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USBIC In The News This section provides external web links to reports featuring members of the USBIC staff. July 2008 Can Democracy Deliver the Goods? A Gallup Poll taken June 9-12 asked people how much confidence they had in a list of American institutions. In the favorable categories of "A great deal" and "Quite a lot," the Presidency garnered only 26% support and Congress earned an even lower 12%. In the unfavorable categories of "Very little" and "None," the Presidency rated a dismal 48% and Congress 41%. These are the premier institutions of American democracy. The President and members of Congress are elected by the people. The electorate changed the majority party in both houses of Congress in the 2006 elections, from Republican to Democratic. Yet, now Congress is rated less favorably than before - albeit the decline is not very great because the Congressional image was already badly tarnished. Click here to read the article... HAWKINS: A secure defense industry? On July 9, Defense Secretary Robert Gates announced the $39 billion competition for a new fleet of U.S. Air Force refueling tankers would be reopened. The General Accountability Office (GAO) had upheld a protest by Boeing against the award last February of the contract for 179 tankers to a consortium headed by Northrup-Grumman, but using the Airbus A330 airliner built by European Aeronautic Defense and Space Company (EADS). Boeing has built every previous Air Force tanker. GAO auditors found the competition had been "anything but fair and open." Click here to read the article... Air Force-Boeing Tanker Deal A Double-Edged Sword For McCain "It is definitely a loss for him," argued Alan Tonelson, senior research fellow at the U.S. Business & Industrial Council Educational Foundation. "This situation gives Mr. McCain a much bigger black eye, because he also has been a big proponent of this globalized defense base strategy." Click here to read the article... McCain Unyielding On Fair Trade Referring to a number of speeches Mr. McCain has given on trade, Alan Tonelson, a research fellow at the U.S. Business and Industry Council, responded, "They are generally pretty clueless and they generally reflect his deep lack of interest and knowledge on this subject." Mr. Tonelson, however, did not some hidden nuggets of wisdom in the speeches. "Mr. McCain is largely content to spout free market clichés, but from time to time he will talk about level playing fields overseas... he has even expressed concern that our China policies are ignoring the rise of China militarily," Mr. Tonelson noted. Click here to read the article... June 2008 Obama's Trade Tango By recanting his "protectionist" ways and trying to play nice with the Wall Street fat cats, Mr. Obama has moved closer to free trade McCain, denied the working man a voice in the upcoming election and ensured the light at the end of the tunnel was a freight train. Soaring trade deficits, an impotent dollar, high gas prices, a Chinese economy on steroids, and a decline of the American standard of living will not fade over the next four years, rather they will remain fixtures on the U.S. political landscape. "Our growth engines like manufacturing are faltering," said Alan Tonelson of the U.S. Business and Industry Council. And Mr. Tonelson's prognosis is right on the money. Click here to read the article... As the Dollar Falls, Foreign Nationals Shop for U.S. Firms Alan Tonelson, a research fellow at a trade group representing small and mid-size U.S. manufacturers, believes that, by targeting mostly leading technology firms, foreign companies are "acquiring control over the most dynamic pieces of the American economy." "They're acquiring control over America's future," he told The Boston Globe. Click here to read the article... Oil to the Fore in U.S.-China Talks "I really don't think that anything Washington does is going to significantly affect China's domestic energy policies," said Alan Tonelson, a research fellow for the U.S. Business and Industry Council who views the talks as more an exercise in public relations than a path toward progress. "China will choose to subsidize or not subsidize fuels because of how it sees China's own economic and energy interests." Click here to read the article... U.S.-China Economic Talks U.S. and Chinese officials are meeting for two days of economic talks, and on the agenda is trade, currency and banking. CNBC's Hampton Pearson; Alan Tonelson, of the U.S. Business & Industry Council; and Ron Insana, of Insana Capital Partners, discuss. Click here to read the article... USBIC wake-up call: Domestic manufacturers urge Congress to pass strong trade countermeasures According to USBIC President Kevin L. Kearns, whose organization represents 1,550 domestic manufacturers and other companies, “Any presidential candidate genuinely concerned about America’s working families and the beleaguered domestic industries employing them will endorse these actions as well. Instead of providing rebate-check handouts, our political leaders must give the American people their factories, labs, and jobs back.” Kearns called China “an economic rogue state—one that keeps stealing production, revenue, R&D, and jobs from our domestic manufacturers and their employees. Beijing’s American victims need their government’s help now. They can’t wait for a new president and Congress.” Click here to read the article... Exclusive: The Cure for Shortages is Growth There is an interesting irony here, in that the first major move towards "free trade" involved the same decision to forsake home production in favor of cheaper food imports. Richard Cobden led the successful Anti-Corn Law campaign that ended tariff protection for British farmers in 1846, only to find that a world based on international economic integration and interdependence increased the country's vulnerability. Cobden had to imagine a world at peace to make his theory work. He claimed commerce was "the grand panacea" and that under its influence "the motive for large and mighty empires, for gigantic armies and great fleets would die away" as countries became trade partners rather than rivals. But as historian Anthony Pagden noted in his insight book Peoples and Empires, "Like the not dissimilar modern belief that democracies never go to war with one another, this, in time, proved to be an illusion, since commerce could, and generally did, become as much a source for conflict as for peace." Rather than eliminating the motive for a "great fleet," interdependence required naval supremacy. As First Lord of the Admiralty George Goshen said in 1898, "we must have many more [battleships and cruisers] than our enemies if our trade routes and food supplies are to be protected." When a vital resource falls outside national control, power must be projected to regain control. Click here to read the article... Oil, manufacturing, and China boost April trade losses The U.S. trade deficit jumped 7.81 percent in April to $60.90 billion from a revised March figure of $56.49 billion, as chronic U.S. shortfalls in not only oil but manufacturing, high-tech products, and goods trade with China all surged by double-digit levels. In fact, U.S. goods exports to economically booming China shockingly cratered by 10.59 percent in April. The total U.S. deficit that month was the highest figure since March 2007. “Continuing non-oil trade losses deserve considerable blame for America’s recent economic stagnation, and threaten future prosperity as sharply as our oil addiction,” says Alan Tonelson, a Research Fellow at the U.S. Business and Industry Council. “They reflect ongoing trade policy failures by the Republican White House and the Democratic Congress that must become a top presidential campaign issue.” Click here to read the article... A boon for outsourcers, pact rips off United States With a recession either under way or imminent, triggered by reckless over-borrowing and dismal under-production, the last thing Americans need is an outsourcers' boondoggle like the proposed trade agreement with Colombia. Supporters claim the deal will jumpstart U.S. exports and thus overall demand for American-made products and services. After all, backers say, previous U.S. presidents and Congresses gave Colombia duty-free access to the U.S. market years ago. This deal finally gives American producers the same opportunities in Colombia. Click here to read the article... May 2008 Bosses join the unemployment line 'Losing proposition' But cutting payrolls is the wrong way to compete in the global economy, according to Alan Tonelson, a researcher with the United States Business & Industry Council, a Washington-based advocacy group representing medium and small manufacturers. ''It's ultimately a losing proposition,'' he said. Tonelson argues in his book, Race to the Bottom, that no amount of labor-saving technology can offset the low wages, huge pools of workers and lower overall capital costs in China, India and other Third World nations. ''We will never be able to compete with them simply by cost-cutting,'' he said. Tonelson said his research shows that in the past decade, imports have gained a larger share of the U.S. home market, even in high-tech and capital-intensive industries such as computers, aircraft and large-machinery manufacturing, where the United States is supposed to have an advantage. All but five of 114 industries Tonelson studied saw increases in ''import penetration,'' as measured in the dollar value of products purchased in the United States but made overseas. Overall market share captured by imports in these industries increased by more than half, from 21 percent in 1997 to nearly 34 percent in 2006. Free trade agreements, beginning with NAFTA in 1994, have fueled the surge in imports, Tonelson said, by ''sending jobs, production and, increasingly, research and development overseas.'' Tonelson acknowledged that some U.S. manufacturers, such as Caterpillar, the Illinois maker of earthmoving equipment, ''have managed to keep their employment levels pretty high by cutting wages.'' ''They're introducing two-tier wage systems — a lot of workers are making $10 to $14 an hour'' at jobs that had paid double that or more. But he argued that in the longer run, those shrinking blue-collar paychecks carry a cost that can't be measured in dollars. ''The middle class will be gutted,'' he said. ''The division of the country into a relatively small number of high-income earners and a much larger pool of working poor will greatly accelerate. ''In other words, the social profile of the United States will start to resemble that of Third World countries.'' Click here to read the article... DOMESTIC MANUFACTURERS GROUP HAILS CLINTON AND OBAMA CHINA CURRENCY MOVES; URGES DEMOCRATIC CONGRESSIONAL LEADERS TO FOLLOW SUIT WASHINGTON, D.C., May 1, 2008  – The U.S. Business and Industry Council applauded Democratic presidential candidates Sen. Hillary Clinton and Sen. Barack Obama for endorsing in the last 24 hours the only bill  before the U.S. Senate capable of combating currency manipulation by China and other unfair U.S. trading partners, S. 796, The Fair Currency Act. The Council, which does not endorse candidates for political office, also urged Congressional Democratic leaders to put S. 796 and its House counterpart on a fast track for approval.                                                            