U.S. exporters of semiconductors and consumer electronics strongly supported the passage of the three new trade agreements, and expect the deals to provide a significant boost to U.S. export volumes to those countries.
“Semiconductors are America’s top exporting industry, and with three-quarters of semiconductors designed and manufactured here and 82 percent of our sales outside the U.S., access to growing markets is critical for the success of our industry,” Brian Toohey, president of the Semiconductor Industry Association, said after Congress approved the FTAs with Colombia, Panama and South Korea in October.
They are a big business, and a major factor in air cargo fortunes over the years. The SIA estimates worldwide semiconductor sales topped $300 billion for the first time in 2011, reaching $302 billion. The group forecasts 3.7 percent growth for 2012.
Sage Chandler, senior director for international trade at the Consumer Electronics Association, said the CEA views the three trade pacts and the Trans-Pacific Partnership currently under negotiation “as one vital step in reaching the larger goal of multilateral trade liberalization.” According to Chandler, the tariff cuts built into FTAs are particularly critical to promoting U.S. exports of consumer electronics because the industry is highly competitive, efficient and globally integrated. “These factors, coupled with the large investment needed to manufacture CE products, result in CE products often having narrow profit margins,” Chandler said.
Without a multilateral agreement to reduce worldwide tariffs on consumer electronics, “small price changes resulting from duty savings stemming from free trade agreements can have the effect of shifting quantities of products demanded to those products produced by favored manufacturers” in countries that benefit by participating in an FTA, Chandler said. “Lowering barriers on a reciprocal basis will have a positive effect in terms of maximizing areas in which the U.S. consumer electronics industry has competitive edges,” such as in the production of high technology parts, research and development, design, and the launching of new products.
Although Korean manufacturers of electronic appliances — including flat-panel TVs, smartphones and personal computers — will enjoy rising export volumes to the U.S., U.S. exporters of specialized electronics products also will enjoy rising export volumes to Korea. Over the next 15 years, Korea’s annual exports to the U.S. in the sector are expected increase by $161 million while U.S. exports to Korea in the sector will grow $145 million, according to the Korea Electronics Association. The CEA said several categories of U.S.-made consumer electronics and equipment are on the list of leading U.S. exports of goods to Korea, including semiconductors, industrial machinery, telecommunications equipment and electrical machinery. In anticipation of the new agreement, U.S. imports of Korean consumer electronics and other products grew rapidly in 2011.
According to the CEA, most opportunities for U.S. export growth will be in specialized products where innovation is driving the market, such as smartphones, touch-screen handsets, and 3D high-definition monitors. Overall Korean output of computing devices, mobile handsets and audiovisual products amounted to $12.7 billion in 2010, and is expected to increase to $12.9 billion by 2014, the group said.
Contact Alan M. Field at email@example.com.