Free trade agreements, like the one recently agreed to with South Korea, have been very good to Tramco, a manufacturing company headquartered in Wichita.
Tramco products are environmentally friendly, totally enclosed industrial conveyors. The company's niche market has been oil seed processing, which extracts edible oils from items like soybeans, corn, sunflower seed and canola for home and commercial cooking use. However, Tramco also builds conveyors for numerous industrial dry bulk products.
One can find its products at a Wichita soybean processing plant and at the renovated grain terminal south of Wichita's airport. Further afield, one can find Tramco's products unloading grain ships in Japan, Taiwan, China and Korea; conveying coal in Morocco; or conveying copper in Chile for the company whose mines became famous due to the brave mineworkers who were rescued this fall.
Tramco made its first international sale in 1972. Overseas sales reached their peak in 2003, when 66 percent of its production in Wichita was shipped to customers outside of the United States. A full 51 percent of production that year went to China, which enjoyed permanent normal trade relations with the United States as a fellow member of the World Trade Organization.
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When Tramco shipped its first conveyor to China in 1988, China was subject to most-favored-nation tariff status that had to be reviewed annually by the president. Moreover, beginning in 1989, Congress began to challenge the decision of the president to apply to China the lower U.S. tariffs applied to most other U.S. trading partners. Companies like Tramco began to face the threat each year that Congress would vote to dramatically increase U.S. tariffs on Chinese products, and that China, in turn, would place significantly higher tariffs on American products, like Tramco's conveyors being sold to China.
In 1990, China undertook the construction of the world's then-largest ports and grain storage facilities. This was an 8- to 10-year project, and not one U.S. company played a significant role. Dutch, Canadian and Australian companies, whose governments had more certainty in their trade relationships with China, saw the benefits. It was very hard for me to sit on the sidelines and watch my foreign competitors take all those jobs.
When the United States reaches a free trade agreement with a country or region — as in the North American Free Trade Agreement struck with Mexico and Canada —Tramco is very confident its sales will grow within that region. For instance, before NAFTA, Tramco customers in Mexico had to pay a 30 percent import duty, and import duties for sales to Canada ranged from 10 percent to 18 percent depending on the province. After the signing of NAFTA, Tramco sales to Mexico and Canada rose significantly as a result of lower or no import duties. These sales translate into more jobs here. In the winter of 2009, when Tramco had $1.9 million in sales to Canada, we avoided layoffs at a time when other companies were letting workers go.
Tramco is proud to claim that its products are in all 50 states and in more than 55 countries around the world. For me, international business has been a wonderful and educational experience, and our global growth has been aided significantly by the various trade agreements with nations around the world.
You may have heard what a poor deal NAFTA has been for Kansas, but I would like to share some statistics from U.S. Department of Commerce.
Kansas exports to Canada and Mexico were $776 million in 1993, the last year before NAFTA entered into force. By 2008, the state's exports to the two countries had more than quintupled to $4 billion. This success is largely due to NAFTA.
Worried about the trade deficit? It's a little known fact that the United States is now running a trade surplus in manufactured goods with its 17 free trade agreement partner countries. This is on top of the global trade surpluses the United States has long achieved in services and agricultural products.
If you're worried about the trade deficit, free trade agreements are the solution, not the problem.