Domestic Manufacturers Group Says “New Trade Policy” Ignores Producers’ and Workers’ Real Interests
Newswire Services
May 11, 2007
WASHINGTON, D.C. - The “New Trade Policy” compromise announced yesterday by House Democratic leaders, House Republicans, and the Bush administration will become a simple sell-out of U.S. producer and worker interests if not quickly accompanied by more fundamental changes in America’s global trade strategy, the U.S. Business and Industry Council (USBIC) charged today.
According to USBIC President Kevin L. Kearns, “Trying to raise world labor and environmental standards through trade policy is a worthy goal. Unfortunately, given the number of third world trading partners and the size of their combined populations, the measures proposed in the New Trade Policy are completely unenforceable. To date the United States has not been able to enforce current trade agreements with provisions on, for example, subsidies or theft of intellectual property. Why would anyone expect a better track record on labor and environmental provisions simply because they too become part of trade agreements? More fundamental changes to trade policy are necessary to accomplish our goals of restoring a healthy manufacturing and technology base, as well as a rising standard of living for all Americans.”
Added Kearns, “This New Trade Policy completely ignores numerous other and vastly more important problems with U.S. trade policy and world trade patterns that are endangering not only America’s economic future, but also the sustainability of the entire global trading system.”
The biggest such problems,” explained Kearns, “are currency manipulation, pervasive subsidies, intellectual property theft, discrepancies in tax systems (particularly Value Added Tax rebates), and numerous other non-tariff barriers used by most foreign governments to distort world production patterns and trade flows – usually at the expense of U.S. domestic companies and their workers. Further, Washington’s decision to focus trade expansion on low-income countries unable to afford U.S. products, as well as regions addicted to export-led growth strategies, represents a failed approach.”
The latter approach inevitably has helped boost the U.S. trade deficit to already dangerous levels because it involves countries too poor to become consumers of U.S.-made goods but able to become producers of goods destined for the U.S. market. Thus current U.S. trade policy, which is only marginally altered by the New Trade Policy, keeps moving the entire world economy ever closer to a dollar crash and deep depression.
Because of its narrow approach, argued Kearns, the New Trade Policy “is almost completely irrelevant to the interests of America’s domestic manufacturers, farmers, ranchers, and service providers and their employees – not to mention the global imperative of restoring healthy, balanced, and sustainable growth.”
As a result,” he continued, “the new framework itself won’t change world trade flows one bit and doesn’t address the issues of unfair competitive practices faced every day by U.S. producers and their employees at home and abroad. Nor will it offset the enormous labor glut that is the main cause of rock-bottom third world wages. Therefore, the New Trade Policy won’t preserve or create a single high quality American job or reduce the trade deficit by a penny – much less boost incomes abroad enough to begin to re-balance trade flows.”
In addition, noted Kearns, “The most problematic provisions of the New Trade Policy deal with Strategic Worker Assistance and Training (SWAT), which are naive at best. Promising workers training for good replacement jobs may assuage some consciences but is misleading. Due to current trade policies, this nation is not now creating any jobs in internationally traded industries. These are the higher-paying, better-benefits jobs. Promising portability in health care and pensions likewise sounds good, but these two traditional benefits are being phased out as remaining American businesses try to survive in the globalized economy. As for improving education and technical skills, we have been trying to do so since the Soviets put up Sputnik fifty years ago. No one has yet figured out how to do so successfully. In fact, the best way to assure decent jobs, good incomes, and reasonable benefits is to preserve and expand manufacturing, technology, and high-tech service bases – as well as to see that our farmers and ranchers survive.”
No wonder ardent outsourcers ranging from the U.S. Chamber of Commerce to Republican Congressmen like Jim McCrery and Roy Blunt are so pleased,” said Kearns. “They know that this deal will permit multinational companies to continue the unabated increase of their profits by hollowing out America’s productive base.”
Among the measures USBIC proposes to address America’s biggest trade policy challenges include:
imposing a moratorium on all new U.S. trade agreements and rejecting renewal of fast track trade negotiating authority for President Bush until the United States figures out how to reduce our massive current account imbalances, to enforce effectively existing trade agreements, and to make trade policy work for all Americans.
identifying currency manipulation – along with a host of other similar practices – as a substantial and actionable trade subsidy, and applying countervailing duties against imports from offending countries. This goal could be accomplished through prompt passage of the Ryan-Hunter currency manipulation bill or similar, broader measures that attack subsidies across the board.
promptly passing the bipartisan border equalization tax measure about to be introduced by Reps. Bill Pascrell (D-NJ), Michael Michaud (D-ME), Duncan Hunter (R-CA), and Walter Jones (R-NC). This bill would redress the inequities faced by U.S.-based producers by the World Trade Organization’s failure to address the trade distortions created by foreign Value Added Tax systems and their rebates to exporters.
placing a cap on U.S. trade deficit by limiting it to one percent of GDP. Separate measures introduced in the last Congress by Rep. Michael Michaud (D-ME) and Sen. Byron Dorgan (D.-ND) would prevent the U.S. trade deficit from spiraling out of control and restore the balances necessary to preserve the world trading system.
According to Kearns, “The New Trade Policy represents a small, but likely ineffective, step in the right direction. If we really want to solve the problem of our massive current account deficits and the wrenching dislocations they cause, much stronger medicine is necessary. The longer we wait to take effective action, the more difficult it becomes. USBIC strongly supports the efforts of genuine trade reformers among House Democrats to use the above-mentioned and other related measures to hold their leaders accountable for their promises to turn U.S. trade policy into an engine of domestic growth, not to continue as an incentive to offshoring factories and jobs.”