Said Council President Kevin L. Kearns, “Sens. Clinton and Obama have both demonstrated genuine presidential leadership by endorsing the Fair Currency Act.  Their moves show how fed up voters are with Washington’s appeasement of China and other predatory traders, and how the Bush administration’s Strategic Economic Dialogue with China has failed to produce any tangible relief for American factory owners or American workers.  A major change in direction is in order and The Fair Currency Act is the appropriate vehicle.” Kearns added, “It’s high time that the Senate and House Democratic leaders got this message as well.  They need to stop dithering on these bills, get them out of committee and on to the respective floors, and send a final version to the President’s desk ASAP – with the biggest possible majorities.”   The two bills, which have enjoyed strong bipartisan support in the current and pervious sessions of Congress, would enable U.S. industries victimized by artificially cheap foreign currencies to win prompt import relief in U.S. trade courts.  Their key provision is a finding that currency manipulation is an actionable export subsidy and thus violates U.S. trade law.  This finding paves the way for negatively affected American industries to win offsetting duties on unfairly subsidized imports that compete with their own products.    The Senate version’s chief sponsors are Republican Jim Bunning of Kentucky and Democrats Debbie Stabenow of Michigan and Evan Bayh of Indiana.  Lead sponsors of the House version are Democratic Tim Ryan of Ohio and Republican Duncan Hunter of California. Although other legislators have also introduced currency manipulation bills, Kearns argues that they either lack teeth, contain too many loopholes, or employ trade-relief procedures that are too slow-moving or expensive to use, especially for small and medium-sized manufacturers. The U.S. Business & Industry Council is a national business organization founded in 1933.  Its 1,500 members are mainly family-owned domestic manufacturing companies.    -30- DOMESTIC MANUFACTURERS’ GROUP SUPPORTS CUSTOMS RULE CHANGE WASHINGTON, D.C., April 24, 2008 – The U.S. Business and Industry Council this week supported U.S. Customs and Border Protection’s long overdue effort to change a rule that has systematically under-counted imports, encouraged both importing and the offshoring of formerly domestic production, and significantly overstated the U.S. economy’s performance. USBIC did so by submitting a substantive, analytical comment letter on the rule change. The rule, known as the “first-sale” rule, permits companies to value imports based on the price paid in the first transaction of the importing process.  Since this process so often consists of lengthy supply chains, which produce numerous mark-ups and other fees, the “first-sale” price is usually much lower than the price paid by the importer at the border. Customs has proposed returning to its previous system of basing import values – and thus duty – on this “final-sale” price. Said Kevin L. Kearns, the Council’s president, “Customs deserves great praise and support for challenging the first-sale rule and championing the cause of obtaining accurate government economic data and appropriate revenues from importers.  The first-sale rule has led to significant under-counting of imports, created perverse economic incentives, and distorted the U.S. economic picture since its implementation in 1988.  Now the agency needs Congress’s backing to ensure that the import valuation process can never again be abused by offshorers and importers.” Kearns explained that the first-sale rule represents a major subsidy both for importing itself and for the production-offshoring business models that generate so many imports.  “Like any other business activity, importing entails costs.  By enabling importers to ignore so many of these costs for Customs purposes, the first-sale rule enables them to pay artificially low tariffs and thus strengthens their bottom lines for reasons having nothing to do with market forces.” Kearns continued, “The distortions and abuses are even worse in connection with free trade agreements.  Most of these grant duty-free status to goods with certain levels of U.S. or local or regional content.  By artificially understating the value of the entire product, the first-sale rule also artificially reduces the value of the content needed for duty-free treatment.  Since so much of the production moved to free-trade partner countries is imported back into the United States, the first-sale rule is a tremendous and undeserved boondoggle for offshorers.  And domestic producers and their workers pay the price.” America’s current economic and financial troubles, moreover, reveal many of the costs of such artificial incentives, said Kearns.  “The current crisis makes clear that America’s recent economic strategy has relied too heavily on importing, consuming, and borrowing, and too little on producing and earning income.  Eliminating the first-sale rule would represent an important step towards righting our national economic priorities once again. Contrary to claims made by offshoring and importing interests, Kearns pointed out that eliminating the first-sale rule would not force such companies to raise prices charged consumers.  “Eliminating the first-sale rule has no intrinsic effect on consumer prices whatever,” he said.  “It simply requires that importers pay duties based on the true cost of their importing operations.  They could hold consumer prices stable by accepting lower profits or by creating new efficiencies and productivity gains.  In other words, they could increase the share of their profitability earned by real intelligence and effort, and reduce the share arbitrarily handed to them by the government.” The U.S. Business & Industry Council is a national business organization founded in 1933.  Its 1,500 members are mainly family-owned domestic manufacturing companies. Job Losses Focus Debate on U.S.-China Trade INDIANAOPLIS STAR Candidates are using Indiana as platform to discuss imports, currency reform By Ted Evanoff Butch Williams was floored when Thomson Consumer Electronics closed its Marion glass plant four years ago, shipped much of the machinery to China and left him jobless. Now, presidential aspirants Hillary Rodham Clinton and Barack Obama are on the campaign trail in Indiana insisting they favor trade-reform measures that could save factory jobs. Indiana has lost an estimated 45,000 industrial jobs because of the flow of merchandise from China. Trade experts say getting China to ease the flow of goods -- about $1 billion a day -- into the U.S. will be hard for America's next president to accomplish. Heavily taxing goods from China can quickly raise the price of imports and slow the flow. But a chain reaction could send fuel prices higher and set off a deep U.S. recession, experts say. This could cause unemployment in China, and angry factory workers could revolt against the Communist government in Beijing. "We'd be left standing, but they would be crippled, and the regime in Beijing would probably fall as millions and millions of workers took to the streets," said Alan Tonelson, an economist at the U.S. Business and Industry Council, a lobbying group in Washington. What makes the issue even thornier is the movement of U.S. companies to China. The place where Williams worked for 17 years making television picture tubes employed about 990 workers -- jobs now held by workers in China. Brookings Institution analyst Mark Muro notes that from 1998 to 2003, investment in research by U.S. companies grew twice as fast overseas as at home. Moving research abroad, Muro said, "is a fair indication of where they think the talent and capacity is." Mindful of the tripwires in trade reform, each Democratic candidate outlined positions in separate interviews with The Indianapolis Star that called for measures far short of imposing stiff taxes on imports. "It's a tricky path we have to traverse," Clinton said. A U.S. senator from New York, Clinton's state includes pro-China Wall Street firms and distressed industrial cities. New York factories have shed 191,000 jobs statewide since 2001, compared to 90,000 in Indiana. "We're not going to stand by and lose our standard of living, which I think is at risk," Clinton said in the interview. She said she favors a "thorough analysis" of China trade that would look at how to "level the playing field." Creating a trade prosecutor could help. So could adjudicating trade disputes within the World Trade Organization, she said. WTO rules bar the subsidies Beijing provides for steel and other industries. "We are being taken advantage of," Clinton said. Obama, a U.S. senator from Illinois, which has lost 169,000 industrial jobs since 2001, noted consumers here gain from low-cost Chinese goods. While this holds down inflation, he asked, "What good is it to have a TV" priced at $100 less "if you don't have a job?" Economics professors say a broad flow of imports should push up the value of the yuan and raise prices on Chinese products. Instead, China keeps the yuan low. Obama said it is "indisputable" that China manipulates its currency for its own gain. Clinton agrees. Indeed, both candidates describe yuan manipulation as the speed pedal China uses to accelerate its economy. Obama said he and the people he would select to head Treasury, State and international trade each would negotiate currency reform with Chinese leaders. Clinton said she herself would discuss the matter with Beijing but noted: "We probably don't have as much control there as we might hope." That's because of our import binge. The United States doesn't export enough to pay for all the oil and merchandise it imports. America exports to China about one-fifth of the goods China exports to America. To keep the economy flush, the U.S. Treasury borrows cash, issuing IOUs known as Treasury bills. Now the U.S.' key lender, China has accumulated nearly $400 billion worth of dollars and T-bills last year alone. Through the intricacies of the currency markets, hoarding this cash and foreign currency keeps the yuan low. "It's hard to talk back to your banker,'' Obama said. While a stiff tax on imports from China could help U.S. industrial workers, China could retaliate. It could refuse T-bills paying the low interest rates Beijing has long accepted. Then U.S. interest rates most likely would rise to encourage loans from investors in other nations, Tonelson said. Obama said the U.S. still can threaten to impede imports. "They have access to the biggest market in the world,'' Obama said. "They are very dependent on the United States.'' With the two Democrats putting trade at center stage, factory advocate Scott Paul said he is satisfied a serious discussion finally is under way about the U.S. industrial economy. Paul is executive director of the Alliance for American Manufacturing, which has bought advertisements in The Star urging trade reform with China. Because the government has bailed out Wall Street and provides subsidies, such as tax breaks and research grants to oil, farming, pharmaceutical and other industries, Paul said, the next administration in the White House could accept the notion of subsidies for the U.S. manufacturing base. That could particularly help essential defense products, including steel, electronics and microchips at a time when China is building a first-rate military, including a navy able to roam the Pacific Ocean. "There have been a lot of places in the United States that have been deindustrialized. Can you make those jobs come back? Probably not," Paul said. "But why shouldn't we have a chip industry that has military applications that remains in the United States?" While the trade talk continues, former Marion glass plant worker Butch Williams said he hasn't had time to care about China. He has retrained, remarried, relocated to Huntington and become crew supervisor at Butler Telecom in Fort Wayne. "Even though my work went to China, it's still free enterprise," Williams said. "If we start to build walls around our borders, it defeats the purpose of our republic. I feel like, let the market rule." Matt Will, a finance professor at the University of Indianapolis, agrees. "Our economy is heading into a recession because the dollar is weaker and we are importing less goods," he said. "In my opinion, we should give China lots of green pieces of paper, and they should send us all the consumer goods we can afford." Call Star reporter Ted Evanoff at (317) 444-6019 China Currency Coalition Welcomes Senator Clinton's Support of S. 796, The Fair Currency Act of 2007 Doug Bartlett, co-chair of the coalition, owner of Bartlett Manufacturing Company, Inc., in Cary, Illinois, and Chairman of the U.S. Business and Industry Council, "Senator Clinton's backing of S. 796 is a highly positive development and is much appreciated.  