Hey, I Know, Let's Sell Some Stuff!

I have very little fellow feeling for the banksters, but there was a tinge of empathy the other day when I read this quote Susie Madrak picked up on from a New York Times article about Wall Street's reaction to the proposed banking tax: "The big banks, the lobbyists say, have become increasingly alarmed that the legislative process may move in unexpected directions outside their control."

Funny, that. I'm often alarmed that the legislative process might move in unexpected directions beyond my control, and I'm guessing that the many Americans who've watched their companies ship jobs overseas and close down entire departments or factories have felt the same way. As Paul Krugman estimated this week, Chinese trade mercantilism, alone, has cost around 1.5 million US jobs. However, in an effort to reverse this trend, which accelerated rapidly this past decade, the Obama administration is going to try and actively help US businesses sell products made in the US to other countries.

Shocking, I know.

Yesterday, the Obama administration unveiled in more detail the Commerce Department export promotion program, which has the goal of protecting US industries from "unfair tariff and non-tariff barriers and addressing practices that blatantly harm U.S. companies," and creating 2 million new jobs over the next five years through programs like these:

* Bring on as many as 328 trade experts to serve as advocates for U.S. companies;
* Assist more than 23,000 clients to begin or grow their export sales in 2011;
* Put a special focus on increasing the number of small- and medium-sized businesses exporting to more than one market by 50 percent over the next five years;
* Increase their presence in emerging high-growth markets like China, India and Brazil;
* And develop a comprehensive strategy to identify market opportunities in fast-growing sectors like environmental goods and services, renewable energy, healthcare and biotechnology.

Obama has already begun to make good on the first part, enforcing laws that have gone unused since China's 2001 entry into the World Trade Organization. Richard McCormack provides a stark example from 2007:

... Thank you, President Bush, for killing 500 good-paying American jobs -- the ones that earn between $50,000 and $60,000 a year -- and allowing the United States to become dependent on China for many of the components used to transport fresh water into people's homes and businesses. That's the message from McWane Inc., of Birmingham, Ala., the country's largest provider of ductile waterworks fittings with 7,000 employees.

The company has recently closed its U.S. factories that made water equipment fittings and has shifted its production to a 400,000-square-foot plant on a 50-acre site in China to produce the same products. Why? Because President Bush on March 3, 2004, overruled a six-to-zero vote by the International Trade Commission that determined Chinese producers were dumping waterworks fittings into the U.S. market. McWane brought the case before the ITC under Section 421 of the Trade Act and spent $1.5 million pursuing it. The ITC determined the industry was worthy of import relief consisting of duties of up to 50 percent on ductile iron waterworks fittings from China. But President Bush didn't agree with the decision, claiming that U.S. consumers were more important than U.S. producers.

"I find that the import relief would have an adverse impact on the United States economy clearly greater than the benefits of such action," Bush wrote in his memorandum denying relief. "I find that import relief would have an adverse impact on the United States economy clearly greater than the benefit of such action." Bush has vetoed every affirmative 421 case that has reached his desk on similar grounds.

... The Chinese aren't as efficient, either. At McWane's U.S. plants, it takes 15 man-hours-per-ton to produce ductile fittings, whereas in China, it takes 150-man-hours-per-ton. Moreover, there are no standards regulating arsenic in the coking coal used to make piping and components that carry fresh water, nor do the Chinese have certifiable radiation testing systems. The Chinese have also been found to be using asbestos to coat pipes and fittings in an attempt to minimize leakage. ...

McCormack writes in the book, "Manufacturing A Better Future For America," that in the face of Bush's unyielding refusal to intervene to enforce WTO-compliant trade laws already on the books, companies stopped filing trade complaints at all. There was no point. As the United States went on to rack up a shocking burden of consumer debt, the spending binge created jobs in countries like China, whose priced-to-sell currency policy, along with value-added tax rebates to exporters, keeps the retail costs of their goods artificially low.

The US employs similar policies only in the agricultural sector. While there are very good reasons for this export-oriented sector not to have been creating many jobs in the US, this agricultural commodity dumping has done the same thing to farmers in developing nations that China's manufacturing and currency policies have done to US manufacturing: pushed them out of business in droves. Dumping is a proven and effective way to beggar your neighbors, works almost every time.

So, yes, the trade enforcement will be great and will help remaining US businesses. Though a lot of the companies that filed those vetoed 421 claims are no longer around to be helped and the country would need, as Bill Scher wrote yesterday, 402,000 jobs per month, for three years, just to dig out of this recession and get back to the unemployment levels prevailing during the Bush-era 'jobless recovery.' How likely is that?

Both the additional financing and strategic support Obama wants to implement on behalf of US businesses are going to have to get approved in a political climate where deficits finally matter again. Also, the US Senate has determined, in a mostly bipartisan fashion, that the Massachusetts special election results mean that the public doesn't want them to spend money on a jobs bill, or a climate bill that would create demand for new industries. That might seem like a very odd conclusion to reach, but I guess that's why Senators get paid the big bucks, all that lateral thinking.

Obama has so far demonstrated good faith on trade enforcement, though the rest of his jobs agenda now faces a media and Senate that, as they say, knows the cost of everything and the value of nothing.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future