According to USBIC President Kevin L. Kearns, “Trying to raise world labor and environmental standards through trade policy is a worthy goal. Unfortunately, given the number of third world trading partners and the size of their combined populations, the measures proposed in the New Trade Policy are completely unenforceable. To date the United States has not been able to enforce current trade agreements with provisions on, for example, subsidies or theft of intellectual property. Why would anyone expect a better track record on labor and environmental provisions simply because they too become part of trade agreements? More fundamental changes to trade policy are necessary to accomplish our goals of restoring a healthy manufacturing and technology base, as well as a rising standard of living for all Americans.”
Added Kearns, “This New Trade Policy completely ignores numerous other and vastly more important problems with U.S. trade policy and world trade patterns that are endangering not only America’s economic future, but also the sustainability of the entire global trading system.”
The biggest such problems,” explained Kearns, “are currency manipulation, pervasive subsidies, intellectual property theft, discrepancies in tax systems (particularly Value Added Tax rebates), and numerous other non-tariff barriers used by most foreign governments to distort world production patterns and trade flows – usually at the expense of U.S. domestic companies and their workers. Further, Washington’s decision to focus trade expansion on low-income countries unable to afford U.S. products, as well as regions addicted to export-led growth strategies, represents a failed approach.”
The latter approach inevitably has helped boost the U.S. trade deficit to already dangerous levels because it involves countries too poor to become consumers of U.S.-made goods but able to become producers of goods destined for the U.S. market. Thus current U.S. trade policy, which is only marginally altered by the New Trade Policy, keeps moving the entire world economy ever closer to a dollar crash and deep depression.
Because of its narrow approach, argued Kearns, the New Trade Policy “is almost completely irrelevant to the interests of America’s domestic manufacturers, farmers, ranchers, and service providers and their employees – not to mention the global imperative of restoring healthy, balanced, and sustainable growth.”
As a result,” he continued, “the new framework itself won’t change world trade flows one bit and doesn’t address the issues of unfair competitive practices faced every day by U.S. producers and their employees at home and abroad. Nor will it offset the enormous labor glut that is the main cause of rock-bottom third world wages. Therefore, the New Trade Policy won’t preserve or create a single high quality American job or reduce the trade deficit by a penny – much less boost incomes abroad enough to begin to re-balance trade flows.”
In addition, noted Kearns, “The most problematic provisions of the New Trade Policy deal with Strategic Worker Assistance and Training (SWAT), which are naive at best. Promising workers training for good replacement jobs may assuage some consciences but is misleading. Due to current trade policies, this nation is not now creating any jobs in internationally traded industries. These are the higher-paying, better-benefits jobs. Promising portability in health care and pensions likewise sounds good, but these two traditional benefits are being phased out as remaining American businesses try to survive in the globalized economy. As for improving education and technical skills, we have been trying to do so since the Soviets put up Sputnik fifty years ago. No one has yet figured out how to do so successfully. In fact, the best way to assure decent jobs, good incomes, and reasonable benefits is to preserve and expand manufacturing, technology, and high-tech service bases – as well as to see that our farmers and ranchers survive.”
No wonder ardent outsourcers ranging from the U.S. Chamber of Commerce to Republican Congressmen like Jim McCrery and Roy Blunt are so pleased,” said Kearns. “They know that this deal will permit multinational companies to continue the unabated increase of their profits by hollowing out America’s productive base.”
Among the measures USBIC proposes to address America’s biggest trade policy challenges include:
imposing a moratorium on all new U.S. trade agreements and rejecting renewal of fast track trade negotiating authority for President Bush until the United States figures out how to reduce our massive current account imbalances, to enforce effectively existing trade agreements, and to make trade policy work for all Americans.
identifying currency manipulation – along with a host of other similar practices – as a substantial and actionable trade subsidy, and applying countervailing duties against imports from offending countries. This goal could be accomplished through prompt passage of the Ryan-Hunter currency manipulation bill or similar, broader measures that attack subsidies across the board.
promptly passing the bipartisan border equalization tax measure about to be introduced by Reps. Bill Pascrell (D-NJ), Michael Michaud (D-ME), Duncan Hunter (R-CA), and Walter Jones (R-NC). This bill would redress the inequities faced by U.S.-based producers by the World Trade Organization’s failure to address the trade distortions created by foreign Value Added Tax systems and their rebates to exporters.
placing a cap on U.S. trade deficit by limiting it to one percent of GDP. Separate measures introduced in the last Congress by Rep. Michael Michaud (D-ME) and Sen. Byron Dorgan (D.-ND) would prevent the U.S. trade deficit from spiraling out of control and restore the balances necessary to preserve the world trading system.
According to Kearns, “The New Trade Policy represents a small, but likely ineffective, step in the right direction. If we really want to solve the problem of our massive current account deficits and the wrenching dislocations they cause, much stronger medicine is necessary. The longer we wait to take effective action, the more difficult it becomes. USBIC strongly supports the efforts of genuine trade reformers among House Democrats to use the above-mentioned and other related measures to hold their leaders accountable for their promises to turn U.S. trade policy into an engine of domestic growth, not to continue as an incentive to offshoring factories and jobs.”
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