The Bunning-Stabenow-Bayh bill recognizes that manipulation of exchange rates by China and other countries is a monetary measure contrary to China's international legal obligations and has extremely adverse  consequences  for  manufacturing  in  the  United  States.    China's  enormous  and skyrocketing trade  surpluses  with  the  United  States  year  after  year  and  huge  and growing reserves of foreign exchange are occurring at the expense of U.S. economic growth and national security.  In the face of strong recessionary pressures, the United States cannot afford to look the other way when unfair practices harm domestic American producers.  The Fair Currency Act of 2007 is the best approach to take corrective action to bring about a balanced trade relationship and to impress upon China that the United States means business." Click here to read the article... April 2008 Do not panic over foreign wealth Investment by SWFs could also have broader foreign policy implications. Hillary Clinton has put it succinctly by saying that it is hard to lay down the law to your banker. Alan Tonelson, a political analyst, has speculated that America's ability to take a hard line with China in a confrontation over Taiwan might be inhibited if the Chinese government controlled large chunks of Wall Street. Click here to read the article... Naval Strength Cannot Be Taken for Granted William R. Hawkins            In the spring of 1908, the U.S. Navy’s Great White Fleet was docked in San Francisco, readying itself for the Pacific leg of its around-the-world cruise. It had already passed through the Caribbean and around Latin America (there was not yet a Panama Canal). The global demonstration of American strength over the next year (the fleet would not return to Hampton Roads, Virginia until February, 1909) was meant to show the international community that the United States had arrived as a major power. But it was also meant to generate support in a frugal Congress for President Theodore Roosevelt’s plans for further naval expansion. Click here to read the article... Patent Bill Should Die The facts, cited by U.S. Business and Industry Council, tell what the patent bills risk. U.S. manufacturers perform two-thirds of the R&D. They own six out of ten patents and, increasingly, corporate intellectual property is a firm’s greatest asset. Small inventors, independent firms, research universities and nonprofits file a third of the patent applications. Click here to read the article... Patent Reform Legislation Has Many Foes, Little Friends "[T]he reality is that there profound differences over damages, post-grant review, first-to-file, Internet publication of patent applications, and other issues among the majority of the stakeholders," argued Kevin Kearns, President of the U.S. Business and Industry Council. Click here to read the article... Export bonanza a little slow in arriving ''The scale of export [growth] that we have seen from 2006 to 2007 is overrated,'' said Alan Tonelson, a research fellow at the U.S. Business & Industry Council Educational Foundation. ``We have achieved double-digit export growth many times in the past.'' Tonelson said that import growth was cut slightly more than half in 2007. ''That was new and that was what was responsible for bringing the trade deficit down modestly,'' he said. Click here to read the article... China Currency Coalition Applauds Senators Bunning, Stabenow, and Bayh for Introduction of The China Currency Manipulation Act of 2008 The China Currency Coalition is co-chaired by Richard L. Trumka, Secretary-Treasurer of the AFL-CIO, and by Doug Bartlett, owner of Bartlett Manufacturing Company, Inc., in Cary, Illinois, and Chairman of the U.S. Business and Industry Council.  David A. Hartquist is Senior Partner and Chairman of the International Trade Practice Group at Kelley Drye & Warren LLP in Washington, D.C. Click here to read the article... Trade Secrets Alan Tonelson, a research fellow at the U.S. Business and Industrial Council Educational Foundation who has been an outspoken critic of NAFTA, says, "We have 1,500 member companies, and I can't remember the last time anyone mentioned Mexico as a problem. China is the main problem." Click here to read the article... March 2008 Sovereign Salvation? Debating whether or not the Fed should step in to back up sovereign investments, with Alan Tonelson, U.S. Business & Industry Council; Rachel Ziemba, RGE Monitor; and CNBC's Maria Bartiromo. Click here to read the article... 'Just Top-Notch' Family-owned firms, such as Sconza Candy, tend to operate their businesses differently from publicly traded companies such as Hershey, said Alan Tonelson, a research fellow with the U.S. Business and Industry Council, which represents family-held manufacturing companies. Most importantly, he said, there is no pressure to make shareholders happy. Owners typically use bank financing rather than issuing stock, he said, a move that is much more "patient" than shareholders or analysts who demand fast returns. Family members are hands-on operators of their business, he said. "They are at the factory every day. They are familiar with the work force, and they interact with them every day. When something goes wrong, they are called in," Tonelson said. Such companies often become pillars of their community. The owners develop emotional ties to the region that managers of large, multinational companies might not, Tonelson said. Click here to read the article... Curbing imports the best trade stimulus HAD THE UNITED STATES conducted smarter trade policies over the last decade, the economy would grow this year by an amount nearly four times greater than the biggest conceivable boost from the new stimulus package — and a recession wouldn’t be imminent at all. Better yet, this trade-related growth would have shrunk the federal budget deficit, not expanded it, according to new research on U.S. trade flows from the U.S. Business and Industry Council. Click here to read the article... Trade, Economy Becoming Focus Of Pa. Primary "The Democratic and Republican presidential candidates remain clueless about the nation's biggest trade challenges, heatedly debating NAFTA and ignoring the far greater damage inflicted by China's mercantilism," said Alan Tonelson, a Research Fellow at the U.S. Business and Industry Council. Click here to read the article... USBIC report: Rising January trade deficit due to worsening performance in manufactures, high-tech “Having refused to pass a strong China currency bill this year, the Democratic Congress is rapidly joining the Republican White House as part of our China trade problem, not part of its solution,” says Alan Tonelson, a Research Fellow at the U.S. Business and Industry Council. “Meanwhile, the Democratic and Republic presidential candidates remain clueless about the nation’s biggest trade challenges, heatedly debating NAFTA and ignoring the far greater damage inflicted by China’s mercantilism.” Click here to read the article... What in the World? The 2008 Presidential Campaign and Foreign Policies Elizabeth Arnold, from National Public Radio, Mike Peters, from the Anchorage Daily News and Alan Tonelson, from the US Business and Industry Council join in a panel discussion about the 2008 presidential campaign. General Manager of Alaska Public Telecommunications Incorporated (KSKA’s parent company), Steve Lindbeck moderates the panel discussion centered on foreign policy. The panel provides an overview of the important issues facing voters and answers questions on the role of morality, the Iraq War, and candidates Ron Paul and Ralph Nader in this year’s presidential race. Click here to read the article... Sovereign Funds: Friends or Foes? Discussing whether sovereign wealth funds are a threat to the U.S. economy, with William Hawkins, senior fellow at the U.S. Business and Industry Council, and CNBCs Dennis Kneale Click here to read the article... February 2008 Democrats seek corporate tax change, but benefits unclear Ending deferral is well and good, says Alan Tonelson, a research fellow with the United States Business & Industry Council, which represents family-owned and closely held U.S. firms. But he calls it "largely a dodge." The real problem, he says, is that it's just too cheap to make things in foreign countries like China and India. "With the natural cost advantages that they have," says Tonelson, "plus the massive subsidies countries like China have been willing to offer to attract manufacturing, it's inconceivable that tax law changes in this country could have much effect." He encourages the U.S. to negotiate trade agreements that pump up domestic job creation and manufacturing. Click here to read the article... Rebating the hook as Alan Tonelson of the U.S. Business and Industry Council notes, things have changed. In 1997, says Mr. Tonelson, about 38 cents of every dollar spent on consumer goods bought imports. Today that figure is 61 cents--and much more in key areas. For instance, 92 percent of the consumer electronics bought in America are imported, as are 96 percent of men's shirts and 86 percent of women's blouses. America's de-industrialization in favor of today's information/service/"New" economy--which won't be adding workers to meet a greater demand for TVs or Tickle Me Elmos--has largely vitiated the old stimulus formula. Click here to read the article... Falling Trade Deficit Sends Mixed Signals "Yes, we have had double-digit export growth, but we have done that before," said Alan Tonelson, a research fellow with the United States Business and Industry Council (USBIC). Mr. Tonelson was quick to point out that import growth was cut practically in half, due largely in part to the increased