This section provides external web links to reports featuring members of the USBIC staff.
January 2012
Santorum’s manufacturing approach promising but incomplete Whatever they think of his social conservatism, real friends of domestic manufacturing - and, by extension, a genuinely healthy U.S. economy - owe Rick Santorum a hearty, “Thanks.”
The Republican presidential underdog has touted the importance of American industry with the type of passion and insight long missing among most Democrats and Republicans.
Mr. Santorum has not only pushed for special treatment for manufacturing in his economic policy platform - the former senator from Pennsylvania has provided a cogent rationale, reminding dogmatic Republicans and conservatives in particular that industry faces offshoring and foreign competition threats simply absent for most service sectors.
Obama pushes manufacturing incentives on five-state tour The U.S. Business and Industry Council welcomed the tax credits. "But their effects will be minimal," Council President Kevin Kearns said, "as long as the president keeps pushing trade deals with competitors that keep massively subsidizing industry with financing that a heavily indebted America can't hope to match."
Obama State Of The Union Speech: Labor Leaders And Economists Unimpressed With Jobs Proposals Kevin L. Kearns, president of the Business and Industry Council, agreed that Obama's specific proposals would have too small of an impact. He also pointed to a need for reform of China's currency policy. If the president pushed for that, it would be a far stronger move, Kearns said, than "saying, 'I saved 1,000 jobs in the tire industry by imposing the tariffs on pirated Chinese tires.'"
And as far as Obama's proposals for re-educating the workforce, Kearns said, "The best retraining program is called a job."
Revving down It used to be the low-end stuff like shoes, clothes and furniture that displaced American manufacturing, then cars and consumer electronics. A new report by Alan Tonelson, a researcher at the U.S. Business and Industry Council which represents 1,500 American companies, now shows that high-end U.S. industry is facing ever tougher foreign competition in its own backyard.
Tonelson has crunched the numbers since 1997 on high-value, advanced manufacturing – the crown jewel of American industry that is capital intensive and depends on technological superiority such as turbines, pharmaceuticals and electrical engineering. He finds that imported products had captured 38 percent of the $1.63 trillion U.S. market for advanced manufactured products by 2010, up from 24.5 percent when the government started collected the data in 1997. Only six U.S.-based advanced manufacturers have gained market share in the United States in the 13-year period. Sectors that are more than 50 percent dominated by foreign producers have risen from eight in 1997 to 32 by 2010, he said.
Obama launches push to bring jobs back to the U.S. Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a trade group of small manufacturers pushing for a tougher U.S. trade stance, dismissed the White House push as “happy talk.”
Tonelson said that without tough trade sanctions of foreign countries, any domestic manufacturing agenda is bound to fail.
Improving S&T Policy Carolyn S. Wagner’s article makes useful points about the benefits to the United States of tapping burgeoning sources of foreign scientific knowledge by fostering and participating in more international research collaboration. But some important flaws in her assumptions indicate that Washington will need to pursue these goals more carefully and discriminatingly than her essay appears to recognize.
Although no one could reasonably object to the author’s goal of augmenting U.S. scientific wherewithal with knowhow generated abroad, the payoffs to the United States from this cooperative strategy will surely be more modest than Wagner suggests and the risks significantly greater.
Nat'l jobless rate drops to 8.5% "The December jobs numbers, however encouraging, mustn’t be taken as evidence that current U.S. economic policies are finally producing acceptable results. Despite the trillions of borrowed dollars injected into the economy by Washington since the economic crisis began, the nation has still regained only 18.3 percent of the 7.7 million total jobs lost during the recession. In manufacturing, the job recovery is barely detectable – two million jobs lost during the recession, 1.3 percent regained. Without major policy change, the nation will never generate the debt-free growth and robust private sector job creation required for a durable, production-led economic recovery. Prompt House passage and presidential enactment of the anti-currency manipulation bill passed in October by the Senate is the place to begin.” Alan Tonelson, research fellow, U.S. Business and Industry Council, which has long maintained that U.S. factories cannot grow without tougher trade policies.
Can Buying American & Fairer Trade Solve our Job Woes? President Barack Obama’s new jobs plan, if passed by Congress, might spark some activity and even some employment in the moribund U.S. economy. But it’s unlikely to foster the growth and job creation we urgently need, without adding new debt, because the plan ignores a key obstacle to genuine prosperity: the nation’s immense trade deficit.
Before the financial crisis peaked two years ago, most Americans and their leaders understandably, if not wisely, ignored the economic costs of the nation’s trade gap. This chronic shortfall reduced U.S. output and employment, and most economists warned that it was unsustainable. But a string of asset bubbles fueled enough growth and hiring to more than compensate, and the day of reckoning seemed comfortably far off.
TONELSON: Made in China: U.S. Can’t Afford High Cost of Low-Priced Christmas Gifts Although the first predictions of a record holiday shopping season have been scaled back, hopes remain alive that December retail sales will still give the U.S. economy a badly needed lift. But consumers’ binging on holiday gifts will actually produce much more red ink for America than growth and jobs.
Amid Washington’s latest tax and budget battles, few headlines were garnered by the Club for Growth’s recent announcement opposing the Senate-passed bill to fight currency manipulation by U.S. trade competitors such as China. But its decision was terrible news for the beleaguered American economy on at least three major counts.
First, the currency bill, which House Republican leaders are blocking despite its strong bipartisan support, would help domestic industries whose products compete against artificially underpriced goods from market-rigging countries. Thus it’s vital for reorienting the economy away from reckless spending and borrowing, and toward productive activity such as manufacturing. Second, as a major funder of conservatives’ political campaigns, the Club has strong clout with Republican legislators, including those thinking of bucking leadership and forcing a vote on the bill. Third, the Club’s position on the bill reflects deep ignorance about manufacturing.
Ruling called threat to Ohio companies Alan Tonelson, a research fellow at the U.S. Business and Industry Council representing 2,000 domestic small and medium-sized manufacturing companies, said the appeals court ruling underscores flawed U.S. policy. “It’s the latest reminder of the pitfalls when we rely on legalistic approaches to trade problems,” he said. “No other trading power in the world would give so much power over such important parts of its economy to judges with no apparent knowledge of global market realities. Going down this road will continue to tie ourselves up in knots and paralyze us when we try to respond to foreign market rigging.”
Tonelson said he’s concerned that intense partisanship and paralysis in Congress could make getting a legislative fix for the court ruling problematic. In that vein, Brown said the U.S. House of Representatives should pass the Currency Exchange and Oversight Reform Act, legislation attacking currency manipulation authored by Brown and supported by Portman. It’s estimated that China undervalues its currency below its true value by at least 25 percent, undercutting U.S. manufacturers.
Despite "Made in America Christmas" call, most Americans still buy imported gifts The move to encourage Americans to buy gifts made in America for Christmas has met with challenges. Bruce Bishop, a reader, wrote from the ABC News website: "This campaign is more than 25 years old. Its impact has always been, and always will be, insignificant."
But the phenomenon is worrying some economists and researchers. Alan Tonelson, a research fellow at the U.S. Business and Industry Council, wrote in the Christian Science Monitor that consumption by Americans did generate greater U.S. output and therefore more employment, but mainly when the goods and services they buy are produced domestically. When the Americans buy imports, nearly all the growth and jobs are created where these products are made -- overseas.
Worse, like any items bought by Americans with credit, purchases of imports financed by borrowed money add to the country's already bloated national debt, he added.
Americans can’t afford high cost of low-priced Christmas gifts made in China Although the first predictions of a record holiday shopping season have been scaled back, hopes remain that December retail sales will give the economy a badly needed lift. But consumers' spending on holiday gifts will actually produce much more red ink for America than growth and jobs. For nearly all their purchases are imports, and new government data make clear their debt-creation will hit new records.
Consumption by Americans does generate greater U.S. output and therefore more employment, but mainly when the goods and services they buy are produced domestically. When Americans buy imports, nearly all the growth and jobs are created where these products are made - overseas.
Made in China: US can't afford high cost of low-priced Christmas gifts Although the first predictions of a record holiday shopping season have been scaled back, hopes remain alive that December retail sales will still give the US economy a badly needed lift. But consumers’ binging on holiday gifts will actually produce much more red ink for America than growth and jobs. For nearly all of their purchases are imports, and new government data make clear that this year their debt-creation will hit new records.
TONELSON: US can't afford high cost of low-priced Christmas gifts made in China Although the first predictions of a record holiday shopping season have been scaled back, hopes remain alive that December retail sales will still give the US economy a badly needed lift. But consumers’ binging on holiday gifts will actually produce much more red ink for America than growth and jobs. For nearly all of their purchases are imports, and new government data make clear that this year their debt-creation will hit new records.
Consumption by Americans does generate greater US output and therefore more employment – but mainly when the goods and services they buy are produced domestically. When Americans buy imports, nearly all the growth and jobs are created where these products are made – overseas.
Five of the 12 largest employers in Ohio are now health care systems, including Dayton-based Premier Health Partners, which ranked 12th with more than 14,000 workers.
Balancing Our Trade Is Not Protectionism Surprisingly, when President Obama was campaigning for the Presidency, he said he would not allow the Chinese to continue to manipulate their currency. But in recent years, he has become ambivalent about the currency manipulation issue. Robert Kuttner of the Huffington Post says that Treasury Secretary Geithner has repeatedly refused to formally cite China as a currency manipulator, which should compel the U.S. government to pursue sanctions.
Alan Tonelson writes in the American Economic Alerts that “the President’s recent remarks strongly, if reluctantly, hinted at a White House veto” This is a very strange reversal of thinking by the President, and one can only wonder how much the multinational lobbyists have influenced the administration in terms of the 2012 election.
That’s what I kept thinking while slogging through the briefs recently filed with federal authorities in connection with charges that Chinese solar-cell firms are driving American rivals out of business with floods of illegally subsidized, predatorily priced imports.
After all, the Solyndra controversy is tarring green manufacturing as a whole as a stronghold of crony capitalism.
Mr. Kirk acknowledged the trade deficit can increase when the economy improves because Americans have more to spend on imports.
That's one of the few things that Alan Tonelson, of the U.S. Business and Industry Council, can agree on with Mr. Kirk. The group represents about 2,000 small and medium-size manufacturers.
Mr. Tonelson said the trade deficit has increased since the recession ended in mid-2009, curbing U.S. economic growth, "and, it stands to reason, subtracting from employment." As for the supposed benefits of the trade agreements, "They're selling the American people a bill of goods," Mr. Tonelson said.
Alan Tonelson: McCain’s responsibility for the fake Chinese military parts crisis U.S. Senators like John McCain understandably have been alarmed to discover that at least one million counterfeit parts – most coming from China – now permeate American weapons and other military systems. And commendably, they have pledged to deal with a threat that’s been a matter of public record for more than a year and a half, when the Commerce Department’s Bureau of Industry and Security issued a detailed report on the subject.
But if McCain in particular wants to understand why the armed forces have become so dangerously compromised, he should start by looking in the mirror. For McCain has long been a major obstacle to Congressional efforts to require that U.S. military products be made mainly of American-manufactured parts, components, and other inputs.
Alan Tonelson: Opposing view: Reclaim the American market Strong job creation ultimately requires strong economic growth. Output, therefore, is the most important gauge of domestic manufacturing performance. And although U.S.-based industry remains enormous, multiplying warning signs should worry anyone convinced that a healthier American economy depends on a healthy manufacturing base.
Alan Tonelson: China’s Currency Policy Disadvantages US-made Products and Costs American Jobs On October 26, 2011, FutureofUSChinaTrade.com director Molly Castelazo caught up with Alan Tonelson, Research Fellow at the U.S. Business & Industrial Council Educational Foundation, to talk about China’s currency policy, which Tonelson says keeps the RMB significantly undervalued relative to the dollar and – more importantly – creates tremendous and completely artificial competitive disadvantages for U.S.-made products.
Dave Camp: China an export opportunity, but 'trade abuses' hurt U.S. firms, workers The lower labor costs overseas pressured U.S. wages downward for those who work in manufacturing or with less than a four-year college degree, the EPI finding said. Rebalancing the value of Chinese currency could create 2.25 million U.S. jobs, supporters contend.
A U.S. Business and Industry Council trade analyst has said U.S.-based multinational corporations, meanwhile, benefit from unfair trade practices with products made in China and shipped to the U.S. market. Proponents say consumers benefit from competition and lower prices.
Alan Tonelson: Wishful American thinking about faltering chinese competitiveness With a bill to combat China’s currency manipulation still before Congress, opponents have increasingly peddled a seductive counter-argument: The legislation, which broadens Washington’s scope to tariff artificially cheap Chinese imports that reduce American output and employment, will not only antagonize China. It will do so unnecessarily, because China is already steadily losing competitiveness versus America in the manufactured goods that dominate its sales in the United States.
"This crisis has been reported by the press as a financial crisis. But the American people understand at the gut level that it's something else, said Alan Tonelson, senior researcher at the U.S. Business & Industry Council, a trade group in Washington. "It's a jobs crisis."
Trade
Tonelson, whose group represents small factories, figures a vast industrial restructuring is a large reason that 13.5 million laid off people currently get unemployment checks.
Benefits of trade outweigh cost - eventually The complexity of the issues explains why support or opposition to individual trade deals doesn't always break along predictable lines. As a senator, Obama voted against the trade agreements with South Korea, Panama and Colombia; as president, he championed them. The AFL-CIO opposed the deals, but another big labor group, the United Food and Commercial Workers, supported them. The National Association of Manufacturers said yes to the packages, while the U.S. Business and Industry Council, whose members include small manufacturers, said no.
TONELSON: Boehner no Gipper on undervaluation bill Thank goodness Ronald Reagan isn't around to see House Speaker John A. Boehner's determination to smother democracy and block a vote on a strong bill to combat currency manipulation. Mr. Boehner's rationale for killing the measure - which passed the Senate on Oct. 11 with 16 Republican votes, and enjoys majority support in his chamber - recalls the kind of appeasing, defeatist diplomatic mindset that the Gipper so thoroughly discredited.
Mr. Boehner's position is no surprise. The Senate bill and its House counterpart grease the skids for imposing tariffs to offset losses inflicted on competitive domestic manufacturers and their employees by artificially cheap currencies such as China's yuan.
“That mistake has been to open the U.S. market to an economic system so thoroughly protectionist that mutually beneficial trade is just not possible. Very much like the Chinese economy ... the (South) Korean economy can best be described as one gigantic trade barrier,” said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a voice for U.S. manufacturers that don’t have overseas operations.
