Fair Trade

The Week of Walking Backwards

Leo Gerard — Fri, 14 Oct 2011 10:01:36 -0400

As the Occupy Wall Street movement spread across the nation last week, politicians in D.C. flipped the bird at protesters – including those camping in Washington’s McPherson Square.

Here’s how: While occupiers sought political focus on the unemployment, impoverishment and foreclosures suffered by the nation’s non-rich 99 percent, politicians considered three major pieces of legislation and passed only the one that will help the wealthiest 1 percent and hurt the remaining 99 percent.

Senate Republicans murdered-by-filibuster the American Jobs Act, which would surtax the 1 percent to provide jobs for the 99 percent. The Senate did pass the currency manipulation bill, but House GOP leaders refused to schedule a vote on the measure that would protect jobs for the 99 percent by punishing countries that undervalue their currencies to artificially lower prices on their exports.

By contrast, both houses of Congress adopted the so-called Free Trade Agreements with Panama, Colombia and Korea, which will, just like their predecessor NAFTA, destroy jobs held by the 99 percent.

It’s incredible. Inexplicable. Inexcusable. In a country where joblessness is a painful 9.1 percent. Where one in five children lives in poverty. Where foreclosures rose again last month. Where a whole movement is growing to protest the appeasement of the rich at the cost of the middle class. In that place, Congress chose to walk backwards. It didn’t take two steps forward – which it could have by passing the currency bill and jobs act. No. It just took a giant step backward by embracing job-killing trade agreements.

It all forces the 99 percent to demand even more loudly: Where’s the jobs?

WHERE’S THE JOBS?

Either the Occupy Wall Street protesters aren’t loud enough or the politicians in Washington refuse to listen. It’s not just street demonstrators who politicians can’t seem to hear. Poll after poll has shown Americans’ first priority, their major concern is jobs.

Yet when President Obama proposes the American Jobs Act, a measure that would create 1.9 million jobs and ease taxes on the middle class and small businesses, Republicans in the Senate rebuff it. If the majority ruled, the jobs act would have passed the Senate with 51 Democrats in favor. But in the Senate, the GOP stops all action by requiring 60 votes to end their filibusters. They talk and talk and talk. And Americans who need jobs get nothing.

Where’s the jobs?

Amazingly, in a city frozen by political gridlock, the Senate passed with bipartisan support the currency manipulation bill. The legislation would make it easier for the United States to punish market-distorting currency undervaluing by imposing tariffs. The measure is crucial to stop what now seems an inexorable rise in the U.S. trade deficit with China, which continuously kills American manufacturing and jobs.

Last month that deficit rose to a record $28.96 billion, an increase of $2 billion over one month’s time. Over the past decade, 57,000 U.S. factories have closed and 6 million jobs have disappeared, with deliberate currency undervaluing by China a major factor. Though employment rose overall last month, the nation lost 13,000 good-paying manufacturing jobs.

The currency manipulation bill has 225 co-signers in the House, more than the majority it needs to pass. But Republican Speaker of the House John Boehner has said he will not permit the chamber to vote on it. He will thwart an attempt to end the practice that is destroying American jobs – even though Republicans in both the House and Senate support it.

Where’s the jobs, Boehner?

Then Congress passed the Free Trade Agreements. Despite the incessant claims that the three will create “tens of thousands of jobs,” it’s clear that they won’t because simultaneously Congress finally renewed the lapsed Trade Adjustment Assistance for workers who lose their jobs as a result of free trade.

Here’s what the New York Times said about the agreements and jobs:

“Economists generally predict that free trade agreements, which eliminate tariffs and other policies aimed at protecting domestic manufacturers, benefit all participating nations by creating a larger common market, increasing sales and reducing prices. But such deals also create clear losers, as workers lose well-paid jobs to foreign competition.”

The United States can’t afford to lose any more manufacturing jobs. Yet it is projected that these agreements will particularly damage the U.S. textile, electronics and auto supply industries.

Again and again, politicians told Americans that NAFTA would create hundreds of thousands of U.S. jobs. It did the opposite. Why would something different occur with these three copycat deals?

Where’s the jobs?

This is what the Times editorial board said about Republicans:

“The Republicans offer no actual economic plans, only tired slogans about cutting regulations and spending, and ending health care reform. The party seems content to run out the clock on Mr. Obama’s term while doing very little. On Tuesday, Mr. Obama’s campaign manager, Jim Messina, accused Republicans of trying to “suffocate the economy” in hopes that the pain would work to their political advantage. They are doing little to refute that charge.”