economic worries burdening the American consumer. Click here to read the article... Sovereign Wealth Funds Survey A new survey out states Americans are uneasy about investment from foreign goverments, with Dan Bartlett, The White House; Alan Tonelson, U.S. Business and Industry Council and CNBCs Melissa Francis Click here to read the article... U.S. 2007 trade deficit drops because of falling imports Said Kevin L. Kearns, president of the U.S. Business and Industry Council, “The facts make clear that export boom claims are falsehoods concocted by the Bush administration and other outsourcing interests to cover up continuing trade policy failures. America’s trade numbers are improving because the U.S. economy is slowing – not because recent presidents have opened new foreign consumer markets or adequately dealt with predatory foreign trade practices.” “A $700-plus billion trade deficit is completely unacceptable for America’s competitive producers. It also keeps saddling our citizens and their children with ever more debt, and keeps enabling foreign interests to increase their influence over our economic future. Yet both the Bush administration and the Democratic Congress continue ignoring America’s biggest trade problem – blatant cheating by China and other Asian countries on currency, subsidies, and numerous other fronts – and keep focusing their trade policy efforts on new outsourcing-focused deals with minuscule third world economies. Both major political parties urgently need to start championing genuinely American interests in U.S. trade policy, and the place to start is with a strong currency manipulation bill,” continued Kearns.” Click here to read the article... Growing Foreign Government Investments May Threaten U.S. National Security Sitting next to Ms. Markheim during this discussion was Alan Tonelson, representing 1,500 companies of the U.S. Business and Industry Council, and whose perspective was diametrically opposite to hers. For Mr. Tonelson, the benefits of foreign investment "fall far short of the dangers they pose." Mr. Tonelson said he worries that the "ballooning role played by SWFs" poses major threats to the fundamentals of a free market—competition, equality of opportunity, transparency, and the free flow of information. Tonelson noted a new focus of the SWFs that alarms him. He mentioned the sudden way in which state-controlled entities can mobilize capital, making huge investments in major American and foreign banks and brokerages. He also said we should be wary of the secretiveness of the operations of most SWFs, and of many of the governments involved, which are hostile to our national security. Click here to read the article... Benefitting From Tax Rebates Discussing whether China will benefit the most from the economic stimulus plan, with Alan Tonelson, U.S. Business and Industry Council; Vince Farrell, Scotsman Capital Management and CNBCs Dennis Kneale Click here to read the article... Stimulating? Or, well, not so much? As congressional leaders, the Bush administration and presidential candidates tout the stimulus plan (that probable $600 check you'll be getting in the mail to spend and thereby help the U.S. economy) they forgot one thing: nothing anyone buys here is made here. Thus, the plan may be well, less than stimulating. Alan Tonelson, U.S. Business and Industry Council, has much more on this in the Pittsburgh Post-Gazette. Some highlights: Click here to read the article... Rebates: Congress giveth, China taketh away? One fair trade proponent - Alan Tonelson, with the U.S. Business and Industry Council - said in a recently published article that Americans should "accept that many of the stimulus' benefits will leak overseas." Click here to read the article... Spitting in the fiscal wind We have transitioned from an agricultural economy to a manufacturing economy to a service economy while much of the world still lies in poverty. As a result, it’s cheaper to have paperclips made in China and imported to the United States than to hire American workers to do the job. While that may keep consumer prices low, it also keeps Americans out of work, and fuels foreign economies that compete for market share. A recent U.S. Business and Industry Council report showed that only five of 114 U.S. industries gained market share against import competition between 1997 and 2006. Click here to read the article... Stimulus may aid nimbler business GM now employs fewer than 10,000 Indiana workers, compared with about 40,000 two decades ago. Wal-Mart, the nation's single largest importer of Chinese goods, has replaced GM as Indiana's largest private employer. The Arkansas-based discount retailer has about 36,000 workers in the state. Even if the policymakers in Washington set off a consumer spending boom, it can't rev up old factory towns like Muncie and Marion, where major automotive and television industry plants have closed. "The resulting growth will fall well short of politicians' and voters' expectations -- because import levels have grown so high for so many types of manufactured products," contends a report by economist Alan Tonelson of the U.S. Business and Industry Council, a trade group in favor of import limits. Click here to read the article... Economic stimulus package can prevent recession if it's spent on American goods By ALAN TONELSON and SARAH LINDEN Anyone who has been in a real store in the last 20 years -- a group that apparently excludes top U.S. economic policy-makers -- knows right away why the combination of tax and interest cuts proposed to stimulate the economy is going to flop. The U.S. economy has become so overrun with imports that encouraging Americans to spend more no longer yields nearly as much growth as in years past. Click here to read the article... January 2008 The Private Sector: Too many imports could spoil stimulus plan Before Fed Chairman Ben Bernanke decides on the next interest rate cut to stimulate the economy and head off a recession, he really needs to listen to ... Ben Bernanke. So do the Congress and the president, who have concocted a stimulus plan of their own. In recent testimony on Capitol Hill, Mr. Bernanke unwittingly made clear that the conditions needed to turn lower borrowing costs and tax rebate checks into actual growth are largely gone. The reason: Goods from abroad so thoroughly dominate the purchases of U.S. households and businesses that encouraging much more American spending no longer encourages much more American production. Click here to read the article... Despite strong exports, trade deals tough sell The purpose of these trade agreements is not to open more markets to U.S. exporters, but to make it easier for multinational corporations to move production to lower-cost countries, Tonelson contends. Previous trade agreements played a major role in the loss of more than 3 million manufacturing jobs since 2000, he said. More free trade agreements are "the last thing U.S.-based manufacturers and U.S. working families need," he said. Click here to read the article... Sunset Industry Or Sunset Nation? Alan Tonelson, a economist with the U.S. Business and Industrial Council, explained, "In the U.S. manufacturing is the economy's most productive sector, the engine of most technological progress, the employer of most of its scientists and technicians and the creator of its best paying jobs." Put simply, a strong manufacturing sector is the sign of a healthy economy, and economic nationalism can bring it back from the brink. Click here to read the article... Economists dissect economic stimulus package Another big factor is that an increasing share of goods sold in the U.S. are made overseas. During the 2001 recession, 18 percent of what Americans spent on food and manufactured goods was imported, according to the Commerce Department. By 2006, the share had risen to 21 percent. "A great deal of any stimulus is going to be sent overseas," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a trade association of small manufacturers that lobbies to limit imports. Click here to read the article... Sovereign Wealth Funds Whether sovereign wealth is helping or hurting the economy, with Andrew Busch, BMO Capital Markets; Alan Tonelson, U.S. Business and Industry Council and CNBCs Dylan Ratigan Click here to read the article... Conservatives Renew Call for Executive Order President Bush’s focus has shifted to an economic stimulus package, but that hasn’t discouraged fiscal conservatives from pursuing an executive order canceling lawmakers’ earmarks. A coalition of 24 groups signed a letter to Bush today asking him to bring an end to the “earmark era.” U.S. Business and Industry Council Click here to read the article... China's person of the year Time Magazine drew considerable attention when it named Russian President Vladimir Putin its 2007 "Person of the Year." Time reports Mr. Putin "is passionate in his belief that the dissolution of the Soviet Union was a tragedy." His confrontational policies in Europe, the Middle East and Central Asia have raised fears of a renewed Cold War. Not given as much attention was the naming of Qian Xuesen as Person of the Year by Aviation Week & Space Technology magazine. Mr. Qian is considered the father of China's aerospace industry. As AW&ST stated, "Nothing in aviation or space in 2007 represented a greater change in the status quo than China's ascendancy to the first rank of space powers." Click here to read the article... Wake Up Call Under the guise of ‘developing country’ China uses U.S. businesses to clean up their environment. While companies transfer factories the economic advantages pale to the amount of pollution that needs cleaning up, writes William R. Hawkins Click here to read the article... America For Sale Alan Tonelson on NBC Click here to read the article... China Currency Coalition Urges Congress to Act Promptly to Address Competitive Currency Depreciation Added Doug Bartlett, co-chair of the coalition, Chairman of Bartlett Manufacturing Company, Inc., in Cary, Illinois, and Chairman of the U.S. Business and Industry Council, "China's foreign reserves are now approaching an extraordinary and totally unprecedented $1.4 trillion. As Congress reconvenes, it is critical for U.S. companies and workers that legislation be passed without delay that will address both the trade and monetary aspects of currency misalignment and manipulation. This sort of mercantilist behavior should be labeled for what it is and must be countered in order for the U.S. economy and dollar to regain strength." Click here to read the article... Imports assail manufacturers "It's almost impossible to track where it (product) is consumed," said Alan Tonelson, the author of the report on import penetration. Products are imported by retailers and sold across the states, while other products may be assembled at one site and sold at another. Click here to read the article... U.S. trade deficit jumps 10 percent on higher oil imports According to U.S. Business and Industry Council research Fellow Alan Tonelson, “The November figures make clearer than ever that the nation’s best hope for a sustainable trade balance, sounder national finances, and a healthier manufacturing sector lie in controlling imports, not boosting exports. Thus Washington’s obsession with promoting exports with new trade deals and its neglect of often unfairly traded imports add up to a completely mistaken set of priorities.” Click here to read the article... The foreign trade deficit and the 'recession' Among these groups is the U.S. Business and Industry Council, which represents small and medium-sized manufacturers. A recent USBIC study shows that American manufacturers are not only losing ground to imports in such labor-intensive areas as toy manufacturing and apparel, but in "advanced" or high-tech industries as well.        