Tonelson expects that U.S. trade negotiators will have little leverage over South Korea once the pact takes effect.
Senate slap of China a sign that patience is wearing thin on trade One source of pressure on House Republicans is the stance on trade taken recently by two GOP presidential hopefuls, former Govs. Mitt Romney and Jon Huntsman Jr., former US ambassador to China, who are backing sanctions against currency manipulation.
“Romney’s trade policy contains positions on China that are stronger than any provisions in this [Senate] currency bill,” says Alan Tonelson, a research fellow at the US Business and Industry Council, a national business organization representing small and medium-size domestic manufacturers.
“We’re in uncharted waters economically, and there is no telling how a painful recession and astronomical unemployment rates will affect US politics,” he adds.
China Currency Bill: A Boon or Bust for U.S. Manufacturers? But Alan Tonelson, a research fellow with the U.S. Business and Industry Council, says any past progress with China's currency has primarily come after the United States threatens action.
"As has happened so often before, whenever the American currency debate has heated up, yuan revaluation has been speeding up," Tonelson says. "Although Beijing employs many other market- and trade-rigging practices and has thrown foreign critics off the trail by frequently switching them on and off, that's the reaction of a country not girding for a trade war, but desperately trying to avoid one."
Alan Tonelson: Trade deals negotiated in ignorance? If the Senate learned right before a ratification vote that America’s chief arms control negotiator knew little about arms control, any treaty this official concluded would be dead on arrival. Ditto for a peace treaty produced by a diplomat demonstrably short of knowledge about the adversary. Why, then, do both the House and Senate seem so gung ho about three trade agreements handled by a U.S. Trade Representative who recently revealed major misconceptions about both America’s international commerce and its domestic economy?
Anyone doubting that this description applies to Ron Kirk should read an interview that President Obama’s chief trade envoy gave to Tim Robertson of the California Fair Trade Coalition in late August. Even allowing for impromptu nature of the exchange, several of Kirk’s answers to Robertson’s questions about the pending trade deals with Colombia, South Korea, and Panama, make painfully clear that America’s trade policy point man is largely unaware what kinds of products the United States imports and, at least as important, what kinds Americans make. Consequently, it’s hard to imagine him knowing whether the provisions he agreed to in these deals and trade-offs he accepted will help or harm America’s faltering economy – the acid test of U.S. trade policy.
Are Korea Trade Pact Boosters Selling "Snake Oil"? On Monday, the Obama administration sent Congress its latest version of the Korea-US Free Trade Agreement (KORUS FTA)—a bilateral pact that would be the largest of its kind since the North American Free Trade Agreement. (The package included free trade deals with Panama and Colombia, but those are small potatoes compared with Korea, the world's 15th-largest economy—and a tech and manufacturing powerhouse.) The US Chamber of Commerce, which launched a national pro-ratification campaign in January, was juiced. "America is finally getting back in the game," Thomas J. Donohue, the group's president, declared in a statement. "The chamber will pull out all of the stops to get the votes in Congress, where the agreements already enjoy bipartisan support."
A sizable number of domestic manufacturers, however, have sided against the chamber over Korea. For one, the US Business and Industry Council, an association of small and midsize firms founded in 1933, is strongly opposed to the deal. "We can't imagine that KORUS would serve current US economic interests," says Alan Tonelson, a research fellow with the council.
"We can't eat health care. We can't eat structured investment products," said economist Alan Tonelson of the U.S. Business & Industry Council, a trade group in Washington for small and medium manufacturers. "We need goods. And we need people making those goods.''
Admittedly, not all the facts are out about the administration's decision to award a $535 million dollar federal loan guarantee to the recently collapsed California-based solar panel maker. And admittedly, many free-market extremist politicians and think tank hacks are only too happy to blur a critical distinction: between criminal or otherwise corrupt activities (or simple incompetence, for that matter) on the one hand, and the inherent difficulties and risks on the other hand of subsidizing new, potentially game-changing, but by definition chancy products and technologies that will struggle to attract private capital from the short-term focused American financial system.
Buy American and Fairer Trade Can Solve Job Woes: Alan Tonelson President Barack Obama’s new jobs plan, if passed by Congress, might spark some activity and even some employment in the moribund U.S. economy. But it’s unlikely to foster the growth and job creation we urgently need, without adding new debt, because the plan ignores a key obstacle to genuine prosperity: the nation’s immense trade deficit.
Before the financial crisis peaked two years ago, most Americans and their leaders understandably, if not wisely, ignored the economic costs of the nation’s trade gap. This chronic shortfall reduced U.S. output and employment, and most economists warned that it was unsustainable. But a string of asset bubbles fueled enough growth and hiring to more than compensate, and the day of reckoning seemed comfortably far off.
TONELSON: 2012 campaign’s sources of trade realism The odds of America’s vital and intertwined trade, manufacturing and economic-recovery issues being discussed seriously during this presidential campaign have been looking like the stock market. They’ve risen and plunged several times in recent weeks alone, including during Monday night’s televised Republican presidential forum. Whether these swings reveal these issues’ inescapable salience or a persistently low ceiling will powerfully shape the country’s economic, as well as political, future.
US exports skid, widening US trade gap President Barack Obama has set a goal of doubling exports over five years, to 2015, in an attempt to jump-start the sluggish economy and fight high unemployment.
"The longer the president and Congress wait to slash the trade deficit, the longer a sound US economic recovery will take," warned Alan Tonelson, a research fellow at the US Business and Industry Council.
TONELSON: Wisdom from the mouths of knaves You know the world has gone haywire when two of the most sensible statements made lately about America's economic crisis have come from the Chinese government and Standard & Poor's.
Granted, neither has earned much credibility. China helped "bubbleize" and destabilize the global economy; its brazenly mercantilist policies have stolen healthy growth and employment from the United States and most of the rest of the world and replaced it with artificially cheap credit and just as artificially cheap products. The ratings agency S&P, as remaining economic optimists now note so gleefully, long insisted that working-class families buying McMansions with free-lunch mortgages were foolproof credit risks. One reason, of course, was the massive conflict of interest created by its business model of evaluating its main clients' assets.
"The government's unemployment rate is rosier than it really is," said Alan Tonelson, research fellow at the Business and Industry Council in Washington. "I agree with analysts who are focused on the U-6 figure."
Creating private-sector jobs — not adding to government payrolls — is the key to achieving a genuine recovery.
But employment statistics define the private sector far too broadly. The numbers include too many industries in which demand, and therefore employment, depends heavily on subsidies.
Tonelson, a regular visitor to Northeast Ohio manufacturers, said that the federal government stimulus plan and selected bailouts have failed. “Clearly, much more needs to be done,” he said.
The federal government needs to make closing the trade deficit a top priority, he said. Doing so will broaden the tax base and not add to the deficit, Tonelson said. The president also needs to confront China and other countries that have “predatory trade practices,” he said.
Small Business Hiring Leads Positive June Jobs Report Alan Tonelson, an author and research fellow at the U.S. Business and Industry Council, is concerned that jobs calculations by ADP and the Bureau of Labor distort the outlook, and misrepresent the number of private sector jobs created.
He does not believe that highly subsidized jobs, such as health care, education, and social services, should be counted as private sector jobs. According to his calculations, published in a Bloomberg op-ed, only 291,000 real private sector jobs have been regained since the recession.
Creating private-sector jobs -- not adding to government payrolls -- is the key to achieving a genuine recovery. But employment statistics define the private sector far too broadly. The numbers include too many industries in which demand, and therefore employment, depends heavily on subsidies.
TONELSON: The underlying manufacturing crisis Too bad Americans can’t monetize the happy talk surrounding U.S. manufacturing these days. The resulting new wealth could supercharge economywide growth and hiring, and even pay down the national debt.
During the past month alone, American manufacturing has trounced expectations in two leading surveys. Scores of U.S. companies reportedly have been “reshoring” factories back to the USA. And the Boston Consulting Group and McKinsey & Co., two blue-chip consulting firms, have predicted the imminent flowering of an American manufacturing renaissance.
Patent Reform Favors Corporations, Multinationals America’s 200-year-old patent system is about to be reformed, and the changes will cut out the very heart of innovation in this country, warn many independent inventors, small business owners, and manufacturers, angel investors and venture capitalists.
“We are playing Russian roulette with the basis of the American economy, which is innovation,” said Kevin Kearns, president of the U.S. Business and Industry Council (USBIC).
Indianapolis Star "A country like China has an enormous glut of poorly paid workers," said Alan Tonelson, an expert on the Chinese-U.S. trade gap and a fellow at the U.S. Business and Industry Council.
Many labor-intensive goods are much cheaper to produce elsewhere and import to America because of sharply reduced labor costs. So you can buy a Chicago Cubs painting for $20 as opposed to the $40 or $60 it would cost if produced at fair wages in this country, Tonelson said. The discount we receive at the checkout counter, however, represents only one side of the story.
Alan Tonelson: Boeing’s real problem isn’t the NLRB The National Labor Relations Board’s charge that the Boeing Co.’s decision to produce aircraft in right-to-work South Carolina violates American labor law is easy to portray as a clear-cut example of wild government overreach.
Or at least it’s easy if you look only superficially at the decisive effects on worldwide aerospace-production patterns of incompetent U.S. trade and globalization policies.
With manufacturing plan, Obama misses the bigger picture President Obama's new program to revive American manufacturing, largely by improving its access to federal and university research contains some promising, if small-scale, features. But it ignores the structural and global challenges mainly responsible for domestic industry’s malaise. In a word: Imports keep corroding what had been a powerful engine of job-creation, growth, and technological progress.
Whole new approach is needed on imports A report issued last week says that the decline is getting much worse. The U. S. Business and Industry Council (USBIC) reports that outsourcing of some of our most sophisticated “advanced industries,” as the private research group called them, took place in the depths of our Great Recession, and is ongoing.
Pro & Con: Free trade with Colombia, Panama and S. Korea? A report issued this week by the U.S. Business and Industry Council indicates U.S. manufacturers of sophisticated goods have already lost a major share of their market to foreign competitors.
Imports have captured about 36 percent of the U.S. market for turbines, machine tools, electro-medical devices and other advanced manufacturing goods, according to the council. That's about the same market share that imports held going into the Great Recession. Alan Tonelson, the author of the business and industry council report, is skeptical of the president's plan. He said the large multinational companies involved in the partnership had sent production and jobs overseas.
"What we need to worry about is whether these items will be made here," he said. "If it does not include detailed measures that promote production at home and employment at home, I'm afraid the results will be just as inadequate as those of the president's other manufacturing initiatives."
Employers hope products of U.S. Manufacturing will be made here A report issued this week by the U.S. Business and Industry Council indicates U.S. manufacturers of sophisticated goods have already lost a major share of their market to foreign competitors.
Imports have captured about 36 percent of the U.S. market for turbines, machine tools, electro-medical devices and other advanced manufacturing goods, according to the council. That's about the same market share that imports held going into the Great Recession. Alan Tonelson, the author of the business and industry council report, is skeptical of the president's plan. He said the large multinational companies involved in the partnership had sent production and jobs overseas.
"What we need to worry about is whether these items will be made here," he said. "If it does not include detailed measures that promote production at home and employment at home, I'm afraid the results will be just as inadequate as those of the president's other manufacturing initiatives."
But a new report by the U.S. Business Industry Council, titled "High Import Penetration Keeps Growth and Hiring Down," asserts that the country's chief executive is "missing a big opportunity to speed up economic recovery by limiting his trade-related growth initiatives to boosting U.S. exports". The report makes the case that the gains possible from better import controls would have a much greater effect on the economy.
Alan Tonelson, research fellow at the USBIC and author of the report, joined Aaron and Henry to discuss the President's new half-billion dollar push to rebuild America's wilted manufacturing base.
"This new policy initiative is not only sorely inadequate in terms of the scale of the problem," he says, referring to the $700 billion manufacturing trade deficit. "But, much of this is beside the point because the President keeps ignoring…the big issue that is facing America's domestic manufacturing base: It is being forced to compete in a world full of markets that are rigged against it."
Patent refiorm bill called a boon for Texas companies Opposition came from the U.S. Business and Industry Council and a coalition of conservatives including Richard Land, president of the Ethics and Religious Liberty Commission of the Southern Baptist Convention.
Gains for Texas seen in patent bill Opposition came from the U.S. Business and Industry Council and a coalition of conservatives that include Richard Land, president of the Ethics and Religious Liberty Commission of the Southern Baptist Convention.
Rep. Dana Rohrabacher, R-Calif., said the bill favors large companies over smaller ones and weakens the U.S. patent system by bringing it in line with competing systems in Europe and Asia.
The bill would change the U.S. system to a "first-to-file" system used in other countries that opponents said would give an advantage to those first to the patent office, not the inventor.
Kearns said the measure could hurt Texas especially, since the state is home to a university system known for its research and development and high-tech industries. He said the bill could privilege large companies with the resources to file expensive patent applications quickly and frequently over smaller start-up companies and student inventors.
“Texas is going to be a loser on the jobs issue under this bill,” he said.
America Invents Act Europeanizes U.S. Patent Law? U.S. Business and Industry Council President Kevin Kearns and Rep. Marcy Kaptur, (D-Ohio), on why the America Invents Act hurts small businesses and job growth.
Federal budget clashes represent one major front in the struggle to spur a sustainable American economic recovery — but only one. Also vital is getting U.S. trade policy right.
That’s why President Barack Obama must scrap his business-as-usual approach to this often overlooked issue, and push to strengthen pending trade deals with Colombia, Korea and Panama negotiated by his predecessor.
Indeed, trade policy can be an especially important U.S. recovery option. Unlike most alternatives, it can spur private sector growth and employment without worsening budget deficits or consumer indebtedness. But accomplishing these goals requires policies that improve the U.S. trade balance, which has been massively in deficit for decades.
Patent reform bill splits California Republicans in Congress Kevin Kearns heads the U.S. Business and Industry Council, which represents 2,000 manufacturers. He’s asking Congress to slow down. "If we straighten out the mess at the patent office and do a funding only bill, that would be sufficient for the time being and then we can see after we get the Patent Office out of its dysfunctional state, we can see what we need to do in the future."