As the Occupy Wall Street movement has shown, America can’t wait. The middle class needs help now.

Where’s the jobs?

Colombia FTA: Rewarding Promises Instead of Performance

Leo Gerard — Tue, 12 Apr 2011 10:22:56 -0400

Tragically, the government of Colombia exhibits the behavior of an addict. And, just as regrettably, the United States is co-dependent, so addicted to so called free trade that it plans to award Colombia an agreement based solely on promises.

Addicts always promise. They’ll stop, they pledge. Their co-dependents desperately want to believe, so they cooperate with the addicts’ demands.

Colombia, the most dangerous country in the world for trade unionists, has pledged to try to stop the murders to persuade Congress to approve a Free Trade Agreement (FTA). Promises, promises.

And the United States has agreed to accept those promises rather than demand performance before signing an FTA. American’s Wall Street banks and multi-national corporations crave another FTA so badly they will believe anything.

When the Colombia FTA was first proposed, Congress refused to approve it because so many trade unionists are assassinated each year by the Colombian military and paramilitary forces that the murders exceed the number of unionists killed in all other countries of the world combined. In 2007, the year that former President George W. Bush completed the agreement, 39 Colombian unionists were slain.

The Colombian government knew why Congress denied approval. It could have responded four years ago by protecting trade unionists and preserving their lives. It did not.

Instead, the murders increased. In 2008, 52 Colombian trade unionists were assassinated, one a week. In 2009, the number declined by 5 to 47, but it was back up to 52 last year. Six have been slain so far this year, including Hector Orozco and Gilardo Garcia, members of the agricultural union known as Association of Peasant Workers of Tolima, who were threatened by the Colombian military just before they were assassinated. Promises, promises.

In response to the concerns expressed by Congress about the murders, the newly-proposed FTA requires Bogota to improve safeguards for workers by April 22, and to develop a plan by May 20 to enhance the capacity of regional judicial offices because the murders of trade unionists go unpunished by the Colombian government – giving the killers an impunity rate of approximately 95 percent. And by mid-June, the Colombian government promises to increase penalties for threatening workers.

The government of Colombia could have completed all of those steps four years ago. It didn’t bother.

To this point, Congress has taken the moral high ground by refusing to approve the trade deal. It said, basically, as long as Colombia continued to countenance the slaughter of its community and labor leaders, Afro-Colombians and indigenous people, America would not give it special treatment for trade purposes.

In addition, Congress recognized the FTA’s potential to devastate Colombian farmers. The FTA would speed forced displacement of Afro-Colombians and indigenous people by encouraging increased exploitation of their land by business interests, such as palm oil companies, half of which are owned by paramilitary groups. Expelling these farmers from their land would further swell Colombia’s internally-displaced population – the largest in the world at 4.3 million.

Making matters worse for Colombian farmers, the main U.S. beneficiaries of the FTA would be big agricultural companies which would be permitted to dump cheap, subsidized food stuffs into Colombia duty-free. This would result in farmers’ impoverishment and land loss because small growers would not be able to compete with the low-cost American produce. In Haiti and Mexico, domestic food production was wiped out by similar free trade agreements. It’s likely that Colombia would follow the path of Mexico, where, as the ability to grow legitimate crops became economically impossible, farmers turned more and more to producing illicit drugs. Colombia already produces as much as 80 percent of the world’s cocaine.

Business groups, like the U.S. Chamber of Commerce, protested the refusal by Congress to approve the FTA, contending that increasing American exports and jobs was more important than protecting Colombian lives and human rights.

The Chamber’s position is not only depraved, it’s based on flawed calculations of exports and jobs. Just like the North American Free Trade Agreement (NAFTA) and granting China entrance to the World Trade Organization (WTO), the Colombia FTA will cost America jobs and exacerbate the U.S. trade deficit.

Previous projections by the Chamber and the U.S. International Trade Commission (ITC) that NAFTA and China’s WTO membership would improve the U.S. economy proved catastrophically off base.

When the U.S. signed NAFTA in 1993, it had a $1.7 billion trade surplus with Mexico. After the agreement, that surplus quickly morphed into a deficit, which ballooned to $64.7 billion in 2008. These annual deficits cost the U.S. 560,000 jobs between 1993 and 2004.