Alan Tonelson, senior analyst for USBIC said the "report shows that, even in so-called high-tech industries, where we're supposed to have a natural advantage, U.S.-based manufacturers can't compete effectively on their home turf.  And if they can't prevail at home, how can they compete effectively abroad?" Click here to read the article... Sovereign Funds Whether these funds will help of hurt Wall Street, with Alan Tonelson, U.S. Business and Industry Council; Eli Lehrer, Enterprise Institute and CNBC's Sue Herera Click here to read the article... Trillion Dollar Funds The results of the trillion dollar survey and a look at why sovereign funds are gaining attention in Washington, with Yaron Brook, Ayn Rand Institute; William Hawkins, U.S. Business and Industry Council; CNBCs Michelle Caruso-Cabrera and Melissa Francis Click here to read the article... Should America shun Chinese goods to reduce global warming? Yes As made painfully clear by last month’s international conference, the world’s governments keep moving toward a global warming strategy that actually boosts greenhouse gas emissions and weakens industry and all its economic and strategic benefits in the United States and elsewhere in the developed world. The key is super-green Europe’s growing support for a grand bargain that would strictly curb greenhouse gas emissions in rich countries like the United States, while placing only minimal restraints on the full-throttle economies of massive new polluters like China and India. The Bush administration has resisted so far, but a new Democratic president could well seal this deal. Since most rich-country manufacturing is much cleaner than most Third World manufacturing, greenhouse gas emissions would keep surging — fueled partly by American, European and even Japanese companies seeking Third World pollution havens. As a result, economic hollowing out would accelerate in the high-income world with most Americans suffering disproportionately. Click here to read the article... December 2007 Foreign nations snap up U.S., Europe bank shares The key solution, he says, is already in place: An executive-branch review process that considers national security implications of foreign investments - whether the investor represents a government or some other overseas entity. The process, tightened this year by Congress, is known as the Committee on Foreign Investment in the United States, or CFIUS. The review authority works, as long as it is used properly, says William Hawkins of the US Business and Industry Council, a private lobbying group for manufacturers. "They haven't been exercising that authority [enough]" he says. Under the law signed by President Bush this summer, CFIUS reviews now will involve higher-level officials than before and special consideration will be given not just to technology with military applications, but also to critical US infrastructure. Acquisitions by state-owned companies, including sovereign wealth funds, will also get closer scrutiny. On Thursday, President Bush weighed in on the latest moves by sovereign funds, responding to a reporter's question. He said he is "fine" with capital coming to Wall Street from overseas. The greater worry, he says, would be if the US became protectionist regarding the flow of money. Experts say that these funds are here to stay - one facet of the rising power of developing nations. Often, these nations don't share America's strong emphasis on the private ownership in economic affairs. "The rise of SWFs should be seen as a further sign of a shift in the world economy," said Gerard Lyons, an economist at Standard Chartered, in a November congressional hearing on the issue. "Western countries should seize this as an opportunity to work with emerging economies such as China and Russia and others to find common ground rules and a code of practice." In some of these nations, the line between government and the private sector can be blurry. In one case now under CFIUS review, Mr. Hawkins says, the Chinese firm Hauwei Technologies is a key investor behind a deal by Bain Capital to invest in US computer-security technology. "The line between public and private is very thin" in China, Hawkins says. Click here to read the article... CSUSTL Letter to the Bush Administration Concerning Draft WTO Rules Text The Committee to Support U.S. Trade Laws ("CSUSTL") today sent a letter to Secretary of Commerce Carlos Gutierrez and United States Trade Representative Susan Schwab the House and Senate leadership expressing the Committee's dissatisfaction with the draft negotiating text issued by the Chairman of the Doha Round Rules group. CSUSTL has urged the Administration to negotiate stronger rules against unfair trade practices. Click here to read the article... Sino Stake in Morgan Stanley Discussing whether Chinas stake in Morgan Stanley should cause concern to investors, with Alan Tonelson, of the U.S. Business and Industry Council, and Todd Malan, of the Organization for International Investment Click here to read the article... Pay in aerospace is low for non-Boeing workers Click here to read the article... Paulsons China Visit Treasury Secretary Henry Paulson is in China for another round of talks on trade and other issues. Alan Tonelson, of the U.S. Business and Industry Council, and former Treasury Undersecretary John Taylor share their insight. Click here to read the article... Trade pacts promise jobs, but do they deliver? ''There has been a change in the arguments made by those who have been favoring trade agreements,'' said William Hawkins, a senior fellow at the U.S. Business and Industrial Council. They've abandoned ''what they originally said these trade agreements would do, which is expand U.S. exports, bring better jobs, actual benefits to the United States,'' he said. Click here to read the article... Subprime crunch cools leveraged buyout market "In the long term, the correction is probably healthy because too many of the deals materialized only because of the very low cost of borrowing money," said Alan Tonelson, research fellow at the US Business and Industry Council, a trade group for small and midsized manufacturers. The mounting number of deal withdrawals has especially affected big transactions dependent on high-risk "junk bond" financing. Click here to read the article... Undervalued Currency And Toxic Toys Fuel Concerns Over China Trade Policy William R. Hawkins, a senior fellow for national security studies at the U.S. Business and Industry Council, argues China is a key beneficiary of one of the largest recorded trade imbalances in history. Mr. Hawkins notes that while U.S. exports to China have increased from $18 billion to $52 billion over the past five years, exports from China to the U.S. have increased from $102 billion to $287 billion. "Although the percentage increase in U.S. export growth is greater, percentages don't buy anything; cash does. And this is where China makes out like the bandit that it is - with a tripling of the American trade deficit with Beijing over those five years," said Mr. Hawkins. "China is arming Iran with conventional weapons, some of which end up in the hands of insurgents and militias in Iraq, Afghanistan, and Lebanon," said Mr. Hawkins. Click here to read the article... Restrict foreign ownership of U.S. companies To ensure America's long-term prosperity and national security, strict limits on foreign government investments in U.S. companies and other hard assets are needed - and they are needed fast. As demonstrated most recently by the purchase of 5 percent of Citigroup stock by Persian Gulf sheikhdom Abu Dhabi, the flood of official foreign money already eyeing America's economic jewels will only continue ballooning. Not only do these governments' profits keep soaring from increasingly one-way trade with the United States and from robust global oil exports, but sagging yields on their traditional fixed-income U.S. investments plus the weakening dollar have spurred a search for higher returns - generally through official investment agencies called Sovereign Wealth Funds. Click here to read the article... China, U.S. Reach Accord Over Subsidies Critics complained that yesterday's settlement achieved little because China already was moving to roll back subsidies, especially the tax breaks cited by the administration. "The Bush administration has won nothing," said Kevin Kearns, president of the U.S. Business and Industry Council, which represents small, mostly family-owned manufacturing firms. "Washington has simply wasted time and U.S. taxpayers' money." Click here to read the article... November 2007 China dropping subsidies that aided exporters Others were more critical, noting that Chinese exporters continue to enjoy an enormous competitive advantage because Beijing artificially depresses the value of its currency. Since loosening the link between the yuan and the U.S. dollar in July 2005, the Chinese currency has risen in value by more than 12%. Most economists agree it remains undervalued by 25% or more. "This does nothing about the biggest Chinese subsidy," says Alan Tonelson of the U.S. Business and Industry Council, which supports unilateral tariffs on Chinese imports. Click here to read the article... China agrees to drop some subsidies Alan Tonelson, a research fellow at the U.S. Business and Industry Council, said his group, which represents 1,500 small and medium-sized manufacturing companies, would keep pressing for passage of legislation that would allow the U.S. government to impose retaliatory tariffs on Chinese goods as punishment for China's currency practices. Click here to read the article... Protectionism vs. Sovereign Wealth While some think capital infusions, like the one from Abu Dhabi, are keeping America great, others say the risks far outweigh the rewards. Monte Brem, of StepStone Group, and Alan Tonelson, of the U.S. Business and Industry Council, discuss the issue. Click here to read the article... Abu Dhabi Stake in AMD Discussing whether or not the Abu Dhabi stake in AMD worrisome, with Alan Tonelson, U.S. Business and Industry Council; Todd Malan, Organization for International Investment; and CNBCs Erin Burnett. Click here to read the article... Trade pact help businesses, hurts workers "These agreements really shouldn't be called trade agreements because there is no market for U.S. products on the other end," said Alan Tonelson, a trade policy researcher at the U.S. Business and Industry Council. "They are really outsourcing agreements. The multinationals that have been pushing for them don't value Peru or the Latin American countries as exciting new markets for their products." Click here to read the article... Bushs Free Trade Event Bush has been campaigning for Congress to embrace free trade agreements he says will help boost exports. Daniel Griswold, of the Cato Institute, and Alan Tonelson, of the