From: The Honorable Paul Tonko
Sent By: brendan.larkin@mail.house.gov
Date: 7/30/2014

Briefing on Understanding Trade Data: Factoryless Goods and Re-exports

Tomorrow, 11:00am-12:00pm

2456 Rayburn House Office Building

Dear Colleague:

Congress, the press and the public need accurate trade data in order to understand the effects of our nation’s trade policies. Unfortunately, a number of current and potential interpretations of our trade data have attempted to downplay the realities of the U.S. trade deficit. Please join us for an informative briefing to explain U.S. trade data, specifically the proposed inclusion of “factoryless goods” and the current inclusion of re-exported goods among domestically manufactured goods.

Recently, the Economic Classification Policy Committee (ECPC) at OMB has proposed changes to the North American Industry Classification System (NAICS) that could have real-world implications that few have fully considered. Under this proposal, factoryless goods producers—that is, companies that exist in the U.S. but contract manufacturing activities to foreign companies—would be counted as domestic manufacturers. For example, American companies that design products and contract with foreign companies to manufacture them would be considered a U.S. manufacturer and classified as a factoryless goods producer, regardless of where its products are made. Foreign companies that actually manufacture these goods would be classified as service providers. This decision could have major implications for Buy American rules, Trade Adjustment Assistance and the data used to calculate our nation’s trade balance.

Currently, the Office of the U.S. Trade Representative relies on trade data provided by the Census Bureau. Unfortunately, this data includes re-exports—goods that are produced abroad and shipped through the U.S. en route to a final destination—among its U.S. export totals. Re-exports do not support domestic production jobs, so it seems obvious that these goods should not be counted the same as U.S.-made exports. While the Census data makes no distinction between domestic exports and re-exports, the U.S. International Trade Commission (USITC) does correct the data by removing re-exports.

The panelists will explain the importance of relying on the data that most accurately reflect our nation’s trade balance and how to access USITC’s database.

Speakers will include:

  • Celeste Drake, Trade Policy Specialist, AFL-CIO
  • Ben Beachy, Research Director, Public Citizen’s Global Trade Watch

If you have any questions, please contact Brendan Larkin (Brendan.Larkin@mail.house.gov) with Rep. Tonko or Frank Pigulski (Frank.Pigulski@mail.house.gov) with Rep. Lipinski.

Sincerely,

Paul D. Tonko                                      Daniel Lipinski
Member of Congress                            Member of Congress

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