Similarly, the ITC predicted that the tariff reductions China offered when it entered the WTO would result in a trade deficit of $1 billion a year. Instead, between the years of 2001 and 2008, the actual result was deficits of $185 billion, and the loss or displacement of 2.3 million American jobs.

The U.S. already runs a trade deficit with Colombia. It was $1.86 billion in 2009. The Economic Policy Institute calculates that the proposed FTA with Colombia would nearly double that trade deficit by 2015, which would cost the United States another 55,000 jobs.

Frankly, the EPI calculation, which factors in effects on trade like currency manipulation, is far more credible than the ITC and Chamber reports, which ignore these issues.

Bogota wants the FTA because it believes the deal will be good for Colombian business interests. One immediate bonus, for example, is that the FTA would eliminate tariffs on 80 percent of Colombia’s exports to the U.S.

To get what it wants, the Colombian government is willing to say anything. Just like an addict. Promises, promises. The Colombian government’s past performance shows its pledges to protect workers from assassination are empty.

America must reject the role of co-dependent. It must demand the proof of performance before rewarding the government of Colombia with an FTA.

Without proof of performance, the government of Colombia will get away with murder. It will export more of its goods – crude oil, coffee, fruit and flowers -- to the U.S. And unwitting Americans will buy more blood red Colombian roses.

Corporate Rewards: Controlling U.S. Trade Policy

Leo Gerard — Tue, 23 Nov 2010 10:50:44 -0500

Real men, real human beings, with feelings and families, fought and died at Gettysburg to preserve the Union, to ensure, as their president, Abraham Lincoln, would say later, that “government of the people, by the people, for the people, shall not perish from the earth.”

Perversely, afterwards, non-humans commandeered the constitutional amendment intended to protect the rights of former slaves. Corporations wrested from the U.S. Supreme Court a decision based on the 14^th Amendment asserting that corporations are people with rights to be upheld by the government – but with no counterbalancing human responsibilities to the republic. No duty to fight or die in war, for example. Earlier this year, the Supreme Court expanded those rights – ruling that corporations have a First Amendment free speech right to surreptitiously spend unlimited money on political campaigns.

Today, Lincoln would have to say America’s got a government of the people by the corporations, for the corporations.

The proposed trade agreement with South Korea illustrates corporate control of government for profit. It’s the same with efforts to revive the moribund trade schemes former President George W. Bush also negotiated with Panama and Colombia, the world’s most dangerous country by far for trade unionists, with 2,700 assassinated with impunity in the past two decades, 38 slain so far this year.

Nobody likes these trade deals – except corporations. They’re all modeled on the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA), both of which killed American jobs while giving corporations new authority to sue governments (read: taxpayers) for regulations – like environmental standards – that corporations contend interfere with their right to make money.

The Economic Policy Institute estimates that the South Korea so-called Free Trade Agreement (FTA) would cost America 159,000 jobs and enlarge its trade deficit by $16.7 billion in its first seven years.

Americans, now suffering though corporate-caused 9.6 percent unemployment, know a deal when they see one – and the South Korea FTA is not one. In a September poll by NBC News and the Wall Street Journal, 53 percent of Americans said so-called free trade agreements have injured the country. Only 17 percent said those trade schemes benefited the United States. Disgust with these deals spans party lines, including Tea Partiers, 61 percent of whom said they’re bad for America.

Many politicians, particularly Democrats, abhor the schemes as well. In July, just after President Obama announced that he would try to get the South Korea pact passed, 110 House Democrats described their disdain for the deal:

“We oppose specific provisions of the agreement in the financial services, investment, and labor chapters, because they benefit multi-national corporations at the expense of small businesses and workers.”

In addition, during this fall’s midterm election campaign, 205 candidates, Republican and Democrat, ran on platforms condemning job off-shoring and unfair trade, and house Democrats who ran on fair trade were three times as likely to survive the GOP “shellacking” as Democrats who supported so-called free trade schemes.

Significantly, the South Korean public and some South Korean politicians also oppose the trade proposal. In the week leading up to the G-20 meetings in Seoul, trade unionists, farmers, peasants and students filled the streets in marches and candle light vigils to express outrage with the proposed agreement, including its provisions giving U.S. corporations the right to challenge South Korean laws in private tribunals.