U.S. Business Industry Council, share their insight. Click here to read the article... Patent Fairness Economist Pat Choate has produced a research paper for the U.S. Business and Industry Council (USBIC), examining "the arguments in favor of patent “reform” that are being spread by the Coalition for Patent Fairness (CPF), the organization representing Big Tech corporations on the issue." USBIC President Kevin Kearns asks the large-issue questions:     These Big Tech multinationals were themselves start-ups with a few patents and a few dreams not that long ago, and do not need to alter the U.S. patent system to conform to their business model at the expense of other models. Simply put, do some of the most profitable corporations in America need to add marginally to their bottom lines by undermining the patent protections that a full range of other companies depend upon for their livelihood – not to mention their employees? Having made it to the top, should they be permitted to deny the next generation of small technology innovators the opportunity to climb the American ladder of success? Click here to read the article... October 2007 Wake Up Call China is making a concerted effort to establish itself as a major maritime power. It is the world’s third largest shipbuilder in terms of gross tonnage, behind only South Korea and Japan. Beijing currently accounts for 24 percent of world shipbuilding, and hopes to surpass both Asian rivals during 2015-2020. Click here to read the article... Set Limits on Sovereign Wealth Sovereign wealth funds (SWF), large pools of capital in the hands of foreign governments, have loomed into public view. The result of global trade imbalances, they could pose strategic dangers to the United States. These state funds now total $2.6 trillion, still mostly in the hands of Arab oil sheikdoms like Kuwait and Dubai, though Singapore’s Investment Corp. is worth $330 billion. They have a history of pursuing higher returns on capital rather than political agendas. In contrast, Russia’s oil and natural gas exports, and China’s manufacturing surplus, are raising fears that these funds will be used to advance broader national objectives. China has the world’s largest hard currency reserves, some $1.3 trillion and growing. These funds are available to state enterprises, and to a new SWF with an initial grant of $200 billion. Beijing’s foreign direction investment has focused mainly on energy and raw materials to support its expanding industries. Promises of capital have also been used to further Chinese foreign policy. In 2004, President Hu Jintao promised Latin America $100 billion in investments, mostly for energy, mining and infrastructure projects. An example of how the SWF can be used was provided by Russia when state-owned Vneshtorgbank bought more than 5 percent of EADS in 2006. The Russian bank wanted board representation and was considering increasing its stake so as to have a blocking minority vote (similar to the French government’s 15 percent share) in Europe’s largest military and aerospace company. EADS wisely denied the Russians a seat. It is not in the U.S. interest to see Russia, China or any other rival power make such a bid for an American firm. The European Commission has proposed banning single companies from controlling both the production and transportation of electricity and natural gas, a move aimed at preventing Russia’s Gazprom from expanding its control of Europe’s natural gas supply. When state-owned or controlled entities are involved, transactions are no longer “just business.” The attempt by China National Overseas Oil Co. to buy the American energy producer Unocal in 2005 set off alarm bells in Washington. Unocal accepted a rival bid from Chevron after Congress took steps to intervene. Besides resources, China wants advanced technology and has shown interest in acquiring high-tech firms. On Sept. 28, 3Com, a U.S. provider of integrated, secure networks, agreed to be acquired by Bain Capital Partners. As part of the transaction, China’s Huawei Technologies will also invest in 3Com, to “become a commercial and strategic partner,” according to the Chinese firm’s news release. Though a private firm, Huawei’s extremely rapid growth has been supported by government patron-age within a telecom sector tightly managed by Beijing. Its founder, Ren Zhengfei, was described in a 2005 Time magazine profile as “a former soldier who fashions himself after Chairman Mao.” Beijing has made no secret of its desire to obtain dual-use technology, whether through trade, acquisition or espionage. It protested against new Commerce Department security measures on U.S. high-tech exports that were announced last June. Beijing and its “business” partners cannot be trusted when U.S. security is at stake. Public officials must be vigilant and have the power to guard the national interest. On July 26, U.S. President George W. Bush signed the Foreign Investment and National Security Act of 2007. The legislation, which Congress passed unanimously, strengthens the Committee on Foreign Investment in the United States (CFIUS). This multiagency committee, chaired by the Treasury, was created in 1988 to analyze foreign acquisitions of privately owned entities to determine their affect on national security. It can block, limit or restructure deals. Its authority is rooted in the Defense Production Act. There is wide agreement, including a scathing 2005 report by the Government Accountability Office (GAO), that CFIUS has not been doing its duty. It has rubber-stamped too many deals. The act is a first step toward reform and closer congressional oversight. According to Commerce Department data, 91.5 percent of the $161.5 billion in foreign direct investment that came into the United States last year went to buy existing facilities, not open new businesses. The transfer of ownership to foreign hands often eliminates U.S. jobs and production capacity as operations are consolidated in favor of the overseas owner’s home base. Such acquisitions can also transfer technology to commercial or, in the case of China and Russia, geopolitical rivals. Beijing is well aware of how foreign investment can be used, remembering how China was once divided into spheres of influence by imperialist powers. Its Ministry of Commerce has set new limits on foreign investment that could transfer control of leading enterprises or traditional Chinese brands, threaten companies with over 2,000 employees or those that pose risks to “economic security” — not just military security. Beijing uses the term “comprehensive national power” to unite economic and security concerns. The United States must think in the same way. Click here to read the article... Democrats no longer scare Wall Street What are the prospects for a American VAT? Unclear at this point. But with backing from the U.S. Business and Industry Council, a manufacturing industry lobby in Washington, it's one of the few issues on which Big Labor and an important corporate interest have a common goal. Click here to read the article... Let the foreign money flow Alan Tonelson, research fellow at the US Business and Industry Council, said in the Globe this month that "When they buy these companies, they're acquiring control over the most dynamic pieces of the American economy, and they're acquiring control over America's future." Click here to read the article... Foreign Flows or Foes? Debating whether or not sovereign funds can pose a threat to America's economic interests, with Yaron Brook, Ayn Rand executive director; Alan Tonelson, U.S. Business & Industry Council research fellow; and CNBC's Maria Bartiromo. Click here to read the article... Falling Dollar Means Foreign Buyouts "This administration has a major blind spot when it comes to the economic component of national security," stated Alan Tonelson, a research fellow at the U.S. Business and Industry Council. Unlike the outcry that erupted when it was announced a firm from Dubai would run security at America's ports, the merger between Huawei and 3Com is expected to meet little or no opposition. "Both this administration and Congress are so wedded to the free trade ideology, they are determined to downplay or ignore the negatives of the policy," stated Mr. Tonelson. According to economists, free trade has resulted in a falling dollar, which in turn, makes it lucrative for foreigners to buy U.S. Treasury Bonds, as well as U.S. companies. Click here to read the article... Foreign buyouts raise US fears as weaker dollar drives deals "Quite naturally, foreign companies want to play in this market," said Alan Tonelson, research fellow at the US Business and Industry Council, a trade group for small and mid-sized manufacturers. "They want leading-edge technology, and the United States is still the technology leader. But when they buy these companies, they're acquiring control over the most dynamic pieces of the American economy, and they're acquiring control over America's future." Click here to read the article... September 2007 Incredible shrinking paycheck ''The kind of trading system we have today can't possibly work to the advantage of high-wage countries and their workers,'' said Alan Tonelson, a researcher with the United States Business & Industry Council, a Washington-based advocacy group representing medium and small manufacturers. ''Manufacturing is the only sector of the economy that provides workers, with average skills and schooling, with enough pay to support a middle-class life,'' said Tonelson, the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards. Tonelson argued that manufacturing jobs moved offshore will not be replaced with high-tech jobs because those jobs too will be lost to other countries where wages are lower. ''Americans aren't the only smart people on earth,'' he said. ''We're also not the only people who have recognized the need for re-education and re-training. Click here to read the article... Once Again We’re Driving What’s Not Made Here Such trends do not sit well with Alan Tonelson, a research fellow at the United States Business and Industry Council, which favors tariffs. He argues that the Big Three lift the rest of the national economy more than the transplants do. Specifically, he says, nearly every study shows that vehicles manufactured here by G.M., Ford and Chrysler contain a “considerably higher” percentage of American-made parts than cars rolling off the lines at the transplants. Click here to read the article... No-Part Harmony The Patent Reform Act of 2007 (S. 1145) seeks to “harmonize” the American patent system with those of other nations. But, as Kevin Kearns of the U.S. Business and Industry Council has written, “do we really need to be "harmonized" with a calcified European system or the impossibly unfair Japanese system, not to mention the Chinese system, where intellectual property theft is a way of life?” Click here to read the article... Did Howard Berman strong arm opponents of his patent reform bill, HR 1908? Kevin Kearns, president of the U.S. Business & Industry Council, which opposed the House bill, said he planned to start lobbying the Senate today to put the brakes on patent reform. "There is massive and widespread opposition to the bill, and if the Senate thinks they're going to just roll it through, I think that's a mistake," he said. "I think we're going to