of any policy designed to return America to strong economic growth and job creation is to forge trade agreements that will maximize our potential to sell our products, crops and services abroad.

Mitch Malcolm is the International Managing Director for Kwik-Way Products of Marion. Comments: mmalcolm@kwik-way.com