.Some Companies, Jobs Are Back in U.S. -- but What About the Millions Lost? As an example, the costs of doing business in China has been increasing 15-20 percent in the past few years, according to senior consultant Harold Sirkin at Boston Consulting Group. As the cost of doing business increases and narrows the difference between operating overseas as opposed to operating in the United States, Sirkin sees many companies opting to reshore and reinvest in the United States.
But not everyone agrees. Alan Tonelson, a research fellow for the trade group U.S. Business and Industry Council, told CNN, "It's not as if the Chinese government is helpless to offset this rising wage trend." He believes that countries like India and China will begin instituting changes in order to keep American companies operating within their borders.
"I worry that there's a very big deal being made out of a few anecdotal instances. I think it's a lot of wishful thinking going on," said Alan Tonelson, a research fellow for the U.S. Business and Industry Council, a trade group.
What's more, countries such as China and India that have profited from U.S. offshoring won't stand pat and lose the potential jobs without a fight.
"It's not as if the Chinese government is helpless is to offset this rising wage trend," Tonelson said.
A few U.S. employers said quality and cost were the deciding factors in bringing outsourced jobs back to the United States.
For U.S. workers, that's the good news. The bad news, for the 13.9 million unemployed workers in the United States is that the number of jobs returning home is small, CNNMoney reported Friday.
"I worry that there's a very big deal being made out of a few anecdotal instances," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council.
Patent Bill Is Bad For U.S. Inventors There also are serious Constitutional issues raised by this proposed patent legislation. As the U.S. Business and Industry Council has pointed out, “the bill strips Congress of the ‘power of the purse’ set forth by the U.S. Constitution. H.R. 1249 would delegate Congressional authority on fee-setting and spending to the patent office, stripping Congress of its oversight of a major federal agency – a duty mandated by the Constitution.”
China Trade Gap Continues, Obama Looking for Answers Curtiss Kim speaks with US Business and Industry Councilman Alan Tonelson on the current trade gap between the US and China. They go over how President Obama is looking to comee up with a solution for the issue as it was one of the top things the GOP Debate candidates brought up to point out Obama's flaws.
"H.R. 1249 is rife with constitutional and other serious problems and should be pulled from floor consideration at this time," said Kevin L. Kearns, president of the USBIC. "It would be wrong for the House leadership and the White House to try to arrange a backroom deal to address all the serious constitutional deficiencies. More input from small businesses, universities, venture capitalists, and other stakeholders is necessary."
Darien discusses China's role on world stage Research Fellow at the U.S. Business & Industrial Council Educational Foundation Alan Tonelson said the problem with China's economy is that it is geared towards becoming self-sufficient.
"The structure of China's economy says no, no, no. It's not part of the business model to rely on foreign supplies for any longer than necessary," Tonelson said.
A pattern has emerged within the country which shows the items being purchased are those China can't make yet, Tonelson said.
Analysis of H.R. 1249, the "America Invents Act," Uncovers New Problems Today, the U.S. Business and Industry Council (USBIC), a national organization of business owners and executives dedicated to improving the U.S. domestic economy, again called upon Rep. Lamar Smith (R-TX) to withdraw House Resolution 1249 as soon as the House of Representatives reconvenes on June 13, 2011.
Supreme Court Upholds "First-to-Invent" Standard in U.S. Patent Law; The U.S. Business and Industry Council (USBIC), a national organization of business owners and executives dedicated to improving the U.S. domestic economy, is pleased to announce that the Supreme Court of the United States has upheld the "first to invent" standard that has been integral to U.S. patent law since its beginnings.
Earlier today, the Supreme Court ruled 7-2 for the respondents in Stanford v. Roche, a patent infringement case on appeal from the U.S. Court of Appeals for the Federal Circuit. Chief Justice John Roberts delivered the Court's opinion, holding that "[s]ince 1790, the patent law has operated on the premise that rights in an invention belong to the inventor." Chief Justice Roberts also held that "[a]lthough much in intellectual property has changed in the 220 years since the first Patent Act, the basic idea that inventors have the right to patent their inventions has not."
Outsourcing isn't free trade with China. It's a free ride for China. Here’s how proud the Obama administration is of its own China policy: Its latest major policy pronouncement – declaring that Beijing is not, as widely charged, deliberately undervaluing its currency to rig trade flows – was made the Friday afternoon before Memorial Day weekend, once Congress and most of the media were safely starting their vacations.
Market Watch “Last Friday, President Obama once again let China off the hook for currency manipulation. This morning, Americans learned that their jobs crisis has dramatically worsened. That’s no coincidence. The United States will never overcome the jobs depression as long as President Obama keeps coddling Chinese trade cheating.” — Alan Tonelson, research fellow, U.S. Business & Industry Council.
Financial firms were instrumental in getting language in the bills that would create a special court review process to re-evaluate and invalidate current patents, said Kevin L. Kearns, president of the U.S. Business and Industry Council.
With the changes, large banks would no longer have to pay royalties and fees to holders of patents as essential property rights, a violation of the “takings” clause in the Constitution, Kearns said.
Reps. Rohrabacher, Kaptur Lead Bipartisan Opposition to Patent Reform Bill . In addition to Reps. Rohrabacher (R-CA), Kaptur (D-OH), Conyers (D-MI), Sensenbrenner (R-WI) and Manzullo (R-IL), Kevin Kearns from the U.S. Business and Industry Council, patent expert David Boundy, and constitutional scholars Jonathan Massey and Adam Mossoff, also participated in the press conference.
TONELSON: Who will challenge Obama’s U.S. trade policy? Campaign 2012’s most fateful decision could be made shortly, not by Sarah Palin or Jeb Bush or any other Republican A-listers contemplating a run but by Thaddeus McCotter. Unless Donald Trump resurfaces politically, the fifth-term Republican congressman from Michigan looks like the last reasonable chance that U.S. trade policy will be challenged or seriously mentioned during the new but rapidly intensifying presidential cycle.
Trade and broader strategies for the global economy aren’t indisputably America’s biggest policy disasters. Plenty of competition for that title has been generated by the nation’s recession-plagued, debt-strapped, domestically polarized and militarily overextended condition. Still, these economic globalization policies deserve special emphasis.
Is there room for U.S. to benefit from change in China? Alan Tonelson of the U.S. Business and Industry Council characterized predictions of cost parity with China as somewhere between "over optimistic" and "wishful thinking." He said they ignored many factors that influence companies' decisions to invest in China or the United States. Labor costs are only one of them.
The council, which represents about 2,000 small and medium-size manufacturers, has been a vocal critic of China keeping the value of its currency artificially low, which eliminates U.S. jobs by making American exports more expensive. The council, labor unions and others said massive Chinese government subsidies also disadvantaged U.S. industry.
"If labor costs are in fact rising, it would be relatively easy for the Chinese government to offset that rise with greater subsidies," Mr. Tonelson said.
"In the context of various other tiny, poor third-world countries we have focused on in years past -- in terms of trade agreements -- these [Columbia and Panama] are really the world economy's lemonade stands," said Alan Tonelson, a research fellow at the U.S. Business & Industry Council. He points to the North American Free Trade Agreement as a prime example where U.S. manufacturers established operations to take advantage of low-cost labor.
Federal budget clashes represent one major front in the struggle to spur a sustainable American economic recovery - but only one. Also vital is getting U.S. trade policy right.
That's why President Obama must scrap his business-as-usual approach to this often overlooked issue, and push to strengthen pending trade deals with Colombia, Korea and Panama negotiated by his predecessor.
Indeed, trade policy can be an especially important U.S. recovery option. Unlike most alternatives, it can spur private sector growth and employment without worsening budget deficits or consumer indebtedness. But accomplishing these goals requires policies that improve the U.S. trade balance, which has been massively in deficit for decades.
Trade Deals Unite Left and Right in Opposition Alan Tonelson, a senior fellow with the U.S. Business and Industry Council Educational Foundation, said that shared interest between labor unions and tea party groups could help his side win.
“We would hope that the tea parties would make it quite clear to the Republicans they helped elect into office that these trade agreements are a non-starter [as] labor will continue to put as much pressure as it can on the White House and House Democrats,” Tonelson said. At the same time, “That’s the one-two punch that has to work.”
Pending Patent Bill Puts 'Global Harmonization' Above American Innovation Many beg to differ. Midsize and smaller U.S. companies, the venture capital sector, the U.S. Business and Industry Council, many universities, independent inventors, the major engineering society, Reagan Atty. Gen. Edwin Meese, a range of conservative organizations including Eagle Forum and others oppose the legislation.
Need a Towel Ring? Better Try China Some decline in America's low-end manufacturing is to be expected as products head for obsolescence, such as carbon paper and inked ribbon for typewriters. Yet other products that still enjoy plenty of demand in the U.S. seem to be losing their stateside manufacturing base. The worst case could be "we're on the verge of not making anything," says Alan Tonelson, research fellow at the U.S. Business and Industry Council. Tonelson has studied how far imports have penetrated certain industries that once flourished in the U.S. In 2007, imports already accounted for more than 95 percent of the sales in such categories as silverware, men's non-work pants, men's outerwear, and women's non-athletic footwear.
Need a Towel Ring? Better Try China Some decline in America's low-end manufacturing is to be expected as products head for obsolescence, such as carbon paper and inked ribbon for typewriters. Yet other products that still enjoy plenty of demand in the U.S. seem to be losing their stateside manufacturing base. The worst case could be "we're on the verge of not making anything," says Alan Tonelson, research fellow at the U.S. Business and Industry Council. Tonelson has studied how far imports have penetrated certain industries that once flourished in the U.S. In 2007, imports already accounted for more than 95 percent of the sales in such categories as silverware, men's non-work pants, men's outerwear, and women's non-athletic footwear.
"As of 2009, Colombia represented a total market slightly smaller than that of greater Miami and Atlanta, and slightly smaller than greater Seattle," said research fellow Alan Tonelson, arguing that Colombia unfairly subsidizes its exports. "How will this kind of trade expansion spur growth and employment in the United States?"
TONELSON: To recover, keep the money at home Unimaginable as it seems, the bedrock economic strategies of the Obama administration and the Tea Party Nation share a major blind spot. Both aim to accelerate America’s sluggish recovery while virtually ignoring the towering obstacles erected to real prosperity by U.S. trade and other globalization policies.
My colleague, Kevin L. Kearns, and I explained in the New York Times last year how these policies, and the import bloat they’ve fostered, were inevitably sandbagging the president’s stimulus program and would have undercut even less-wasteful versions. As of last spring, fully 85 percent of the spending power created by the stimulus was offset by U.S. trade deficits run up since its enactment.
TONELSON: To recover, keep the money at home Unimaginable as it seems, the bedrock economic strategies of the Obama administration and the Tea Party Nation share a major blind spot. Both aim to accelerate America’s sluggish recovery while virtually ignoring the towering obstacles erected to real prosperity by U.S. trade and other globalization policies.
My colleague, Kevin L. Kearns, and I explained in the New York Times last year how these policies, and the import bloat they’ve fostered, were inevitably sandbagging the president’s stimulus program and would have undercut even less-wasteful versions. As of last spring, fully 85 percent of the spending power created by the stimulus was offset by U.S. trade deficits run up since its enactment.
Washington Journal Alan Tonelson, Washington Times, Contributor explains how globalization affects America’s economy and manufacturing base. He is also a research fellow at the U.S. Business & Industry Council.
Stirring up trade policy thinking What do American political and policy types do with sources of information that repeatedly have proved completely unreliable? Sometimes, it seems, they fetishize them. At least that’s what I saw last week at a House Auto Caucus briefing on the proposed Korea free trade agreement in which I was privileged to participate.
More broadly, the session unexpectedly spotlighted the need for trade policy critics to stir up a much broader, more fundamental debate on trade policy than Congress and the nation at large have conducted so far.
A 25% tariff might not be high enough, according to Alan Tonelson, research fellow at the U.S. Business and Industry Council, which represents U.S. manufacturers.
"The real degree of Chinese undervaluation is at least 40%," he said. "Tariffs are the only way to fix this. Nothing else has worked, nothing else will work."
But even Tonelson concedes it'd be difficult for a tariff to survive a challenge from the WTO.
Ohio, Montgomery Co. ‘under siege’ as jobs disappear Kevin L. Kearns, president of the U.S. Business and Industry Council, a Washington, D.C.-based lobbying group for 1,500 smaller manufacturers and family-owned companies, said “pervasive” predatory practices used by U.S. trade competitors lured away capital and jobs for reasons “having nothing to do with free-market forces or underlying competitiveness.” To balance the landscape, he called for imposing a trade agreement moratorium, forcing state and local governments to adhere to “Buy-American” provisions, and enacting border-adjustment taxes on all U.S. imports.
Amazing Grace (Periods) in Current U.S. Patent Law Higher education divides students into two overarching categories: Arts and Sciences. Arts students may be required to take a science class or two, where they are briefly exposed to such concepts as the history of scientific progress, various laws of physics and chemistry, or the importance of 'scientific' measuring and analysis.
In stark contrast, their Arts classes direct their focus towards 'creative' activity, whether in literature, government, performing and visual arts, or other fields. As a result, Arts students often conclude that science is about precise formulae and mathematical precision, while creativity resides solely in the Arts. However, nothing could be further from the truth. Creativity is at the heart of modern scientific innovation.
Alan Tonelson, research fellow with the U.S. Business and Industry Council, said it is "unconscionable that, with a possible government shutdown looming, Washington would be pushing an agreement that is "certain to send even more American jobs and production offshore and boost U.S. trade deficits and national indebtedness even higher. "If any part of the government should be shut down these days, it’s the U.S. Trade Representative’s Office and any other agencies responsible for foisting yet another outsourcing-focused trade deal on the U.S. economy," Tonelson said in a statement. ...
But the impact of Japan's disaster on U.S. manufacturing has been vastly underestimated and goes far beyond the auto and electronics industries, says Alan Tonelson, research fellow at the U.S. Business and Industry Council and author of Race to the Bottom.
A new report by the Council found that "many of the highest rates of dependence on Japan are found in non-electronics capital goods sectors — industrial machinery and components vital to high-value production throughout the domestic U.S. manufacturing base."
"There's a long, rich tradition of [politicians] being able to reach compromise when time is about to reach out," says Alan Tonelson, research fellow at the U.S. Business and Industry Council.
Tonelson suggests there may be "one or two more continuing resolutions" before a final deal is reached, notwithstanding President Obama's protestations on that issue: "What we are not going to do is once again put off something that should have gotten done months ago," he said.