In October, 35 South Korean lawmakers joined 20 U.S. Representatives in writing President Obama and Korean President Lee Myunk-bak to protest the proposal.

Despite all that opposition, when Obama and Lee emerged from talks without an agreement, the American press, pundits and “analysts on both sides of the aisle,” described the situation as a major diplomacy failure, “a serious setback for the president.”

They were wrong. It wasn’t a setback for Obama. It was the president refusing to sign a bad deal for American workers.

It was, however, a humiliation for the U.S. Chamber of Commerce, which just spent at least $50 million from secret corporate donors to elect Republicans who will do its bidding. The South Korea deal is a priority for the Chamber. Here’s what Chamber senior vice president for international affairs Myron Brilliant told the New York Times after the South Korean negotiations broke down and Obama pledged to attempt to complete the deal over the following six weeks:

“This will be an early test for this president with the new Congress, particularly the House leadership.”

The “Brilliant” test is whether the president of the United States will comply with Chamber demands to complete trade deals that kill jobs and that Americans despise.

When Obama went to Seoul, Chamber President Thomas J. Donohue was there to, as he put it, help win the trade deal. He also was among 120 executives given exclusive access to international leaders including German Chancellor Angela Merkel and Russian President Dmitri A. Medvedev in a conference before the G-20 meeting.

The international organizers didn’t invite to the trade talks or the conference the students, farmers, environmental groups, organized labor and untold millions of individuals who oppose the so-called free trade deals. The human beings who will be hurt most by the trade deals didn’t get a seat at the table. The corporate-people who stand to gain everything did.

Brilliant’s comments express the corporate sense of entitlement. They spent tens of millions to get what they wanted from politicians to increase profits. Now they expect it to be delivered. It’s their recompense, their corporate reward.

If fatter profits mean fewer American jobs and wider trade deficits, that’s simply not a problem for corporations. That’s among the perks corporations got when the Supreme Court awarded them the privileges of personhood in America but none of the pesky personal and patriotic responsibilities of actual people in American society.

American Betrayal, Sponsored By Intel

Isaiah J. Poole — Wed, 19 May 2010 13:43:55 -0400

LISTEN

Hear Clyde Prestowitz discuss the central theme of his book, "The Betrayal of American Prosperity."

If trade expert Clyde Prestowitz’s latest book, “The Betrayal of American Prosperity,” were a television series, one segment would open with this voiceover: “This episode of ‘The Betrayal of American Prosperity’ is brought to you by Intel.”

A group of Chinese workers in white smocks would smile into the camera and sing, “Bahm-bom-bom-bahmmm.”

Intel is indeed the sponsor of the latest act of the betrayal of American workers, who were told by the apostles of free trade and conservative corporatism that it’s OK if nitty-gritty manufacturing jobs went overseas; our supremacy in technology would create opportunities that would more than make up for the blue-collar jobs that were being rapidly exported.

But later this year Intel will open a $2.5 billion plant in Dalian, China that is just the latest example of how the free-traders’ line has proven false. The plant will serve China’s huge demand for lower-end processors, but there is speculation that if Intel can work around U.S. technology export controls, it would move higher-end production to the new facility as well.

At a presentation at the AFL-CIO headquarters in Washington May 18, Prestowitz used Intel as Exhibit A in how American workers are losing as a result of misplaced faith in free-marked orthodoxy and failed American economic policy. “The Betrayal of American Prosperity” details the history and consequences of this failure and offers policy recommendations for rebuilding the country’s job base.

“We’re in a world in which all of the incentives are such as to facilitate the movement of production of tradable goods and the provision of tradable services out of the United States,” Prestowitz said. “It doesn’t matter if they are low-tech, high-tech or medium-tech, they are all moving out.”

In the case of Intel and its new plant in China, which has plants in New Mexico and Oregon, many of the factors that are often used to explain the outsourcing of jobs to other countries don’t apply.

“Is the labor cost going to be less? Well, it will be less, but the labor cost is insignificant in semiconductor production,” Prestowitz said. “Will the operating costs be less? No, it will probably be higher. Will the quality be higher? No, probably worse. Well, will the productivity be higher? No, probably won’t be as good.”

Even the Chinese government’s currency undervaluation, which gives Chinese manufacturers an effective 40 percent cost advantage for their exported goods, is not a major concern for Intel, given that it has no roughly equal competitor.

