How Updating a Trade Agreement Will Help Create Jobs in Ohio and Across the U.S.
Updating the Dominican Republic–Central America Free Trade Agreement will create new jobs in the apparel sector and many other industries.
As both the country and my home state of Ohio work to recover from the pandemic-induced economic slowdown, our elected officials should look toward long-term solutions, not band-aid fixes, to promote businesses, job creation, and economic growth in the United States. One such solution should be updating the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR), which contains provisions that make it harder for American businesses to succeed.
Because of the COVID-19 pandemic, last year the United States lost 20.6 million jobs between mid-March and the end of April. This resulted in an unemployment rate of 14.7%, a level not seen since the Great Depression. Families in Ohio and across the country struggled to make ends meet, buy essential goods, pay their bills and put food on the table. Thankfully, as vaccine adoption has become more widespread, the country has opened back up and our economy is showing signs of recovery.
But as Congress and the Administration continue promoting important policies that spur economic growth and job creation, such as providing loans that help businesses keep their doors open and their staff members on board, our elected officials should also ensure that they are looking to enact long-term job creation policies.
One such policy would be an update to CAFTA-DR, a trade agreement established in the 2000s to promote economic opportunities for partnering countries by eliminating tariffs and reducing other trade barriers. While some components of this agreement have been successful at promoting economic growth, other provisions have hindered job creation. Fortunately, these burdensome provisions could easily be fixed by Congress.
For example, rules of origin requirements included in this agreement give participating CAFTA-DR partner countries “preferential access to the US market” for apparel that is sewn in countries that are part of the agreement. While this policy was initially designed to promote producers in the United States, in reality it has actually decreased the competitiveness of regional garment exporters, making Asian-made apparel more cost effective than its American-made counterparts. This strict rule of origin requirement hurts job creation, rather than encouraging it as intended. If Congress updated this provision to increase the diversity of apparel that can be produced by member countries, it would drive investment in fabric production, in turn creating thousands of jobs in the apparel sector. Given the value of creating long-term jobs, updating this provision should be a priority for those with the power to do so, such as Trade Representative Katherine Tai, President Biden, Vice President Harris, and members of Congress.
While it is certainly beneficial to invest in short-term policies that promote economic development and job creation to get people through these difficult times, it is paramount that our lawmakers and leaders also look for long-term solutions that will make American businesses more competitive, and therefore more successful in the long run. Solutions like updating CAFTA-DR will create jobs and economic growth in communities across the country, including here at home. Fully recovering from the pandemic-induced economic recession will require more than simple fixes. We need to invest in a comprehensive strategy to create good jobs that will last.
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