U.S. companies and industries rely heavily on Japanese-made automotive products and high-tech electronics, but the U.S. Business and Industry Council said in a report there is an even greater dependence on less well-known Japanese products. These include industrial equipment like machine tools and energy-generating turbines.
While the federal data studied by the trade group, which represents 2,000 small- and medium-sized U.S. manufacturers in many industries, was from 2009, it said trade figures for last year strongly indicate the reliance rose considerably in 2010.
Study: U.S. industries overly reliant on Japan The report from the U.S. Business and Industry Council, based on economic data rather than anecdotes, asserts there “is much more widespread U.S. industrial dependence on imports from Japan than post-earthquake accounts have typically indicated.”
Indeed, U.S. auto and electronics companies aren’t the only vulnerable sectors, according to the report, titled “A Supply-Chain Earthquake? American Industrial Dependence on Japanese Manufactures.” Based on import penetration data from 2009, the report says, “many of the highest rates of dependence on Japan are found in non-electronics capital goods sectors — industrial machinery and components vital to high-value production throughout the domestic U.S. manufacturing base.”
House to Take Up Patent Reform In another letter, a group of conservative activists and small businesses asked lawmakers to reject the legislation in favor of a bill focused exclusively on funding the Patent and Trademark Office.
“We urge Congress to shift its attention away from the broad and technically difficult America Invents Act, and instead pass a streamlined, targeted bill that focuses only on long-term PTO funding,” the activists wrote in the letter, which was sent to House members on Tuesday.
“We urge that the proposed act not be enacted in its current form and that the Congress shift its focus to putting PTO on a sound financial footing.”
The letter is signed by nine conservative or small-business groups, including American Innovators for Patent Reform, the National Small Business Association, and the U.S. Business and Industry Council. They criticized the “first-to-file” provision, which would award patents to the inventor who files an application first, as well as changes to the post-grant review process.
Reality-based patent reform The Federal Trade Commission (FTC) has just issued its long-awaited and comprehensive report entitled, "The Evolving IP Marketplace.” Review of this study is critical for a complete understanding of our country’s economic future, particularly job creation through innovation.
Intellectual property now comprises the great majority of corporate worth – about 80 percent. Today’s situation is in sharp contrast to a mere 40 years ago when land, buildings, machinery, etc. made up the vast share of corporate value. Thus commercialized new ideas will create our next generation of industries, manufacturing plants, and jobs.
TONELSON: Obama doesn’t get trade finance President Obama wants to use international trade policy to generate a sustainable, private-sector-led recovery, and that’s a good idea.
Unfortunately, to do so, he evidently needs to learn some basic economics about how exports and imports affect growth and employment. Otherwise, on balance, initiatives like his oft-repeated commitment to double U.S. exports by 2014 and his pursuit of new trade agreements won’t create a penny more of output or a single new job. In fact, as indicated by the new government data for 2010, this trade-policy approach is likeliest to undermine recovery and increase the nation’s already dangerous debt load.
The Half-Truths About U.S. Manufacturing So things are looking up for U.S. manufacturers, but apparently this growth isn’t enough for some industry observers, judging by the so-rose-colored-you-could-prick-yourself-on-the-thorns glasses these pundits are wearing. I learned more details on this trend in a recent blog posting by Alan Tonelson, a research fellow with the non-partisan U.S. Business and Industry Council, who refers to the trend as “manufacturing Pollyanism.”
Tonelson cites a recent op-ed in the Wall Street Journal that seems to be celebrating American ingenuity and innovations under the guise of telling “the truth about U.S. manufacturing,” but what it actually does is bend and twist reality more effectively than the special effects in the movie “Inception.” The author, Mark Perry, a professor at the University of Michigan-Flint, attempts to brush aside the millions of layoffs the U.S. manufacturing has seen over the past decade by pointing to the increase in productivity.
Is the First-to-File Patent Reform Bill right for America? In a February 2, 2011opinion article in The Hill’s Congress Blog, U. S. business & Industry Council President, Kevin Kearns, and Research Fellow, Alan Tonelson, wrote, “The principal advocates of the Leahy bill are the governments of Europe and Japan – along with boosters in China and India. They want the United States to ‘harmonize down’ to their inferior systems. They and the bill have it backwards. Advocates also include a handful of Big Tech transnational corporations that want to make easier and less costly the infringement of other’s patent rights. Their business model has a unique name: ‘efficient infringement.’”
They also pointed out that the reforms of the Clinton era “doubled from 18 to 36 months the time required to process a patent, required the Patent Office to publish full patent applications on the Internet 18 months after filing – encouraging theft of American IP worldwide, and created a new post-grant challenge process to patent validity that can consume three or more years in bureaucratic proceedings inside the Patent Office. As a result, individual inventors who received 15 percent or more of all U. S. patents before the Clinton reforms got barely 5 percent last year.”
amanomics: Guess Who Came to Dinner; Guess Who Didn't Even Get Asked? A study last year from the United States Business and Industry Council (USBIC) shows that the past decade-long surge of advanced manufacturing imports very much helped set the stage for the ongoing economic crisis. USBIC's calculations show that had imports in these sectors remained flat in absolute terms from 1997-2008, U.S. output would have been $405 billion (or 21%) higher, which is an amount more than twice as great as the $185 billion in output lost overall in the first two years (2008-2009) of the Great Recession.
The China Syndrome Fed up with NAM's doublespeak on the currency issue, some small manufacturers have quit the group in favor of more sympathetic organizations such as the Fair Currency Coalition; the Alliance for American Manufacturing; the Tooling, Manufacturing, and Technologies Association; and the 2,000-member US Business and Industry Council. "By me being a NAM member, I was basically preaching against myself," says Burl Finkelstein, owner of Georgia-based Kason Industries, a 250-employee maker of kitchen supplies that left NAM in 2006 because of its currency stance. While it's hard to say how many NAM members have dropped out for that reason, the group is clearly shrinking. In 2004, press reports pegged its membership at 13,000, which is 2,000 more than it claims today. In 2009, NAM froze salaries and eliminated 17 staff positions.
Critics accuse China of deliberately keeping its yuan currency undervalued to boost exports.
"The January trade deficit surge, coming on top of a 32-plus percent rise in last year?s deficit figure, is telling Congress loudly and clearly to figure out how to do trade policy right before plunging ahead with new agreements," said Alan Tonelson of the US Business and Industry Council.
"Step One needs to be solving our trade crisis with a China that remains highly protectionist despite years of US pleadings," he said.
Water Cooler: View from the Rust Belt Of course, the percentage is based on raw numbers gathered by the U.S. Bureau of Labor Statistics. Alan Tonelson thinks the raw numbers are wrong.
Tonelson, a trade researcher for the U.S. Business and Industry Council, a group of smaller factory owners favoring import barriers, says work moved out of American plants magnifies productivity.
"Even the BLS admits its methodology for calculating the headline labor productivity numbers discussed by Vargo appears to be deeply flawed," Tonelson says. "Specifically, this methodology can too often enable increases in offshoring activity to result in recorded productivity increases."
Senate Considering Patent Reform Senator Leahy’s office lists a growing number of supporters for the bill, including Pfizer and other major drug companies, IBM, and the Association of American Universities. Opponents of the bill include the Coalition for Patent Fairness, a group of high-tech companies that would like to see more in the bill to “lessen the growing burden of abusive and unjustified patent infringement claims.” Other opponents of the bill, including the American Innovators for Patent Reform and the U.S. Business and Industry Council, assert that the bill favors multinational and foreign firms over start-up companies entering the U.S. market for the first time.
Full disclosure needed on net cost of offshoring When Congress and the public debate trade and globalization policies, the offshoring American multinational companies that they’ve enriched so handsomely have long enjoyed use of a subtle but powerful secret weapon — indulgent U.S. government data practices that let them get away with intellectual murder.
Sound policymaking on these fronts depends heavily on knowing how existing and proposed initiatives affect the domestic economy. Washington collects detailed, relevant data on the multinationals’ international operations and those of other firms. But in deference to the companies’ insistence on keeping proprietary information confidential, what’s actually published is generally too limited or vague to give the public or policymakers meaningful guidance.
On Your Mark, Get Set, Export “U. S. trade diplomacy has been dominated by trade deals with so-called emerging-market countries that feature huge low-cost labor forces. These countries were valued by companies like GE as cheap and regulation-free production sites,” explains Alan Tonelson, a research fellow at the U. S. Business and Industry Council, which lobbies on behalf of family owned and closely held U. S. manufacturing companies. “They were not valued because they were markets for U. S. products. By and large, their economies have been too small and their populations too poor to serve that function.”
Inflation Fuels Yuan Concerns Alan Tonelson, research fellow at the U.S. Business and Industry Council in Washington, argued that currency policy should not be based on China's "unreliable" CPI figures.
"It's only the latest smokescreen," said Tonelson. "We're focused on getting Washington to move against a long-standing problem."
Export dependent
Tonelson rejected Treasury's argument that inflation is eating away at the exchange rate gap as a suggestion that "the problem will take care of itself."
"We dismiss that as cynical and self-serving nonsense," he said.
Tonelson argued that China's economy is even more export dependent than it was eight years ago when U.S. industry began its campaign against the exchange rate policy.
Liberals lead the charge on conservative issue On their side of the bed, the fellows in opposition to KORUS FTA range from Ralph Nader, the Sierra Club, and the AFL-CIO, to Donald Trump, the U.S. Business and Industry Council, and most House Democrats. Called “Son of NAFTA” after the controversial North American Free Trade Agreement, KORUS FTA was negotiated by the Bush administration — the text is almost identical to NAFTA — but hasn’t been ratified by Congress. Last July, more than 100 Democratic congressmen wrote to President Obama: “The Korea FTA … is another NAFTA-style FTA. We oppose specific provisions of the agreement in the financial services, investment and labor chapters because they benefit multi-national corporations at the expense of small businesses and workers.” Friends of the Earth is fighting ratification because it “replicates some of the worst aspects of NAFTA, providing foreign investors the right to challenge U.S. public health and environmental regulations that could put a dent in their current or expected profits.”
Lobbyists Gear Up for Trade Fight With President Barack Obama signaling that passing a free-trade agreement with South Korea will be a top priority, lobbyists for and against the deal are scrambling to line up support among freshman Republicans.
Senate Judiciary Passes Patent Reform Bill However, there was opposition from such quarters as the US Business and Industry Council, which argues the bill will make it easier to infringe patents, challenge patent rights in administrative hearings at the USPTO and diminish inventor rights in the courts. The group articulated its position in this editorial in The Hill earlier this week.
Patent bill hits resistance The high-tech opponents’ position was also supported by a cadre of conservative groups with nothing to do with the technology industry, such as the Eagle Forum to the Gun Owners of America. The latter recently wrote Senate and House leaders telling them bill is less than American in its roots being pushed by “several large multinational companies” and will lead to a “plundering of American intellectual property and the loss of American factories and jobs to overseas competitors.”
Leahy patent bill: Litigation, not innovation In his State of the Union address, President Obama went into innovation overdrive, touting research and development as a key to speeding America’s recovery from recession, strengthening its manufacturing base, and “winning the future” for the U.S. economy.
His administration has further emphasized that these goals require improving the nation’s intellectual property protection system not only at home, but abroad – hence the White House’s focus on securing new "promises" from China at the recent Washington summit to crack down on its systemic infringements.
Sen. Rob Portman says U.S. trade lags behind other developed nations Yet Alan Tonelson, a research fellow at the United States Business and Industry Council, a manufacturers’ group that focuses on domestic growth, took issue with the way Portman uses this export ratio. Portman left out a big part of the equation, Tonelson suggested..
That’s because if the United States accepts more trade agreements in order to expand exports, it is likely to result in more foreign goods coming into the United States, too. That’s the very problem with existing trade agreements, Tonelson and other critics say: The benefits of jobs supporting exports are outweighed by the jobs lost as companies move operations offshore to use their cheaper labor.
Consider this presentation in favor of the proposed Korea-U.S. Free Trade Agreement.
Let's take it apart, shall we?
They point out that most of America's job losses are not to nations we have free-trade agreements with. True, but this is just a way of saying we're losing jobs to China, as we don't have an FTA with them. Most of our dozen-or-so FTAs are with tiny countries like Jordan, which has an economy the size of metro Minneapolis.
Conservative Groups Call On Congressional Leaders To Sink Leahy's Patent Bill Tech Daily Dose got its hands on the letter from conservative activists on Monday. The comments may give a glimpse into some of the concerns the new GOP majority in the House could have about the patent legislation. The full text of the letter, as obtained by Tech Daily Dose on Monday, follows:
"Dear Speaker Boehner, Senators Reid and McConnell, and Rep. Pelosi:
We are writing to ask that you prevent the passage in this Congress of patent legislation that hampers U.S. competitiveness and threatens American jobs by undermining property rights. With our economy in crisis and millions of Americans out of work, this is the wrong time to jeopardize our recovery by passing legislation to remove incentives for innovation and commercialization of new products and processes.
Energy economics Ford and UAW officials praised the trade agreement Washington just worked out with South Korea. But trade expert Alan Tonelson says Europe landed a better deal with the Koreans on automotive terms.
"South Korea's 10 percent VAT (value added tax) will still impose a hidden tariff on all American products bound for Korea, and its VAT rebate for exports will still provide a hidden subsidy for South Korean goods bound for the U.S.," said Tonelson, a researcher at the U.S. Business & Industry Council, a trade group in Washington that favors restraints on imports.
Business Groups: Fist Bumps for Obama Dissenting voices came from two associations representing domestic manufacturers that have been hurt by what they view as unfair trade deals.
“It looks like the Clinton-era retreads now running the White House have decided that Clinton-like trade deals will cure what ails America’s economy,” said Kevin Kearns, president of the U.S. Business and Industry Council.
Despite promises about how these trade deals would benefit American companies, “U.S. exports still badly lag U.S. imports, and the most effective foreign trade barriers remain firmly in place.”
China's new world order The U.S. response has been mostly carrots - to pretend that sweet reason will persuade China to alter its policies. Last week, President Obama and Hu exchanged largely meaningless pledges of "cooperation." Alan Tonelson of the U.S. Business and Industry Council, a group of manufacturers, says U.S. policy verges on "appeasement." We need sticks. The practical difficulty is being tougher without triggering a trade war that weakens the global recovery. Still, it's possible to do something. The Treasury could brand China a currency manipulator, which it clearly is. The administration could move more forcefully against Chinese subsidies. America's present passivity encourages China's new world order, with fateful consequences for the United States and everyone else.