“So, what’s going on? The answer is, this is a $6 billion investment, and of that $3 billion are being put up in one way or another by the Chinese government,” Prestowitz said. The government investment benefits Intel's bottom line to the tune of $100 million a year over 10 years.

On the website of the American Chamber of Commerce in China, an article confirms that the Chinese government was “influential in persuading Intel to setup its semiconductor manufacturing plant in Dalian,” and notes that, among other things, the Chinese government is building high-speed rail links, new highways and port facilities that would support new industry in Dalian and surrounding areas.

Prestowitz said that America does not have a policy that matches what China and other Asian countries are doing to encourage American firms to stay in America and produce jobs here at home. Merely cutting taxes and hoping for the best doesn’t count.

Prestowitz encouraged a contrast between how Chinese officials and American officials deal with American business leaders. When an American business leader goes to China to cut a deal, Prestowitz said, “you need to prove that you are a friend of China”—and that means moving a significant share of your production to their country and hiring their workers.

When was the last time an executive of a multinational business was challenged to demonstrate that he or she was a “friend of the United States” in that same way?

The pressure that China exerts on businesses that want access to its market “is a very powerful, subtle, unquantifiable factor that does not exist in the United States,” Prestowitz said.

The United States has the huge trade deficit and weak domestic economy that it has because “there’s been a big scam going on in the United States for the past 40 or 50 years,” Prestowitz said. “The scam is that the economists use the term ‘free trade,’ and they know that the average guy doesn’t understand that when they say ‘free trade,’ they means unilateral.”

In other words, “free trade” is not really fair or reciprocal trade, in which countries agree to abide by shared rules in which both sides gain, but it is effectively unilateral disarmament, in which a country such as China can set its own terms for global trade and industrial policy and the United States acts as if its living in an Adam Smith world.

Prestowitz argues for coming out of that fantasy world and borrow from the playbook of its trade competitors. One of his recommendations is to have a war chest of federal funds that can be used to support businesses that expand production and create jobs in the United States, and aggressively court foreign manufacturers who want greater access to the U.S. market to move some of their manufacturing into the U.S. At the same time, he said, U.S. policymakers should fight for fairer trade rules and insist on enforcement.

“It’s not too late, but it’s getting late,” Prestowitz warned.

G-20 Facts: Accounts out of Balance

Eric Lotke — Thu, 24 Sep 2009 06:05:17 -0400

Source: BEA

Today is the first day of the G-20 summit in Pittsburgh. Because the G-20 nations represent 80 percent of world trade, it makes sense to look at America’s position within it. The above chart shows our trade balances with respect to the G-20 nations; the numbers are below.

What stands out is the size of America's trade deficit. In 2008, we ran a trade deficit of over $550 billion with G-20 nations (plus another $180 billion with OPEC). We can't keep this up forever. It’s good in the short-term for our lenders, but it’s bad in the long-term for everyone.

Please keep these numbers in mind as other countries complain about the U.S. on trade. Trade is only fair if it goes both ways.

(Personal note: Rebecca Lehrman helped a lot with this post).

Myths of Protectionism: Stories You Are Likely to Hear in the Wake of the China Tire Trade Tariff Case

Dave Johnson — Mon, 14 Sep 2009 06:00:00 -0400

President Obama has decided to enforce our trade laws and imposed a 3-year tariff on Chinese tires. I suspect the country is about to witness a corporate hissy fit that will surely rival any righteous teabagger’s demands to see the President’s birth certificate.

Here is what is going on: when the US endorsed China entering the World Trade Organization the agreement was that if any of our industries were significantly disrupted, we could call “time out” and give those industries 3 years to adjust. In case after case President Bush refused to enforce this agreement as China took over one industry after another. Since we then had to buy what we used to make, our balance of trade deteriorated and we now owe China vast sums.

In this case the U.S. International Trade Commission found that America’s tire industry was, to say the least, disrupted by a surge of imports of cheap tires. As with so many industries, cheap Chinese imports quickly dominated the market, American factories closed, American workers were laid off, American communities were devastated and instead of having to pay wages and maintain factories, American CEOs and Wall Street executives pocketed more and more short-term profits at the long-term expense of their own companies and our country's economy.

So this time President Obama is enforcing the agreement and applying tariffs. In fact he is applying a lower tariff than the 55% that was recommended, but the tariff of 35% is still substantial and may save jobs, preserve some manufacturing capacity, and hold the trade deficit down just a bit.