be successful there." Click here to read the article... Business groups urge Congress to act quickly on trade deals The U.S. Business and Industry Council, which represents about 500 small and medium-size U.S. manufacturers, also wants a moratorium on new trade agreements. It contends these deals have hurt domestic manufacturers. Click here to read the article... THE STATE OF THE U.S. LABOR MOVEMENT That substantial difference is often highlighted by critics of the service economy such as Alan Tonelson, a spokesman for the U.S. Business and Industry Council, a group that lobbies on behalf of small manufacturers. "We need to start restricting trade in various ways," he said, "because the imports from China and the Third World are replacing too much U.S. production and driving down the wages of too many Americans." Click here to read the article... August 2007 US deal with India draws more fire On Monday, just two days before India celebrated 60 years of independence, its Parliament was disrupted as some members tried to shout down Prime Minister Manmohan Singh. He was defending the nuclear-technology deal he negotiated with the United States against critics, some within his own coalition, who claim the deal will give the US too much leverage over Indian policy. Click here to read the article... Chinese-made toothpaste joins recalls "I think more and more Chinese horror stories are going to be popping up, and the reason is that no one is minding the store," said Alan Tonelson, a research fellow with the U.S. Business and Industry Council, an advocate for family-owned and closely held firms. "Product safety just has not been a priority for China." Click here to read the article... Should China's food, drugs be banned? China has just made the strongest possible argument for immediate action to protect American consumers from its dangerous food and drugs. A few days ago, a Beijing spokesman admitted: "Our work with food and drug supervision is just beginning. The foundation of the work is still weak, and the trend is not promising." Click here to read the article... How Best to Attack America? There has been no major terrorist attack in the United States since September 11, 2001. This is amazing, given how large and open America continues to be. Though the recent National Intelligence Estimate noted that it is harder now to attack the United States, “al-Qaeda is showing greater and greater ability to plan attacks in Europe and the United States.” It is the old offensive-defensive dynamic seen in every war. Homeland Security Secretary Michael Chertoff says his “gut” tells him a new attack may be on the way. But would such an attack be the result of al-Qaeda rebuilding its capability, or of it rethinking its strategy? The debate in enemy circles over how to strike the United States goes back deep into the last century. Click here to read the article... July 2007 Alarm bells on China Release of International Monetary Fund economic growth projections for 2007 set off a rash of misleading headlines. Many claimed that because China will lead the world with a national gross domestic product growth of 11.2 percent, it is the "engine of the global economy." This implies what is happening in China benefits the rest of the world, when in fact it is really only empowering China. Its impact on other countries is problematic. Click here to read the article... Alan Tonelson on CNBC's Power & Money Release of International Monetary Fund economic growth projections for 2007 set off a rash of misleading headlines. Many claimed that because China will lead the world with a national gross domestic product growth of 11.2 percent, it is the "engine of the global economy." This implies what is happening in China benefits the rest of the world, when in fact it is really only empowering China. Its impact on other countries is problematic. Click here to read the article... Stop reckless rush to overhaul patent system By Kevin L. Kearns July 18, 2007 Reform of the nation's patent system, the 218-year-old wellspring of American innovation and material progress, has become a rush project in Congress. Leading the way is the Senate Judiciary Committee, with a bill that could cripple American innovation. Chairman Patrick J. Leahy, a Vermont Democrat, is trying to hustle his bill through committee, apparently to please several powerful information technology firms - even though testimony at the bill's one hearing revealed serious flaws in the legislation Click here to read the article... High-tech imports on the rise Alan Tonelson, a research fellow at the U.S. Business & Industry Council, an association representing small manufacturing companies, said the report makes plain that, even in America's premier industry, the nation faces a growing trade imbalance that, in his view, imperils job creation. "It is hard to believe that for many, many years you can buy from the rest of the world more than you sell to it and have net job creation in your own country," Tonelson said. Click here to read the article... Clinton must clarify stance on free trade “Just as anti-war Democrats are demanding that Sen. Clinton admit that her Iraq War vote was a mistake,” Tonelson said, “fairtrade Democrats should be demanding that she admit that her support for the outsourcing trade deals of the 1990s was a mistake.” Click here to read the article... The Ticking China Bomb Mounting consumer fears and official outrage about dangerous Chinese ingredients in American food and drug product markets have clearly thrown multinational manufacturers for a loop. Are American producers of capital goods and high tech products next? In particular, is the recall of 450,000 defective Chinese-made tires ordered by Washington last week the first sign of a full-blown China-gate scandal over more advanced manufactures? Click here to read the article... President Loses Fast Track Negotiating Authority The US Business and Industry Council said the expiration of TPA is a “major victory for domestic producers and an essential step toward developing new US trade policies that promote a healthier growth for America and the world.” Click here to read the article... Trade Promotion Authority Dies on the Vine "This is a major victory for businesses that produce goods in the United States and employ Americans," said Alan Tonelson, a trade policy analyst for the US Business and Industry Council, which represents small and medium-size businesses that claim to be hurt by imports. Click here to read the article... Bush's trade authority running out "With Congress forced by fast track into simple take-it-or-leave-it votes, economically clueless diplomats won free rein to give away big chunks of the U.S. market in dubious bids to win and keep foreign friends," said Kevin L. Kearns, president of the U.S. Business and Industry Council, a trade group for small- and medium-sized manufacturers. Click here to read the article... June 2007 The U.S. Is A Tale Of Two Countries Alan Tonelson, research fellow for the United States Business and Industry Council (USBIC), agreed. "The country is waking up to this problem, and this is going to be an issue for the candidates," stated Tonelson. Tonelson warned, however, "politicians from both parties are going to feel some pressure to support current trade policies, but it is clear that free trade positions won't help them with voters, but will help them with big business." With the presidential race heating up, Tonelson has been impressed by two different candidates-California Congressman and GOP presidential hopeful Duncan Hunter and Ohio Congressman and Democratic hopeful Dennis Kucinich. Noting that Hunter has a solid record on trade policies, Tonelson expressed some concern about Kucinich. "The problem with Kucinich is that his concerns are largely environmental and don't have much to do with the key issue -manufacturing," stated Tonelson. Click here to read the article... End Nears for Era of Presidential Trade Authority "Denying domestic manufacturers, farmers, service providers, and their employees a real influence with their legislators has produced disastrous results," declared Kevin L. Kearns, president of the U.S. Business and Industry Council, a trade group representing small businesses and a critic of trade deals. He accused "footloose multinational companies" of exploiting trade policy as "a blueprint for supplying the U.S. market from penny-wage, regulation-free foreign production sites like Mexico and China." 'Fast track' trade authority to expire “This is a major victory for businesses that produce goods in the United States and employ Americans,” said Alan Tonelson, a trade policy analyst for the U.S. Business and Industry Council, which represents small and medium-sized businesses hurt by imports. “It’s a major step toward turning trade policy back into an engine of U.S. production instead of offshoring.” Click here to read the article... U.S. patent overhaul shouldn't be rushed Reform of the nation's patent system, the 218-year-old wellspring of American innovation and material progress, has become a rush project in Congress. Leading the way is the Senate Judiciary Committee with a bill that could cripple American innovation. Committee Chairman Patrick Leahy (D-Vt.) is trying to hustle his bill (S.1145) through committee, apparently to please several powerful information technology firms -- even though testimony at the bill's one hearing revealed serious flaws in the legislation. Click here to read the article... China currency wields complex clout in U.S. Alan Tonelson, a research fellow with the U.S. Business and Industry Council, representing small and medium-sized American manufacturers, conceded currency legislation "would not be a magic bullet" to save all U.S. companies. In industries that rely heavily upon cheap labor, such as textiles and apparel, China still would have a dramatic advantage, he conceded. "A T-shirt is a labor-intensive product," he said. But Tonelson said China is shifting away from such goods to capital- and technology-intensive exports, such as semiconductors and construction equipment. Using U.S. Census data, he estimates that in 1990, less than 17 percent of Chinese exports to the U.S. involved "advanced" manufacturing. Today, nearly 60 percent of China's sales to Americans involve high-end manufacturing. In those cases, the cheap currency matters, he argues. "If the exchange rate were an unimportant factor, the Chinese would not be so doggedly resistant to U.S. demands," he said. Click here to read the article... Washington Sees Private Equity as New Source of Revenue “The future implications of China’s partnership with Blackstone deserve much greater scrutiny than they’ve had so far,” Alan Tonelson, research fellow at the U.S. Business and Industry Council, told CNBC. “You have to remember that Blackstone’s Chinese partner is not a Chinese private company, which is a controversial concept to start with, it’s the Chinese government. The Bush administration’s defense department has once again reminded us that China is a major and growing national security problem for the United States.” Click here to read the article and watch the video... Patent nonsense Reform of the U.S. patent system, the 218-year-old wellspring of American innovation and material progress, has suddenly become a rush project in the Senate and House