U.S. companies dump billions into China Trade groups critical of China-U.S. trade policy say that a mature consumer market like the United States is struggling to compete for investment dollars when businesses weigh sluggish U.S. growth with China's rapidly growing middle class.
Plus, Chinese trade policies are causing U.S. companies to lean toward production in China rather than trying to export goods from U.S. factories, said Alan Tonelson, a senior fellow with U.S. Business and Industry Council.
"The Chinese work overtime to lure this investment with lavish subsidies or coercion," Tonelson said.
He's also worried that some of the companies investing in China with the expectation to sell to Chinese consumers will find that's easier said than done, leading them to export at least some of the product back to the U.S. market.
U.S. and China tout $45 billion in export deals Boeing, while crediting the U.S. government for helping to seal the $19 billion deal, acknowledged the orders had been on their books for a while.
That prompted some criticism of Obama's announcement.
"This kind of fakery is an insult to the American people, and especially to America's legions of unemployed," said Alan Tonelson of the U.S. Business and Industry Council.
They're definitely feeling snubbed. "The Obama administration has made clear, over and over again, that its heart is with the multinationals and that it does not really think America’s domestic manufacturing base matters," said Ian Fletcher, a research fellow at the US Business and Industry Council, a Washington think tank representing small and midsize manufacturers. "But as long as the U.S. keeps leaking $500 billion a year through the trade deficit, America will continue to struggle to create jobs."
China's 'new' jet orders anything but Boeing was left rather embarrassed Wednesday as its public-relations team faced skeptical press questioning of an announcement the company had little to do with, one that was merely political window dressing for President Hu's state visit.
Alan Tonelson, a research analyst with a foundation attached to the U.S. Business & Industry Council, which represents small to medium-sized U.S. manufacturers critical of Chinese trade policies, called the announcement political "fakery."
"The president should get out of the business of trumpeting phony export deals that won't create a single new job, and get serious about combating the Chinese predatory trade policies," said Tonelson.
China's Reagan-esque Trap for Obama After the Democrats' mid-year election debacle, President Obama reportedly began reading about Ronald Reagan for political and policy inspiration. On critical China-related issues, however, Reagan's star pupils these days seem to be in Beijing, not Washington. For recent Chinese economic and military challenges to the United States signal that Beijing is laying a trap for America closely resembling the trap Reagan laid to help bring down the Soviet Union. And Obama's inept responses signal that America is falling into it.
Of all the U.S. Cold War strategies to bring about either Soviet cooperation or collapse, the cleverest and most effective was Reagan's effort to try to spend America's rival superpower into the ground through an unprecedented American defense build-up, while denying the Soviets access to Western technology and capital that would have helped them militarily and economically.
This is bad for U.S.-based manufacturers because it makes the cost of U.S. goods more expensive in China and makes Chinese products cheaper in the United States. Estimates are that the Chinese currency is undervalued by between 10% and 40%.
For American companies, "it's like starting a 100-yard race 40 yards behind," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents smaller and mid-size manufacturers. "It's the number one issue they face."
U.S. vs. China Is now the time for the U.S. to get tough with China or have we already allowed them to get the upper hand, with Ted Fishman, China Inc. and Alan Tonelson, U.S. Business & Industry Council.
China illegally plunders U.S. solar industry, with impunity The problem isn’t simply about lost jobs but could become a lost opportunity for the U.S. to be an innovator within the critical alternative energy sector. This concept was validated by economist Ian Fletcher, a Research Fellow with the U.S. Business and Industry Council (USBIC) which is a nationwide non-profit think tank representing the views of nearly 2,000 small-and-medium-sized companies in the U.S., many of them in manufacturing.
Mr. Fletcher is also the author of a book whose title says it all: Free Trade Doesn’t Work. Commenting on the Evergreen situation, Mr. Fletcher told me:
Chinese President Visits the U.S.: Can America Accept the Economic Reality of a Prosperous China? The week ahead will be one of proposed measures and counter measures. Part of the Democratic Party agenda is to confront China and other countries on the issue of artificial currency management that hinders free trade make that U.S. Trade advantages. Americans know well the stamp “Made in China”. Will Chinese adapt as well to “Made in the U.S.A.”? China’s small business operations are thriving while the U.S. small to midsize enterprises are sitting in the penalty box waiting to go back out on the global ice. This is the top issue according to the U.S. Business and Industry Council.
China bringing businesses to Chicago But Alan Tonelson, research fellow at the U.S. Business & Industry Council, said he suspects that Chinese companies are increasingly investing in the United States "largely for show" to gain access to the U.S. market to keep Chinese exports flowing here.
"Given trade frictions in recent years, it makes sense for the Chinese to buy some U.S. goodwill with a few token investments in manufacturing with this country," said Tonelson, whose group says it represents mostly family-owned U.S. manufacturers.
Chinese leader Hu Jintao to visit USA during tense times Democratic senators such as Bob Casey of Pennsylvania say they will greet Hu by proposing legislation that would impose stiff penalties on countries such as China that manage their currency in a way that harms U.S. trade. They blame China's currency manipulation, which they say keeps Chinese goods in the U.S. inexpensive and makes U.S. exports to China more expensive.
The U.S. Business and Industry Council has said the matter is the top issue faced by small and midsize manufacturers.
New loans would help GM on fuel efficiency Slowly the mood is changing. In the much-discussed and nonpartisan book “Free Trade Doesn’t Work,” recently published by the U.S. Business & Industry Council, Ian Fletcher outlines the nation’s failed trade policies and argues for the dire need for the United States to employ tariffs — to act as other rational countries act.
He argues that for many Americans free trade has become a “‘beautiful idea,’ a secular religion like Marxism once was,” but, like Marxism, it falls short of reality. The Obama administration, unfortunately, seems to have missed the memo.
Alan Tonelson: One-sided trade barriers bad for U.S. President Barack Obama’s pursuit of free trade with South Korea evidently assumes that, if at first you don’t succeed, try the same failed approach again and again.
In fact, this latest attempt to promote American growth and employment by opening long-closed foreign markets to U.S. goods and services is even less excusable than pacts like the North American Free Trade Agreement or the numerous trade expansion deals with China.
After all, the American deficits, debts, job destruction and growth losses resulting from these deals were long masked by bubbles in technology spending, housing and credit itself. With these reckless options just about gone, the still-mounting costs of past agreements plus those certain from the Korea pact represent the difference between a slumping and a recovering economy.
Industry Group Slams Daley as White House Pick, Citing Strong Ties to China Outsourcing Lobby The U.S. Business and Industry Council, on January 6, charged that President Obama's choice of William M. Daley as White House Chief of Staff rewards the multinational business and financial interests whose massive offshoring moves have weakened America's productive economy and helped trigger the ongoing economic crisis.
Citing Daley's position on the board of the nation's main organization of corporate China outsourcers, the Council called Obama's decision a towering obstacle to hopes for overhauling the failed China and global trade policies that ballooned America's national debt and set the stage for the nation's near financial collapse.
Pact keeps barriers in place President Obama’s pursuit of free trade with South Korea evidently assumes that, if at first you don’t succeed, try the same failed approach again and again.
In fact, this latest attempt to promote American growth and employment by opening long-closed foreign markets to U.S. goods and services is even less excusable than pacts like NAFTA or the numerous trade expansion deals with China.
Back to the future: Obama turns to Clinton economic team However, the U.S. Business and Industry Council, a group of smaller, U.S.-based manufacturers who favor protectionist trade policies, said that Daley as commerce secretary and as a director of the U.S.-China Business Council, had helped pave the way for jobs and manufacturing to leave the U.S.
In fact, this latest attempt to promote American growth and employment by opening long-closed foreign markets to U.S. goods and services is even less excusable than pacts like NAFTA or the numerous trade expansion deals with China.
Past New Years' Resolutions Run Amok -- Here's Hoping for Better in 2011 Concerning "doubling U.S. gross exports within five years", which according to the President's own analysis may create at most 2 million jobs over those five years, as the United States Business and Industry Council (USBIC) has repeatedly identified, merely increasing U.S. gross exports will accomplish no economic good per se. Growth and employment can only result from increasing U.S. net exports.
Reject the free-trade accord with South Korea Slowly the mood is changing. In the much-discussed and nonpartisan book “Free Trade Doesn’t Work,” recently published by the U.S. Business & Industry Council, Ian Fletcher outlines the nation’s failed trade policies and argues for the dire need for the United States to employ tariffs — to act as other rational countries act.
He argues that for many Americans free trade has become a “‘beautiful idea,’ a secular religion like Marxism once was,” but, like Marxism, it falls short of reality. The Obama administration, unfortunately, seems to have missed the memo.
Getting America Back to Work (Part 2) It's no surprise the economy is on the minds of most Americans. One in ten of us is out of work. It's a rate that hasn't changed in a year and a half. So why aren't jobs being created? Why aren't businesses hiring? Can the government do anything about it? Should it? Three different economists with three very different views discuss how they would get America back to work.
Getting America Back to Work (Part 1) It's no surprise the economy is on the minds of most Americans. One in ten of us is out of work. It's a rate that hasn't changed in a year and a half. So why aren't jobs being created? Why aren't businesses hiring? Can the government do anything about it? Should it? Three different economists with three very different views discuss how they would get America back to work.
Will Your Tax Cut End Up in China? Whatever's going on, one thing is clear: The tax cuts won't stop the bleeding from the US economy. The artificially low value of the yen against the dollar is already a major cause of America's $290 billion trade deficit, which is what got us into this economic mess to begin with. Writing the New York Times in September, Alan Tonelson and Kevin Kearns point out that the trade deficit:
. . .is actually a central reason why American growth has lagged and President Obama’s stimulus hasn’t led to a robust recovery: since February 2009, the government has injected $512 billion into the American economy, but during roughly the same period, the trade deficit leaked about $602 billion out of it and into foreign markets.
Consequently, a successful recovery strategy will require aggressive measures to reduce the trade deficit — including new and expanded tariffs to encourage the sale of domestic goods over imports and a serious reindustrialization policy to create the manufacturing strength to exploit these new opportunities.
Domestic Manufacturers Oppose Korea Trade Agreement The 2,000 domestic manufacturing companies represented by the U.S. Business and Industry Council on Dec. 9 condemned the new Korea-U.S. trade agreement as a repeat of America's disastrous trade policy mistakes and urged Congress to reject the deal.
The deal must be defeated, the Council emphasized, not because of specific flawed provisions. Rather, it explained, history clearly teaches that mutually beneficial U.S. trade with fundamentally protectionist countries like Korea is simply not possible.
Will NAM’s manufacturing strategy plan save American Manufacturing? I strongly disagree with NAM’s recommendation to “enact pending trade agreements and negotiate additional agreements in the Pacific area and elsewhere.” In my June blog article, “Do Free Trade Agreements Create Jobs?” I pointed out that NAFTA, effective in 1994, and the subsequent free trade agreements haven’t created American jobs, they have cost American jobs. Between 1994 and 1999, we lost about a half million manufacturing jobs, but we’ve lost another 5.5 million jobs since the year 2000 when China was granted Most Favored National status and gained access to the World Trade Organization thereafter. Our trade deficit with China rose from $84 billion in 2001 to $226,877 billion in 2009, down from $268,039 in 2008 due to the worldwide recession. As Ian Fletcher stated in his book, Free Trade Doesn’t Work, What Should Replace It and Why, Chinese imports now constitute 83 percent of our non-oil deficit. Elsewhere in his book, Fletcher noted, “It has been estimated that every billion dollars of trade deficit costs American about 9,000 jobs. In his book, Mr. Fletcher makes a compelling argument that a “natural strategic tariff” should replace free trade agreements. I strongly suggest that NAM and other national economists consider Mr. Fletcher’s proposed solution.
Much at stake in trade deal U.S. opposition to the trade agreement still exists. The U.S. Business and Industry Council argues that South Korea culturally remains closed to exports.
“The country's barriers are systemic,” council Research Fellow Alan Tonelson wrote in his blog. “International agreements are simply incapable of breaking it down.”
Some truth exists to that, Allen said. “Any new market is difficult to get into,” he said. “Countries like South Korea are culturally closed to outsiders, but we cannot penetrate the market when we can't get past the tariff barriers. The trade agreement is not a magic wand. It's a key that unlocks the door to trade.”
Allen expressed a sense of urgency over the trade matter. South Korea also has a trade deal in the works with the European Union, so it's a race. Congress needs to approve the South Korean trade deal within six to 12 months, Allen said.
Free Trade Doesn't Work: Interview With Economist Ian Fletcher Free trade doesn't work, the global economy is a myth and the U.S. has been duped during trade negotiations for the past 40 years according to Ian Fletcher, an adjunct fellow with the U.S. Business and Industry Council and author of Free Trade Doesn't Work: What Should Replace It and Why, who relayed these concepts to me in an exclusive interview.
During our exchange I discovered that Mr. Fletcher certainly is not opposed to capitalism, underlined by his experience working for hedge funds and private equity firms as an economist, but what he is opposed to are bad economic policies that have led to an ever-burgeoning U.S. trade deficit well on its way to hitting $500 billion this year.
Transformational fantasies and S. Korea trade International trade issues have the strangest effects on political and policy types. They have turned liberal Democratic devotees of big government at home into champions of government-free commerce abroad.
Just think of the Clinton Democrats — or the Carter Democrats. They have turned die-hard conservative opponents of Chinese communism into enablers of Chinese communist international economic policies. Just think of all the right-wing think tanks urging greater vigilance against Chinese expansionism while staunchly opposing serious responses to predatory Chinese trade practices like currency manipulation.
Whither Trade Policies Now? In keeping with this political year’s roguishly unpredictable nature, the predictions about the incoming Congress and U.S. trade policy that already look most dubious are those being heard most frequently. That is, I can’t imagine that the huge, Tea Party-infused Republican midyear election gains mean that the 112th Congress will exude much warmer and fuzzier feelings toward traditional U.S. trade policies than its Democratic-led predecessor.
On the surface, trade policy optimism seems sensible. Republicans, after all, have been much more supportive of conventional trade expansion than Democrats over the last two decades, no doubt reflecting their general free-market leanings and their closer ties to multinational business and financial interests. But everywhere except the surface, this optimism looks more like Pollyannaism. When the political landscape finally stabilizes, it’s likeliest that, for all the Capitol Hill roster shake-ups, new trade deals like NAFTA will be no more popular in the House and Senate in 2011 than they were in 2010.