The corporate hissy fit is beginning right on schedule. The word being shouted loudest is “protectionism” and there are threats that this will lead to a trade war.

The headline at the Drudge Report screams: “CLASH OF THE TIRES LEADS TO TRADE WAR,” linking to a Financial Times story that doesn’t actually say anything about a “trade war.” In the story China’s minister of commerce Chen Deming says, “This is a grave act of trade protectionism,” and Eswar Prasad, professor of trade economics at Cornell University, calls the enforcement of the agreement “protectionist measures” while at the same time saying the tariffs are not “substantive restraints on trade.”

The Washington Post, rather than lead with the pro-American viewpoint, chose to lead with China's, “China blasts US tire duties as protectionist blow.” Many other corporate-dominated media outlets followed in a similar vein, arguing how this is a bad decision. Wall Street Journal, “A Protectionist Wave” and "Tariff on Tires to Cost Consumers". Others, like Business Week, just reported the news: “In China Tires Case, Obama Strikes Middle Ground.” (Forbes, to its credit, led with a neutral pun, “China and US: Tire-d of Fighting.”)

So what is “protectionism” and why is it supposed to be wrong for a government to protect a country’s manufacturing interests? Isn’t America borrowing so much money from other countries because we don’t manufacture enough goods here anymore to sell and thereby pay for the things we buy?

In the past a major portion of America’s tax revenue came from collecting tariffs on imported goods. This helped fund development of our competitive infrastructure while maintaining internal markets that encouraged development of industry to make goods here both for use in the country and for export. This led to manufacturing jobs. Every country that has built up a manufacturing base has done so by restricting competitive imports.

But there were problems with this “mercantalistic” approach. As with all rules they can be manipulated by the currently-powerful. This was done to keep some prices unreasonably high, encourage monopolistic practices, reduce access to localized or regionalized specialties and discourage others from importing our domestically-made goods. So after we built up a manufacturing base the time came to start selling to others. This necessitated back-scratch trade agreements: you scratch my back by lowering your tariffs, we’ll scratch yours by lowering ours. Etc. And each country's markets expand - as does the competition.

Unfair competition led to the idea of protecting our standard of living. Unfair labor costs, kept low by use of child or prison labor, exploitive wages in non-democratic countries, even use of forced labor or slaves undercuts our own companies’ ability to compete. Failing to provide worker safety protections, or allowing pollution also provide trade advantages to offshore competitors. So to protect ourselves we imposed tariffs that raised the store price on those goods to prevent them from undermining our own standard of living and safety and pollution standards. We protected our national interest.

The idea of these "protection" policies is to encourage these competitors to pay better wages, improve worker safety and/or stop polluting. This way their own economy and environment could improve and their workers would be able to buy the things that we make. Used this way, the policy of protectionism improves living standards for workers everywhere, while growing our economy and improving our standard of living in the process.

The idea of “free trade” theorizes that without “government” involvement these disadvantages will disappear and prices will eventually reflect supply and demand instead of tariffs and regulations. Of course, this ignores that government as constituted in democracies is a banding together of the citizens for mutual protection, empowerment and benefit. The result of "free trade' is a downward spiral of wages, benefits, worker protection and environmental standards as countries race to the bottom in competition.

Expansion of trade is beneficial to all parties if done fairly. Of course, “fairly” is a difficult state to attain when powerful interests compete for dominance in rule-making. In this case we have the competing interests of American workers and manufacturers pitted against Chinese manufacturers. There are also the powerful interests of distributors and retailers who make a percentage off a sale, whatever the source of the goods, and Wall Streeters who buy up companies and demand short-term profits, and profit from debt.

This is where the opposition comes from. Certain powerful interests are doing just fine without any of this goody-goody do-gooder stuff, thank you, and they want things kept that way. So they will fight against changed in the status quo, no matter how necessary or beneficial to the rest of us. We see this so clearly in the health care reform fight and soon we will be hearing some outrageous lie on the order of "death panels" and "government takeover" to try to scare people away from fighting for their own jobs, wages and benefits by asking for reasonable trade and manufacturing policies.

Their primary scare word in use today is "protectionism."

Part II will examine some of the specific myths surrounding the mystical and powerful word “protectionism.”