committees of jurisdiction. Leading the way is the Senate Judiciary Committee, pushing a bill that could cripple most of America's smaller inventors and even the larger industrial firms that depend on patents. The bill could also weaken the ability of our universities to play a prominent role in technology development. Senate Judiciary is rushing this bill through without allowing many of those affected, especially U.S. manufacturers, to present their views to the committee. Judiciary Chair Pat Leahy, Vermont Democrat, held a hearing June 6 on the bill, his proposed Patent Reform Act of 2007 (S. 1145). Though testimony revealed many serious drawbacks in the legislation, Mr. Leahy wants a quick markup of the bill this month, ramming it through committee to please some powerful information technology (IT) firms. Click here to read the article... Corporations should foot bill for illegal labor Other industries reportedly making heavy use of illegal labor are restaurateurs, hoteliers, contractors and cleaners, whose worker wages dropped significantly with the influx of foreign workers, according to Alan Tonelson in the May 8 Washington Times. He adds that there is no shortage of workers in America to take these jobs; the shortage is in those willing to accept poverty-level pay. Click here to read the article... Importing poverty The argument that illegal aliens have been needed to fill a labor shortage in the U.S. economy is not supported by the facts. According to the Census Bureau, 14.3 percent of illegals work in manufacturing. Yet, manufacturing has lost more than 2 million jobs since 2000, with more jobs lost every month. Hordes of American citizens would love to regain factory employment, as they have not been able to find comparably rewarding jobs elsewhere; but illegals have been hired in their place. Most illegals are in the low-end of the labor pool, where unemployment is higher than average and wages are declining, the opposite of what would happen in a market with a shortage. Even in the economy as a whole, real wages for 93 million nonsupervisory, private sector workers fell again in April. Click here to read the article... Lawmakers say value-added tax would aid U.S. exporters by leveling world-trade playing field At a minimum, supporters say the bill will raise awareness in Washington of another problem faced by small U.S. manufacturers. “My first hope is that the bill will pass,” USBIC’s president, Kevin Kearns, said, “but certainly the bill adds pressure in and of itself — whether or not it passes — to do something about our trade deficit.” Click here to read the article... At what cost the Olympics? The head of the Washington-based U.S. Business and Industry Council, Kevin Kearns, went further and said it was 'the latest example of the do-nothing Bush policies that have enabled China`s trade cheating to hollow out the U.S. production base, capture formerly U.S. factories and (research and development) centers, destroy middle-class jobs, undermine the wages of hard-working Americans, and boost America`s international deficits to dangerously high levels.' Click here to read the article... Tensions push Congress to get even with China U.S. firms in a bind In markets from apparel to electronics, American companies that compete with Chinese rivals are struggling to keep pace. In Cary, Ill., northwest of Chicago, Bartlett Manufacturing has seen sales of its printed circuit boards sag from $20 million in 1999 to about $9 million today, according to Douglas Bartlett, the company chairman. Bartlett, 50, says longtime customers tell him they can buy Chinese circuit boards for a fraction of his price, often for no more than the cost of materials. Example: Bartlett sells a circuit board used in the turn signal on a Japanese car for 39 cents each. He's about to lose an order to a Chinese maker that sells the same product for 20 cents. "That's not (because of) labor prices alone. It's currency and export subsidies. … It's not free trade now; it's unfair trade," Bartlett says. Click here to read the article... Currency Bill Sponsors Predict Veto-Proof Passage This Year Supporters of rival House and Senate measures that would allow U.S. firms to attack currency abuses through countervailing duty laws criticized the waiver authority in the bill.      The Senate Finance bill, and a separate measure introduced by Senate Banking Committee leaders, "contain large loopholes and are distractions that can only obstruct more serious efforts to combat China's exchange-rate protectionism," said Kevin Kearns, president of the U.S. Business and Industry Council. Click here to read the article...(subscription required) Senators unveil long-awaited bill on China Supporters of taking tough action against China also harshly criticized the Senate bill. “It failed to meet our very low expectations,” said Alan Tonelson of the U.S. Business and Industrial Council, which represents small manufacturers in the U.S. Tonelson said the bill gives Treasury too much discretion to determine whether a country’s currency is misaligned, and also said it likely violates WTO rules. He said that’s because the bill would appear to allow the U.S. to impose higher anti-dumping duties on countries found to have misaligned currencies. “The idea that the U.S. is going to unilaterally find a new way to calculate anti-dumping duties and this will be endorsed by the WTO is a fantasy,” he said. Click here to read the article... China & Trade The U.S.-China trade dispute enters a new phase as Congress proposes new legislation aimed at forcing China to open its markets, with Alan Tonelson, U.S. Business and Industry Council research fellow; Myron Brilliant, East Asia U.S. Chamber of Commerce vp and CNBC's Bill Griffeth Click here to read the article... Congress seeks to level trade imbalances Legislation in Congress could actually help restore needed balance to the global economy. Although a trade deficit is not itself a problem, some economists say that for US imports to exceed exports by such a large amount is unsustainable. Easing that imbalance may involve some difficult adjustments on all sides. But waiting is not an option, argues Alan Tonelson, a researcher at the US Business and Industry Council, which represents about 1,500 manufacturers. "These trade barriers [and subsidies] have resulted in global trade flows so lopsided ... that the entire international economy is genuinely at risk if they continue." Click here to read the article... Fast-Track Set to Expire, Congress Yawns "Any time we can buy time, it's good," said Alan Tonelson, a fellow with the U.S. Business & Industry Council. "It enables Members and the public to learn more about these trade policies, and the more they learn, the less they like them." He added that as the 2008 elections draw closer, tough trade votes will become more and more unlikely. "So in those respects, delay works very strongly for the cause of dramatically improved trade policies," he said. Tonelson said he spent Tuesday on Capitol Hill briefing House Members and staff who are part of a trade working group that is opposed to the current free-trade model. The group is co-chaired by Rep. Mike Michaud (D-Maine). Tonelson said there's no need for renewal now anyway because the four pending agreements already fall under fast-track (since they were signed before it expires) and because there is no prospect of a breakthrough in the stalled Doha round of World Trade Organization talks. Click here to read the article...(subscription required Is The New Trade Policy The Right Trade Policy? “Our trading partners should not be rewarded for gaining competitive advantage by repressing their workers and by permitting their air and water to become dirtier as they modernize and become more industrialized,” commented Alan Tonelson, Research Fellow at the United States Business and Industry Council (USBIC), an association representing small- and medium-size manufacturing companies. According to Tonelson there is no question that many U.S. manufacturers suffer major competitive disadvantages when they have to compete against foreign rivals that do not have to pay the same kinds of regulatory costs as U.S. companies. “The problem is that no one has come up with a remotely workable way to monitor and enforce conditions in the countries of our trading partners,” said Tonelson, “and that is one of the biggest problems with the New Trade Policy.” Click here to read the article... Pascrell, Allies Want Tax-Law Change for Trade Kevin L. Kearns, president of the U.S. Business and Industry Council, and Thea M. Lee, a trade expert for the AFL-CIO, endorsed the bill on behalf of management and labor-union interests. "American producers of goods and services and American workers should not have to live with this system one more day," Kearns said. Click here to read the article... Bill may add taxes on imports A bipartisan quartet of Congressmen today introduced legislation that would levy a border tax on imported goods unless the U.S. Trade Representative negotiates with other countries to end their border taxes on U.S. exports as well as tax rebates to their own manufacturers. The action is being supported by the American Manufacturing Trade Action Coalition, the AFL-CIO and the United States Business and Industry Council. Click here to read the article... Comprehensive Immigration Reform: Business Community Perspectives Chairwoman Lofgren, Ranking Member King, members of the subcommittee, thank you for inviting me to present a business perspective on the immigration issue. I am William Hawkins, Senior Fellow at the United States Business and Industry Council. The USBIC is an association of approximately 1,500 small and medium sized U.S. companies engaged in a wide variety of manufacturing and services. Our member business owners and CEOs consider themselves first and foremost to be citizens of the United States. As such, they are concerned with the long-term security and prosperity of the United States, both of which are factors in the current debate over immigration policy and border security. Click here to read the article... US/China Economic Meetings Produced Limited Results The US Business and Industry Council (USBIC) blasted the dialogue, saying the two sets of meetings, last December and in May, have produced “no meaningful results,” and it called on Congress to take control of US/China trade policy. “The failure of the White House’s approach is now clear, so the ball is clearly in Congress’s court,” said USBIC’s President Kevin L. Kearns. “With Democrats who have long supported bolder and smarter China trade policies now in charge, there are no more excuses for continued Congressional inaction.” USBIC is strongly backing legislation pending in both the House and Senate that would declare currency manipulation an unfair trade practice, subject to sanctions under US countervailing duty laws. Click here to read the article... May 2007 Technology Firm Executives Say Immigration Barriers Hurt America Alan Tonelson, a research fellow at the United States Business and Industry Council, a group representing small manufacturers, also denounces the H1-B program. “It’s a misguided and counter-productive program,” he said. “There is no shortage of native technology workers. Large manufacturers just want cheap labor.” Click here to read the article...