The End of Free-Trade Globalization "I admire the Chinese for recognizing the world economy is still a jungle, despite all of its legal trappings," says Alan Tonelson, a conservative trade critic at the US Business and Industrial Council. "But here's the problem. They don't seem to understand that unless the US economy recovers its financial and economic health, the entire world will come crashing down. The reason is, we won't be able to serve any longer as the import sponge that buys from everyone else."
Fletcher On Free Trade—But Not, Alas, Immigration Ian Fletcher is an Adjunct Fellow at the San Francisco office of U.S. Business and Industry Council, a Washington think tank. An economist with impeccable academic and private sector pedigrees—Columbia, University of Chicago, hedge funds, private equity groups—he is refreshingly, perhaps uniquely, skeptical of his profession. “We can’t trust the economists”, he writes, adding that while the public holds the economics profession in highest regard, “What economists say to the public is often very different from what they say to one another”
Fletcher has written an elegant, easy-to-read critique of one of the most cherished myths in economic theory—the supremacy of free trade. (Free Trade Doesn’t Work: What Should Replace It and Why, by Ian Fletcher, U.S. Business and Industry Council, 2010. 323 pages.)
It’s the Economy, Stupid! The number one item on the minds of voters in the recent election was the economy. So as the new Congress begins its work in January, the message that has been sent is to pay attention to getting more people employed, as well as resolving the debt and deficit. So this week on Business Matters we’ll hear some very different perspectives on the greatest economic challenges of today and what can we do about them.
The High Cost of 'Free' Trade: Obama "Doesn't Understand Fundamental Reality,” Expert Says Obama's comments (and actions) reflect conventional economic thinking that "everyone benefits" from free trade. But nothing could be further from the truth - at least judging by the "free trade" agreements of the past 20 years, says Alan Tonelson of the U.S. Business & Industry Educational Foundation and author of The Race to the Bottom.
"[President Obama] doesn't seem to understand -- or want to understand -- the fundamental reality that doubling exports...does absolutely nothing to generate growth or employment in the U.S.," Tonelson says. "These open trade policies have dug such a deep debt hole for this economy."
U.S. must actually make things to compete in the global economy But there is this myth that these are all low-end low-skill jobs and its incumbent upon Americans to adapt and develop innovative talents more fit for the new global economy. However, author Ian Fletcher in a book published earlier this year, "Free Trade Doesn’t Work: What Should Replace It and Why", throws cold water on this theory:
“The US economy has ceased generating any net new jobs in internationally traded sectors in either manufacturing or services,” he notes. “The comforting myth persists that America is shifting from low-tech to high-tech employment, but we are not. We are losing jobs in both in shifting to non-tradable services–which are mostly low value–added, and thus ill–paid jobs. According to the Commerce Department, all our net new jobs are in categories such as security guards, waitresses, and the like. The vaunted 'new economy' has not contributed a single net new job to America in this century. Not one.”
Failure to recognize the pitfalls probably will mean a continuing struggle to emerge from recession, as much U.S. domestic demand leaks abroad from the trade deficit rather than being recycled at home. And America will continue to lose key industries: not just the primitive ones a developed nation should shed, but the high-tech jobs of the future.
Any serious discussion of free trade must confront David Ricardo's celebrated 1817 theory of comparative advantage, whose tale of English cloth and Portuguese wine is familiar to generations of economics students. According to a myth accepted by both laypeople and far too many professional economists, this theory proves that free trade is best, always and everywhere, regardless of whether a nation's trading partners reciprocate.
TONELSON: A 'tea party' on trade policy? The "tea party" movement plainly has shaken up American politics and economic policymaking. Will international economic policy be next?
From its early 2009 inception, the tea party has been practically synonymous with free-market absolutism. And certainly the Washington operators who have funded much tea-party activity — such as former Republican House Majority Leader Dick Armey — were expecting the movement to fuel a push-back against the hypergovernment they accused both major parties of building.
Yet many and possibly most tea-party activists have voiced support for at least two major economics-related exceptions to government minimalism
Trade and Tea Party: Not exactly a happy couple Business lobbyists hope the agreement could get the green light from Congress early next year, followed in short order by the Panama and Colombia deals. Not so fast, says Alan Tonelson of the U.S. Business and Industry Council, which lobbies for smaller American manufacturers. "All we can say with certainty," he said, "is that as long as the economy remains slumping and job creation remains so dismal, it's going to be very difficult for either party to push through more trade agreements of the type we've seen over the last ten years."
"Free Trade Doesnt Work: What Should Replace It and Why" Some book reviews write themselves, because the book is so clear and articulate and easily read, and the information in it so straightforward that all the reviewer needs to do is lay it out.
Ian Fletcher writes: Over the last 20 years, Americans have bought over $6 trillion more from the world than we have sold back to it. That's over $20,000 per American. Ironically, if the US were a developing country, our deficits would reach the 5% level that the international monetary fund takes as a benchmark of financial crisis.�
China-bashing is bipartisan in US races Alan Tonelson, research fellow at the U.S. Business and Industry Council, which represents small and mid-sized manufacturers, said the jury's still out on how tea-party influence will shape trade decisions — noting a split between libertarian-leaning conservatives who may favor ending all government restrictions on trade and those who want to do more to protect home industries.
"The tea party certainly at its grass roots is an economic populist movement. And populist movements tend to take a very dim view of U.S. trade policy," he said. "Tea party social conservatives are also very worked up about China."
TONELSON: A 'tea party' on trade policy? The "tea party" movement plainly has shaken up American politics and economic policymaking. Will international economic policy be next?
From its early 2009 inception, the tea party has been practically synonymous with free-market absolutism. And certainly the Washington operators who have funded much tea-party activity — such as former Republican House Majority Leader Dick Armey — were expecting the movement to fuel a push-back against the hypergovernment they accused both major parties of building.
Yet many and possibly most tea-party activists have voiced support for at least two major economics-related exceptions to government minimalism.
How Geithner Is Channeling Keynes on Trade The outcome in Gyeongju won't quiet the growing chorus of American free-trade skeptics, who argue that unfettered global commerce is killing American jobs and industries. Ian Fletcher, an adjunct fellow at the U.S. Business and Industry Council, wrote in a Bloomberg News column on Oct. 26 that the U.S. should slap tariffs on imports "that compete with existing and startup domestic producers, if only as bargaining chips to force other nations to play fair." Nor will Gyeongju appease Congress. On Sept. 29 the House passed by 348-79 a bill directing the Commerce Dept. to treat currency undervaluation as a prohibited export subsidy. Although it applies to any country, China is clearly the No. 1 target. "If this risks upsetting the People's Republic of China, so be it," said co-sponsor Representative Tim Ryan, an Ohio Democrat.
Failure to recognize the pitfalls will probably mean a continuing struggle to emerge from recession, as much U.S. domestic demand leaks abroad due to the trade deficit, rather than being recycled at home. And America will continue to lose key industries: not just the primitive ones a developed nation should shed, but the high-tech jobs of the future.
Any serious discussion of free trade must confront David Ricardo’s celebrated 1817 theory of comparative advantage, whose tale of English cloth and Portuguese wine is familiar to generations of economics students. According to a myth accepted by both lay people and far too many professional economists, this theory proves that free trade is best, always and everywhere, regardless of whether a nation’s trading partners reciprocate.
China the punching bag in US election "Certainly there has been significant movement toward what we would consider a more realistic position on China," said Alan Tonelson of the US Business and Industry Council, which represents manufacturers.
"This trend has emerged after, quite frankly, years of surprising levels of apathy by most legislators. It's emerged, clearly, because the country's economic recovery has been such a crashing disappointment," he said.
China's Trade Gap With U.S. Climbs to Record, Fueling Yuan Tension The gap with China is the largest, and “goes a long way to explaining why this economy remains dead in the water despite the massive stimulus,” Alan Tonelson, research fellow at the U.S. Business and Industry Council, a Washington trade group for U.S.-based manufacturers, said in an interview.
US trade deficit swells amid record China gap "The ongoing, American job-destroying leakage of national wealth to China confirms the House's wisdom in passing the anti-currency manipulation bill last month," said Alan Tonelson, a research fellow at the US Business and Industry Council.
"President Obama finally needs to wake up as well, urge Senate passage, and help American businesses and their employees fight foreign protectionism," he said.
US trade deficit swells amid record China gap "The ongoing, American job-destroying leakage of national wealth to China confirms the House's wisdom in passing the anti-currency manipulation bill last month," said Alan Tonelson, a research fellow at the US Business and Industry Council.
"President Obama finally needs to wake up as well, urge Senate passage, and help American businesses and their employees fight foreign protectionism," he said.
China's mercantilism threatens the global economy China appears to have taken mercantilism too far. The suppression of its currency has produced U.S. dollar reserves “amounting to $2.4 trillion (U.S.), an astonishing 40 percent of China's GDP,” says Ian Fletcher, an economist at the U.S. Business and Industry Council.
It is hard to sterilize such a great inflow of money. It generates persistent overheating in the Chinese economy and a tendency toward inflation in asset and consumer prices. One manifestation now is the property bubble in Chinese urban and coastal real estate in China. Thus, China is not doing even itself any good by pursing its current strategy.
Pernicious Myth of “Free Trade” Ian Fletcher, the author of Free Trade Doesn’t Work (U.S. Business & Industry Council, 2010) begs to differ. In his view, “free trade” is slowly bleeding America’s economy to death and the standard economic arguments free traders use all the time are false. In the meantime the U.S. economy is hemorrhaging quality export industry jobs at an astounding rate. Almost half of our manufacturing workforce has disappeared since 1987 and more than a third of large factories just since 2001. Not coincidentally 2001 is the year China joined the WTO.
In the Problem section of his book, Fletcher tears apart the standard arguments for free trade and some of the snake-oil remedies to the US trade problem (more “education” etc). He suggests a “natural strategic tariff” that would level the playing field between US and foreign exporters in the key manufacturing and service export sectors. It is necessary because “free trade” is unsustainable. Nauru, a small Pacific island nation that had huge deposit of phosphate, opened up to free trade, “became one of the richest countries in the world,” and duly collapsed when the phosphorous soil run out. If it had not opened up to free trade, it would have sold its reserves of phosphate slowly, and it would not have collapsed. Even though free trade may result in gains, the gains are to the economy as a whole and not to an individual, which results in increased income inequality.
Globalization has been a bad deal for U.S. "The only way for America to grow is to change from an economy of outsourcing to growth at home." So said Alan Tonelson, a research fellow at the U.S. Business and Industry Council and author of the revealingly titled book The Race to the Bottom. "We need to create new wealth, if only because we have so much debt we can't walk away from it."
Like more and more economists, including those such as Alan Greenspan who were struck dumb by the economic collapse of the past three years, Tonelson blames China's much-touted economic progress and prowess squarely on American multinational companies. "The path was built by our multinational companies," he went on. "This progress did not come accidentally - the result came by plan. American companies transferred valuable technology as if there were no tomorrow.
The Currency Manipulation Bill: A Key Weapon in the Predatory War on American Manufactu The House has just passed strong legislation to fight currency manipulation by China and other major U.S. trade competitors (H.R. 2378 – originally an initiative of the U.S. Business and Industry Council). But major hurdles remain to getting it passed into law so it can be used as an effective tool by domestic businesses to fight predatory currency practices.
The first is a Senate that has long supported current trade policies more enthusiastically than the House, largely because six-year terms shield its members effectively from public opinion. The second is a White House still far too beholden financially to outsourcing business interests to endorse the bill (even though candidate Obama did just that during his 2008 presidential run), yet too dependent on unions to get out the vote to stay in open opposition to the legislation (especially given an ongoing recession). The third is a World Trade Organization still dominated by countries following export-led growth strategies centered on running big trade surpluses with the United States, and therefore still determined to keep the U.S. market much more open to their goods than their markets are open to U.S. exports.
Interview on the Charlie Brennan Show Charlie does a pro/con on free trade with Alan Tonelson of the U.S. Business & Industry Council, and Charley Molloy, retired corporate executive of Angelica Corporation.
DataTreasury Founder Claudio Ballard Named 2010 “Inventor of the Year” by U.S. Business and Industry Council The United States Business and Industry Council (USBIC), a national organization of business owners and executives dedicated to improving the U.S. domestic economy, has named Claudio Ballard, founder of the Texas-based DataTreasury Corporation, as its 2010 “Inventor of the Year.” The group will honor Ballard’s achievements at a 2011 gala in Washington, D.C.
A lifelong innovator, Ballard is best known for creating the Global Repository Platform, a patent-protected electronic transaction system that dozens of major banks have licensed in order to process digital versions of checks and other financial instruments. The U.S. banking industry now saves billions of dollars annually through the use of this revolutionary technology.
Beggar thy neighbour An interesting analysis of the situation comes from someone who isn't a believer in free trade. Ian Fletcher, a fellow at a US think tank, analyses the ways in which China manipulates its currency and how it might respond to action from the US.
He says China manipulates its currency by preventing its exporters from using the dollars they earn as they wish. Instead, they are required to swap them for domestic currency at China's central bank, which then "sterilises" the dollars by spending them on US Treasury securities rather than US goods.
The Case against Free Trade It is therefore with much relief & pleasure that I register a contrary case: Ian Fletcher’s new book, Free Trade Doesn’t Work. Fletcher’s a trained economist who has read and thought deeply in his subject. The book has 855 footnotes; the Select Bibliography, in teeny print, covers fifteen pages. Fletcher knows his stuff; but he can write, too, and does a great job of explaining the proposition in his title.
Like most conservative non-economists (I suppose), I have been going around with a vague notion that free trade is a Good Thing, protectionism and industrial policy Bad Things. The notion comes with some equally vague arguments to back it up:
Imperium Watch: Why You Don't Have a Job Henry Ford, however lamentable his pro-Nazi sympathies, had the formula for a sound economy with his plan to build good cars and pay his own workers enough to buy them. Now business undercuts its market here by laying people off, then tries to make up for the lost consumer base by seeking customers abroad—a strategy that's proving unviable for American workers and for our balance of trade. The U. S. Business and Industry Council says, "... the most promising source of the new orders needed by U.S.-based manufacturers and their workers are home market shares that have been lost to imports."