Stronger Trade Policies From Obama's Trade Representative

Steven Capozzola — Thu, 16 Jul 2009 17:00:01 -0400

In Pittsburgh today, U.S. Trade Representative Ron Kirk announced that the Obama administration will take a more aggressive approach to supporting American industrial workers through greater protection of labor rights and more aggressive monitoring of overseas trade practices.

In a speech unveiling new initiatives for trade enforcement, Ambassador Kirk promised that his office would begin “consistently monitoring” foreign trade practices and would identify “technical barriers to trade…and tackle them head on”:

"I can tell you with no reservations: the Obama Administration is both willing and able to enforce our trade agreements. American workers deserve no less…Today, on behalf of President Obama, I am here to affirm this administration’s commitment to trade enforcement."

Kirk’s speech took place at the Mon Valley Steel Works in Braddock, Pennsylvania, a plant that has been producing steel since 1875. In response to Kirk’s remarks, United Steelworkers International President Leo Gerard said that U.S. industy has ”had to bear too much of the burden of foreign unfair, predatory and protectionist trade practices. Other nations have closed their markets to our products while they have enjoyed virtually unfettered access to the U.S. market.”

China, with whom the U.S. suffered a record bilateral trade deficit that reached $268 billion in 2008, is a prime culprit. In addition to poor labor standards and lax environmental practices, China employs a number of illegal trade practices, including currency manipulation, dumping, subsidies, and non-tariff barriers. China’s ongoing predatory trade practices have cost the U.S. more than 2.3 million jobs since 2001.

Gerard has made frequent mention of China’s illegal trade practices and praised Kirk’s ”commitment to enforcing the rules and fighting for the interests of working people”:

"Enforcing the rules is an essential ingredient to ensuring that our trade policies actually work to create jobs, opportunity and economic growth. When America stands up, our trading partners open up. That’s the way it should be."

In a preview to his speech, Kirk discussed U.S. trade policy this week in an interview with Wall Street Journal reporters Bob Davis and Greg Hitt. He was straightforward in his assessment of a troubled U.S. manufacturing sector that has lost 40,000 plants in the less 10 years and seen more than 4 million factory workers lose their jobs.

Kirk noted the importance of “creating market access” for U.S. manufacturers and emphasized the importance of ”solving these challenges sooner rather than later, with a recognition that time is a commodity that a lot of our businesses don’t have right now.”

AAM Director Scott Paul, who will testify before a U.S. Senate Committe tomorrow on the urgency of rescuing U.S. manufacturing, called Kirk’s speech “refreshing.” In a statement, he noted:

"I commend Ambassador Kirk for his commitment to trade enforcement. This initiative, coupled with Secretary of Commerce Gary Locke’s comments on the unsustainable nature of our trade deficit with China, gives me hope that we will see a new direction on trade. This would be welcome news for those U.S. manufacturers and their employees who have seen a flood of imports flow into our market, often aided by subsidies and other unfair practices by their governments. The success of Ambassador Kirk’s efforts are going to be measured on a daily basis, and President Obama’s determination on the Section 421 case on imported consumer tires from China in September will be one of the first major tests."

AAM has previously emphasized the importance of “Enforcing the Rules“– with strong trade laws serving as the foundation of a sound American trade policy.

On the industrial side of things, companies like U.S. Steel have also sought stronger enforcement of U.S. trade law, especially on dumping and subsidies. In a recent comment, U.S. Steel noted that, “due to the persistence of dumping and subsidization in our sector, that remains the steel industry’s highest trade-related priority.”

Spare Us Another 8 Years of Faulty US/China Trade Policy

Eran Lillestrand — Wed, 01 Jul 2009 15:18:03 -0400

On Monday, The International Trade Commission (ITC) unanimously voted to recommend that President Obama impose tariffs on the import of Chinese tires for three years. The new administration will have until September 17 to decide what, if any, relief to provide based on the ITC’s recommendation. Will Obama cave to the power of business lobbies and conservatives to follow in the footsteps of President Bush, or support a policy that will help our long term economy?

Chinese tires are one of the many goods that flood the US market because China manipulates its currency and unfairly subsidizes its manufacturing sector. Illegal government subsidies combined with exploited labor and the undervalued Yuan contribute to China’s ability to flood U.S. markets with cheap products, rendering domestic industry uncompetitive.