"The essential point," adds economist Robert Reich, "is we can't expect foreign consumers to fill the shortfall in demand left by American consumers who can no longer maintain their pre-recession standard of living. The only answer is to lift the standard of living of Americans."
Congress to Place Vote on Controversial Currency Bill The Currency Reform for Fair Trade Act is stirring up a good amount of controversy as it lands in front of Congress today. It is unclear if Congress will pass the vote to approve it, but some see it as a contributor to the growing tensions between the U.S. and China. The act would allow for the U.S. to put higher duties on foreign imports to compensate for countries who produce products which can be sold at prices that domestic products cannot compete with.
Obama's Export Goal: How We Can Make it Yesterday I attended a conference on the Renaissance of American Manufacturing in Washington DC. It included a variety of organizations with interests in trade, from the US Business and Industry Council to the International Association of Machinists and the U.S.-China Economic and Security Review Commission. It was another step in our turn towards renewing the American economy, and everyone agreed on two main points: (1) President Obama's goal of doubling exports is important, but (2) it can't be achieved without a robust industrial policy.
Don't Fear a Trade War With China The House Ways and Means Committee has just approved a bill that would attempt, albeit modestly, to crack down on Chinese currency manipulation, a key cause of America's trade deficit. The Ryan-Murphy currency bill (HR 2378) would allow the Commerce Department to treat currency manipulation as an illegal subsidy for the purpose of calculating countervailing duties intended as retaliation. This bill has to be passed by the full House of Representatives and then the Senate before becoming effective, but already the prophets of doom are squealing about the dangers of starting a trade war with China. They are wrong.
How does China manipulate its currency? Mainly by preventing its exporters from using the dollars they earn as they wish. Instead, they are required to swap them for domestic currency at China's central bank, which then "sterilizes" them by spending them on U.S. Treasury securities (and increasingly other, higher-yielding, investments) rather than U.S. goods. As a result, the price of dollars is propped up -- which means the price of yuan is pushed down -- by a demand for dollars which doesn't involve buying American exports.
Trade competition advances, but has miles to go Last week's passage by the House Ways and Means Committee of a bill to fight currency manipulation by China and other U.S. trade competitors really does justify adjectives like "epochal" and "landmark" and "milestone."
Not since the 1988 trade act, which notably mandated the use of new mechanisms to counter perceived unfair foreign trade practices, has Congress acted so vigorously to defend the legitimate interests of the U.S. economy's productive core. And not since the ongoing economic and financial crisis broke out have lawmakers moved so decisively to replace the nation's disastrous borrowing- and spending-based economic strategy with one grounded in producing and earning.
Is a Flat Tariff the Answer to America's Trade Mess? The House Ways and Means Committee has finally approved a bill that would attempt to crack down on Chinese currency manipulation, a key cause of America's trade deficit, by threatening China with retaliatory tariffs. Leaving aside the bogeyman of a trade war--which China is unlikely to start as the nation running the trade surplus and thus the nation having something to lose--this raises the obvious question of whether tariffs are a plausible long-term solution to America's trade problems. What would happen, that is, if America reverted to its historical norm (from Independence to after WWII) of being a tariff-protected economy?
The obvious question here is what kind of tariff are we talking about? As I have documented in other articles and in the book Free Trade Doesn't Work, there are any number of valid criticisms of the economics of free trade. There is not one thing wrong with it, but at least half a dozen things, and they get complicated very fast. As a result, the nightmare that haunts criticisms of free trade in this country is this: what if these criticisms imply that America needs a complicated technocratic tariff policy? This seems to be suggested by the complexity of the defects in free trade and by the fact that the nations which have most successfully repudiated free trade actually have complicated technocratic tariff policies. That would spell trouble, as the political difficulties of achieving such a solution in America are no secret. The dangers of a special-interest takeover are not imaginary. Even if America has in the past done a lot more successful picking of winners than laissez faire ideologues are prepared to admit, it's so hard to convince people of this fact that we might as well take the pessimistic assumption that this is not feasible as our baseline, and if it later turns out to be feasible, treat it as gravy.
Foreign Policy and the 2010 Midterm Elections: Trade The U.S. Business and Industry Council's Alan Tonelson says trade protectionist measures fit (WashTimes) the tea party's overall agenda, since expanded international trade has exacerbated U.S. debt, contributed to the financial crisis, and fed foreign military budgets that threaten U.S. liberties.
America Aping Britain's Historic Decline Through Free Trade One of the most inexcusable things about America's ongoing economic decline by means of free trade is how clear the historical portents are. For example, we are today treading the same path trodden by a nation that Americans know reasonably well: Great Britain. It is easy to forget that until about 1850, Britain, not the U.S., was the world's leading economic power. But then, of course, they blew it. There were, of course, many causes of this decline, but free trade was undoubtedly a major one.
Britain, like the U.S. and every other developed nation, initially rose from agricultural backwardness by way of mercantilism, the opposite of free trade. As late as the beginning of the 19th century, Britain's average tariff on manufactured goods was roughly 50 percent, the highest of any major nation in Europe. And even after Britain embraced free trade in most goods, it continued to tightly regulate trade in strategic capital goods, such as the machinery for the mass production of textiles, in order to forestall its rivals. Even the famed Adam Smith -- who made his living as a customs collector! -- was only in favor of free trade after Britain had consolidated its industrial power through protectionism.
That funny old dogma — Ian Fletcher’s ode to mercantilism But I don’t think folks like Ian Fletcher have as good an excuse for their opposition to free trade. I realize mercantilism, that funny old dogma, can be tempting for people–particularly if you’re a UAW lobbyist, or your radio’s stuck on The Lou Dobbs Show. But Fletcher’s recent article in the Daily Caller isn’t so much a defense of mercantilism as a guerrilla assault on free trade launched from the thorny bushes of fallacy. Let me explain.
Fletcher’s “critique” employs three strategies that, when analyzed, can easily be exposed as Logic 101 no-nos. Consider:
When it comes to trade policy, that’s President Obama’s mantra.
His thinking is that if the United States doubles exports in five years, the economic recovery will be greatly strengthened.
He’s right to view trade flows as growth engines. American consumers are finally curbing spending habits and increasing their savings. A dangerously indebted nation (that is, us) needs to do this to create a foundation for future growth.
Failed trade policy hinders the recovery President Obama and House Republican leader John Boehner have just used dueling Ohio speeches to lay out their parties' rival approaches for economic recovery and draw the main battle lines for Campaign 2010's climactic phase. In the process, though, they also unwittingly revealed why the economy remains dead in the water despite unprecedented government stimulus, and why states like Ohio remain so especially hard hit despite unrelenting bipartisan political attention.
For both parties' recovery recipes focus so narrowly on propping up demand across the economy that they ignore how much supply — especially of the manufactured goods so critical to Ohio — has been lost through decades of failed U.S. trade policies.
Economics vs. Fakeonomics We skeptics of free trade are used to being told, "You don't understand economics." In fact, one major reason I wrote the book Free Trade Doesn't Work was simply to expose, once and for all, that there do exist extremely serious and intellectually reputable arguments, within the confines of accepted mainstream economics, which question free trade. And indeed they exist.
But I've noticed something. We skeptics are often not really struggling against real economics at all. When I pick up a copy of the Wall Street Journal, or Forbes, or the New York Times, or turn on Fox TV or MSNBC, or read papers issued by the libertarian Cato Institute or the Peterson Institute for International Economics, I don't even find economic arguments. I find a mischievous substitute for economics we can call "fakeonomics."
Made in America? Well ... Kevin Kearns, president of the U.S. Business and Industry Council, pointed out to IndustryWeek how China "has consistently manipulated its currency to steal productive capacity from the United States." That allows China to "devastate America's invaluable productive industries, addict the country to debt-fueled, bubble-created 'growth' and destabilize the global economy."
WTO myths blocking China currency progress This week’s congressional hearings on China’s exchange-rate policy have great potential to begin eliminating dangerous U.S.-China economic imbalances and thereby promote real U.S. economic recovery and global economic stability. But first, legislators must scrap two myths about the World Trade Organization largely responsible for keeping U.S. China policy in procedural and legal limbo for years.
The first myth concerns what kinds of currency manipulation bills might conform with the WTO’s rules and regulations. Passing legality tests is naturally important for Americans – and of course, for their lawmakers! But the question is unanswerable because the WTO is not at bottom a legal-judicial institution. Instead, like all the major international organizations the United States has joined since the end of World War II, the WTO is a political organization. Power and interests govern what matters in Geneva, not jurisprudence.
Why free trade doesn't work for America Every now and then I come across a book I like enough to review since I think it should be in the hands of every American and every member of Congress. "Free Trade Doesn't Work: What Should Replace it and Why" by Ian Fletcher definitely fits that criterion.
One reason why is because Fletcher, who formerly was an economist and currently is an adjunct fellow at the U.S. Business and Industry Council (a Washington think tank founded in 1933), not only realizes that free trade doesn't work for America. He also realizes that the United States needs some form of protectionism if we are to ultimately get our economy back on track.
Trade deficit falls to $43 billion in July But Ian Fletcher, trade expert with the U.S. Business & Industry Council, which represents small manufacturers, said Commerce Department figures show how imports retard U.S. economic growth.
In the second quarter of 2010, the trade deficit subtracted 3.37 percent from the gross domestic product, leaving the economy growing at the anemic rate of 1.6 percent.
We Need Demand, Not Protectionism That latter point was the subject of an op ed piece in today’s New York Times, titled “Trading Away the Stimulus.” Its authors point out that so far this year America’s trade deficit has hit $289 billion, compared with $204 billion in the same period in 2009.” They attribute the lack of effectiveness of the stimulus program to this foreign trade leakage. They point out that “. . . since February 2009, the government has injected $512 billion into the American economy, but during roughly the same period, the trade deficit leaked about $602 billion out of it and into foreign markets.”
Translating Protectionist Rhetoric Two protectionists, Alan Tonelson and Kevin Kearns, wrote an op-ed in today's New York Times. It included this key declaration:
"[A] successful recovery strategy will require aggressive measures to reduce the trade deficit — including new and expanded tariffs to encourage the sale of domestic goods over imports and a serious reindustrialization policy to create the manufacturing strength to exploit these new opportunities."
Encourage? No, the more accurate word is "force." This passage should have been written to say "we want to raise taxes on the American people by forcing them to purchase more expensive goods that are less preferable to them."
Trading Away the Stimulus The trade figures from the Commerce Department this week aren’t pretty: despite anemic economic growth, so far this year America’s trade deficit has hit $289 billion, compared with $204 billion for the same period in 2009.
For many people, the trade deficit seems unrelated to the nation’s continued economic crisis. But it is actually a central reason why American growth has lagged and President Obama’s stimulus hasn’t led to a robust recovery: since February 2009, the government has injected $512 billion into the American economy, but during roughly the same period, the trade deficit leaked about $602 billion out of it and into foreign markets.
China won't budge on yuan unless U.S. insists Congressional fulminations (and possibly genuine anger) about China's policy of currency manipulation are mounting steadily, and hearings set for mid-September could produce retaliatory legislation. That's why the two following arguments will start popping up quickly all over official Washington and the media.
First, as the Obama administration already has insisted, Beijing will soon voluntarily recognize the folly of undervaluing the yuan and giving Chinese-made products major artificial price advantages in markets everywhere. Yes, manipulation has persisted for eight years despite loud complaints from domestic producers being undersold unjustly, but Americans still will be urged to give China just a little more time.
A Rare Event: Manufacturing Issues Are Discussed In The House Of Representatives The House of Representatives has passed a bill that would make the President responsible for creating a National Manufacturing Strategy. The legislation (HR-4692) received fairly glowing reviews from members of Congress while it was being discussed on the floor of the House on July 28 and at a hearing of a House Energy and Commerce subcommittee on July 12. But others aren't so sure. "We're really doing nothing but creating another study group, and that's about as duplicative as you could get," said Rep. Phil Gingrey (R-Ga.) during the floor debate. "God knows how many study groups we have already created."
Despite the misgivings, the legislation passed by a vote of 379 to 38. It received endorsements from Republicans and Democrats, and it had the backing of 50 co-sponsors. The private sector is also on board, with letters of support entered into the Congressional Record from Motorola and a dozen trade associations.
Manufacturing at the Crossroads The going is tough, especially for smaller manufacturers, said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, an association of privately owned manufacturers. He is the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade Are Sinking American Living Standards.
One of underappreciated effects of not challenging China’s undervalued currency “is that it erodes manufacturing margins,” Tonelson said. “Companies need high margins to invest in equipment to stay ahead of the competition. Their margins are paper thin right now.”
U.S. trade goal: double exports But the U.S. Business and Industry Council said the Obama administration has failed to deliver when it comes to protecting U.S. jobs and enforcing trade agreements, following the policies of his predecessor, George W. Bush, with only a slight deviation.
"There's no push to limit or reduce the imports to the U.S. If we could simply limit the growth of U.S. imports, we would be gaining hundreds of billions of dollars of orders for our homegrown manufacturers," said Alan Tonelson, a research fellow for the council, a national business organization comprised mostly of manufacturers.
Book Review: Ian Fletcher's 'Free Trade Doesn't Work' In Ian Fletcher's recent book Free Trade Doesn't Work, the author carefully dismantles one of economics most fundamental beliefs -- that free trade based on comparative advantage is good for all people, everywhere and all the time. Fletcher has written an accessible and easy-to-understand book about trade economics that is a great contribution to the ongoing debate about the benefits and costs of the current practice of free trade.
Free trade theory is one of those theories that is difficult to support with the evidence. By examining the data, Fletcher finds the theory of free trade to be fundamentally flawed and shows that it does not work as claimed, and in fact causes harm to many people.
S.D.-area trade is topped by many other metro areas But Alan Tonelson, who heads the U.S. Business and Industry Council in Washington, D.C., noted that even though exports have been increasing, imports have been keeping pace. In the first six months of the year, U.S. exports totaled roughly $517 billion, up 22 percent from last year’s $422 billion. But imports rose 21 percent, from $772 billion to $937 billion. As long as imports keep rising like that, Tonelson said, growth in exports will not create a net rise in employment.
FedEx's Campaign of Distortion We are about to find out yet again whether we are a nation of laws or men. The U.S. Senate will be voting perhaps as early as Tuesday on the FAA Reauthorization Act, including whether House-passed Section 806 will remain part of the bill. FedEx and its CEO Fred Smith have railed against Section 806 for several years now, claiming that it will lead to unionization of their Express division and endless labor strife, affecting the entire U.S. economy. These claims are all self-interested bluster, of course.