Tire imports to the U.S. from China have increased since 2004, with 46 million tires worth $1.7 billion being sold in the U.S. in 2008, making the tire industry another example- other than the ubiquitous “Made in China” label on your t-shirts - of this policy. In January, Secretary of the Treasury, Tim Geithner, delighted American trade unions when he bluntly asserted that China has been manipulating the Yuan, stating that the new administration plans to act "aggresively" employing “all the diplomatic avenues’ to change China’s currency practices.

Monday’s recommendation’s resulted from the efforts of industry groups who petitioned the International Trade Commission (ITC) under section 421, a safeguard provision that is designed to combat the influx of cheap Chinese products that make U.S. competition difficult. In April, the Section 421 Market Disruption Investigation on Tires from China was announced by the ITC. The ITC recommended that President Obama impose tariffs on the import of Chinese tires for three years: "55 percent ad valorem (the value of the item) in the first year, 45 percent in the second year and 35 percent in the third year, in addition to any other applicable tariffs."

One of the groups that petitioned the ITC was the United Steelworkers (USW). "Today’s remedy vote by the ITC is a great victory for the USW, its members and for all U.S. tire workers,” declared USW international president, Leo. W. Gerard. “The tariffs voted by the commissioners should remedy the market disruptive surge in Chinese tire imports that have caused harm to the domestic industry.”

With the wheels in motion, it’s the President’s turn. It’s time for the Administration to step on the gas when it comes to driving its Chinese trade policy towards fair play.

Why does this matter? Start by looking at the human cost.

•Job loss: Eight additional U.S. tiring manufacturing plants employing 8,000 workers are scheduled to be closed this year, according to the Alliance for American Manufacturing, .

•Safety guidelines: U.S. importers have received a number of complaints about Chinese models falling apart, and in August 2006 a van in Pennsylvania lost control when a tire tread and belt separated leaving two passengers dead and two severely injured . In the same year, an ambulance outfitted with Chinese tires rolled over in New Mexico. Fortunately, no one died.

•Missing something?: 45,000 of Chinese imported tires were discovered to be missing a necessary gum strip. Again, Chinese efforts to save money ended up hurting American consumers, in this case fatally.

The broader relevance of the issue is our relationship with China. The cheap import of Chinese tires is unfair and cripples our domestic industry. The ruling by the ITC was unanimous. US workers might be able to compete and win on a level playing field, but this field is tilted.

So why so much fuss over 421? If our tire industry is under pressure, why wouldn’t the Obama administration follow the ITC’s recommendation to check Chinese competitors before the proverbial “air” runs out? This especially, when the “Commission’s economic analysis indicates that the recommended tariff will provide significant beneficial effects to the domestic industry and its workers while having relatively insufficient costs to consumers.”

The dilemma is this: President Obama will face considerable pressure from the power of business lobbies and conservatives to follow in the footsteps of President Bush, whose policy of repeatedly ignoring every recommendation for relief that the trade commission issued left the manufacturing sector in serious need of a shovel and chain. The question now is whether he will stand for workers and manufacturers, or multinational corporations and China. We’ll see in September.

Trusting Anti-trust

Susan Ozawa — Wed, 18 Feb 2009 11:40:18 -0500

Wal-Mart’s doing well. Great. Listen, if we are serious about addressing our trade deficit and really want wages to rise in China to address it, one thing we can do is enforce anti-trust law here in the U.S. Trade economists know that market concentration at the retail level squeezes prices down the supply chain, especially if there is strong competition down the supply chain. What does that mean? If the only buyer is a big company who sells to 80% of the buyers of your products, they set the price at which you will sell them your goods. Timing is of essence and it is better to control monopolization while it is occurring rather than after the fact, when competition has been essentially wiped out, but incentivizing small to medium size businesses while enforcing compliance with labor and environmental laws on the giants like Wal-Mart with extreme penalties otherwise, while devising ways to break them up would be a good start.

For another strong sell, becoming truly serious about anti-trust law, taking up the mantle of another Roosevelt, (Teddy), would be advisable going forward after we rationalize our banking sector. No financial institutions should be too big to fail and incentivizing credit unions and community banks would also ensure market concentration doesn't occur on the downswing, especially after all our support of the oligopoly banks. Luckily we have laws to ensure competition exists. Let’s enforce them, shall we?

Manufacturing an Economy that Works for Working Americans

Eran Lillestrand — Tue, 07 Oct 2008 15:04:30 -0400