Section 806 is really about equal application of the laws of our country to all similarly situated businesses -- which should rise or fall in the marketplace based on their competitive abilities, not favoritism by the Congress. But perhaps we are after all a nation of CEOs: the current recession has exposed the out-of-bounds thinking and actions of many CEOs of large banks and corporations, which is too often aimed at manipulating the legal and political processes for personal and corporate gain.
Trade rep lauds Obama on jobs "We see no significant difference whatsoever," said Alan Tonelson, of the U.S. Business and Industry Council, which represents about 2,000 medium-size and small businesses. Mr. Tonelson said a White House plan to double exports in five years was misconceived and "will mean nothing if imports keep rising at the same level."
Green shoots of realism about trade? I almost fell out of my chair when the call came to the office last Thursday. CNBC wanted me to appear on a segment dealing with that mornings government report on the U.S.'s May trade deficit.
"The trade deficit?" I wondered as the producer and I began talking. Why was CNBC interested in that? True, the gap unexpectedly jumped 4.8 percent, to $42.3 billion -- the highest level in 18 months. But the previous 17 increases had passed with virtually no media notice.
US trade deficit widens to 18-month high "Unless President Obama resolves the resurgent US trade crisis, he won't encourage sustainable US recovery, said Alan Tonelson, a research fellow at the US Business & Industry Council of mainly family-owned domestic manufacturing companies.
Much Needed Currency Reform Bill Is Only a Small First Step Towards Dealing with China It's nice to see the long-stewing Chinese currency manipulation pot bubbling a bit again, thanks to China's latest blatantly disingenuous move to allow a token fluctuation or two of the yuan. And it's great that Sen. Debbie Stabenow's currency bill is inching towards the floor of the Senate. (The underlying idea, giving American industries formal trade remedies against currency manipulation by foreign governments, was actually thought up several years ago by Kevin Kearns, president of my organization, the U.S. Business & Industry Council.)
Passing this bill would be a very useful and encouraging step. Currency manipulation and related trade chicanery have gone on long enough. It's especially encouraging that the bill's sponsors grasp -- as the trade-clueless Obama administration doesn't -- that trying to change China's behavior is a losing game. So this measure wisely dispenses with preaching reform to Beijing and simply authorizes the use of sanctions in particular cases to provide trade relief to victimized American industries.
Overcoming Free Trade, An Uphill Fight Ian Fletcher, economist, is an Adjunct Fellow at the San Francisco office of U.S. Business and Industry Council, with a specialty in protectionism and industrial policy. Fletcher believes that America's financial mess and our festering trade crisis were both caused by bad policies that mainstream economists told us were OK. His writing is data driven, uses common sense, is interesting, and eschews arcane mathematics. The 'bad news' is that overcoming free trade will be an uphill fight - 97% of economists support it.
If only 'free trade' doctrine was the provenance of university mathematics departments, it wouldn't last five minutes. Elementary math is enough to discredit the underlying thinking. Unfortunately, in the past two decades the U.S. has accumulated a $6 trillion trade deficit following its prescriptives. University of Maryland economist Peter Morici estimates the U.S. economy is about 12% lower than it would be absent these trade deficits.
He said the Beijing authorities have made similar statements before, but he believes they are more concerned about unemployment than inflation. "Maintaining employment has been the paramount goal," he said.
China's Share of Advanced U.S. Manufacturing Market Soars China, widely dismissed as a head-to-head economic competitor to America in advanced manufactured goods, has been seizing significant and often rapidly rising shares of the U.S. market for dozens of these high value products from American-based producers for more than a decade, according to a new study by the U.S. Business and Industry Council (USBIC).
China's industrial prowess is now beginning to threaten those domestic industrial sectors that Americans have long relied on to create premium-wage jobs and technological innovation, and to undergird national security, the group explains. Expanding these industries is also a key to any sustainable U.S. economic recovery, the council notes.
China close to catching U.S. in manufacturing Alan Tonelson, research fellow at the U.S. Business and Industry Council, a group of businesses critical of U.S. trade policy, said Chinese manufacturers overtaking their U.S. counterparts is inevitable, given the policies of the two governments.
"They've been pursuing a policy of maximizing manufacturing growth, while Washington's attitude over the decades has ranged from complete indifference to outright neglect," he said.
He said that trade policy and China's decision to keep its currency artificially pegged to the dollar rather than freely traded aren't the only reasons for growth of Chinese manufacturing. But he argues they helped open the door to a flood of Chinese exports that have hurt a wide range of U.S. manufacturers.
USBIC: Another Embarrassing Trip To China For America’s Top Economic Diplomats It was another embarrassing trip to China for a high-level group of American diplomats and cabinet members, according to organizations representing domestic manufacturers. While attending the latest U.S.-China Joint Commission on Commerce and Trade (JCCT) in late May, Treasury Secretary Timothy Geithner experienced what three Bush administration Treasury Secretaries experienced: a public rebuff from a senior Chinese official regarding China’s intransigence on its currency. “Face is a critical concept in Asia and every time the last four Treasury Secretaries have gone to Beijing, they have lost face while they were there,” says Kevin Kearns, president of the United States Business and Industry Council (USBIC), and a 12-year veteran of the State Department. “They are telling us that they are not going to cooperate. They have been telling us that since January 1994, when they competitively devalued their currency for the first time and started sucking the manufacturing out of the United States. This is a rogue economic state whose behavior has gone unchallenged for 16 years. Why should they stop doing what is working for them?” The Obama economic team “is as clueless as the Bush administration” on manufacturing, trade and jobs issues, says Kearns, whose organization represents 1,500 domestic U.S. manufacturers. Kearns says that Obama has no intention of addressing Chinese protectionist and mercantilist policies. “The central problem is that the elite political and economic class in the United States operates under Ricardo’s Theory of Competitive Advantage and free trade, and they don’t understand that this theory is useful but completely inadequate in the modern world,” says Kearns. “People like Larry Summers [director of the White House National Economic Council] and Christina Romer [Chair of Obama’s Council of Economic Advisors] operate like this is gospel. The Chinese are home free on currency. Even if we got a currency bill out of Congress Obama would veto it.” Another problem with the Obama economic team is that it is listening to a group of men whose companies are known for outsourcing jobs. CEOs from Cisco, Caterpillar, GE and Fed Ex are on the White House Economic Advisory Board. “If you think they are manufacturers or are domestically oriented,then you are not hearing from domestic manufacturers,” says Kearns. “If you have [NAM President] John Engler and [Chamber of Commerce President] Tom Donohue claiming to represent domestic manufacturers you are in big trouble. These guys not only drink the Kool-Aid, they mix it and pour it.” Obama’s advisors have put in place economic policies focused on creating a “pseudo bounce, that is purchased with future dollars and is only designed to restore the status-quo ante,” says Kearns. “The status quo ante is what led us to the recession. We are not doing anything for manufacturing and or wealth creation. The Obama team has no idea. Their idea is that after Rohm Emanual handled the Monica Lewinsky scandal [for Bill Clinton], he becomes an investment banker, makes $28 million and then runs for Congress. That is his idea of how you make money.”
Trade with China divides U.S. business The U.S. Business and Industry Council, which represents about 2,000 businesses wary of international trade, argues that it's time for tariffs.
"Secretary Geithner in particular seemed much more interested in giving the results a pro-China spin than in ending the currency and trade cheating that has devastated Main Street economic interests," said Kevin Kearns, president of the business and industry council.
"Only outsourcing and importing corporate interests could be pleased by this PR exercise."
2000-2010 a de-industrialization decade for U.S. manufacturing Calling it a "de-industrialization decade", the U.S. Business and Industry Council's (USBIC) analysis of new trade and output data showed that 70 different U.S. manufacturing industries ran trade deficits in 2009 at a time when the recession depressed domestic demand, with alarming rates of decline going back to 2000. Plastics and related industries were not spared, according to the USBIC, with the material among the 15 of 114 industries that saw "unusually fast-growing import penetration rates," losing 15% or more of their home U.S. market to imports.
China's obsession with exporting The latest installment of the U.S.-China Strategic and Economic Dialogue concluded last week, and nothing comes to mind so readily as that classic joke about communism: "They pretend to pay us, and we pretend to work." Only the talks are much worse than a joke. They keep pushing the U.S. and world economies further away from genuine recovery and closer to renewed bubblization.
Can Geithner Pull the Right Strings in U.S.-China Relations? "I see no signs that Geithner has had the slightest effectiveness with the Chinese," says Alan Tonelson, a research fellow at the U.S. Business & Industry Council. "The big test of the Administration's policy will be whether Congress is impressed with this dismal record."
Tonelson clearly isn't a fan. Geithner, however, appears to have plenty of them on the mainland, judging by his warm reception in China. Particularly flattering were the comments of Chinese television talk show host Chen Luyu, a Chinese version of Oprah Winfrey, who referred to the Treasury Secretary as one of the Obama Administration's best-looking officials.
Re-bubble-izing, Not Recovery So - everything learned about economics to date is completely wrong, and countries really can spend their way to real prosperity, right?
That’s certainly one lesson that can be drawn so far from recent economic data pointing to a U.S. recovery from the Great Recession. Here’s another – and one that seems much more realistic: The recovery data show that the nation is simply re-creating the same patterns of production and consumption that inflated the biggest financial and economic bubble of all time during the last decade, and whose bursting of course triggered the recession to begin with.
Conservative Groups Blast Senate Patent Bill The head of the U.S. Business and Industry Council and leaders of 16 conservative groups blasted the Senate Judiciary Committee's patent reform bill Thursday and urged Republican senators to block the measure from the Senate floor, CongressDaily reported.
"We urge you to place a hold on this bill until the provisions undermining basic property rights, economic freedom, the interests of small inventors, universities, and research consortia, and job creation are corrected," according to a recent letter sent to Senate Republicans and signed by U.S. Business and Industry Council President Kevin L. Kearns as well as officials with such groups as the Eagle Forum and the Traditional Values Coalition.
Manufacturing Community Sets Agenda at Leadership Summit On a subsequent panel, economist Alan Tonelson, research fellow at the U.S. Business and Industry Council, echoed the need for policy and tax change. He advocated imposing a 40% tariff on goods from China and “buy America” requirements on federal agencies unless China stops what he called huge manufacturing subsidies and also allows its currency to float rather than manipulating it to favor Chinese exports.
Otherwise, the U.S. stimulus program will be short-lived “gimmickry,” he asserted. Tonelson said he is worried that the current recovery could be a “mammoth fake” that he likened to the deficit-inducing government spending that followed the post-2001 recession and eventually led to the 2008 credit collapse and housing bubble burst.
Hot new export: Hoosier Jobs In the past year, President Barack Obama has sketched the broad outline of an industrial renaissance, but "you actually see a lot of active resistance to the idea" of a national industrial policy, said Alan Tonelson, economist at the U.S. Business & Industry Council, a Washington trade group representing 1,500 smaller manufacturers.
"Many sophisticated policy analysts in Washington who look at these issues work at institutions whose sponsors want the economy to be finance heavy and status quo,'' Tonelson said.
US politicians playing "silly little games" on China Alan Tonelson, of the United States Business and Industry Council, which represents 1,500 small and medium sized US businesses, says he prefers to look at the past decade of China's recurring giant trade surpluses, not - what he calls - the "temporary blip" of China's recent import boom.
Mr Tonelson says that American policy makers are getting it wrong by not focussing enough on China's currency policy, as well as on "China's manifold other trade barriers and other predatory practices", which he argues have "been at the expense of jobs, growth and production all over the world".
The results of reckless borrowing In his April 21 letter ["Get over the factory fixation"], Donald J. Boudreaux wrote correctly that, despite manufacturing's relatively low share of the U.S. economy, Americans have not suffered "a lack of access, or even shrinking access, to industrial production." What he forgets, though, is a major consequence of the nation's enormous, longstanding manufacturing-dominated trade deficits:
China Slows Down the Global Supply Chain There's a school of thought in some manufacturing circles that suggests that the loss of millions of manufacturing jobs over the past decade can be blamed largely, if not entirely, on China's emergence as the world's low-cost producer while flouting the global trade rules that other countries follow. China, for instance, "has consistently manipulated its currency to steal productive capacity from the United States," observes Kevin Kearns, president of the U.S. Business and Industry Council. This currency manipulation has allowed China to "devastate America's invaluable productive industries, addict the country to debt-fueled, bubble-created 'growth' and destabilize the global economy."
Is China a Currency Manipulator? The U.S. Business and Industry Council's Alan Tonelson and the Peterson Institute's Fred Bergsten both believe China manipulates its currency, but they question China's response to the Treasury's postponement. Tonelson says China will evade rebalancing if the United States does not both label it a manipulator and impose tariffs. Bergsten questions whether any independent effort by China to revaluate its currency would go far enough.
Cut the baloney and look past the yuan Just before my only trip to China, a veteran Asia watcher gave me this invaluable advice: Resist the "ooh-aah syndrome." However mind-bending China appears, keep your baloney-meter on. Clearly, he's never gotten through to President Obama or most of the punditocracy. For baloney has abounded lately in the China currency manipulation saga. Consider the main ideas clearly shaping the past week's decisions:
Obama, Hu discuss yuan on sidelines of nuclear summit "Settling for token China currency moves would betray American producers and their employees and delay U.S. recovery," said the U.S. Business and Industry Council, a trade group of small manufacturers.
Treasury Secretary Postpones Report On Currency Policies The U.S, Business and Industry Council (USBIC) reacted strongly to Geithner's decision, saying a delay in labeling China a currency manipulator "can only guarantee more American factory cutbacks and closures with accompanying job losses." USBIC President Kevin Kearns said, "Once again the Obama administration is forcing our domestic producers to pay the price of U.S. diplomacy repeating an ineffective Washington tradition of buying foreign cooperation with U.S. market share."
U.S. Buys China Time on Currency A U.S. Treasury's decision to delay making a determination on whether China is manipulating its currency could give Beijing some room to let the yuan rise in value. But some U.S. lawmakers and business groups are continuing to push for a tougher, and faster, approach.
Treasury Secretary Timothy Geithner said Saturday the U.S. would delay a report to Congress on the currency policies of major trading partners, including China, citing a spate of high-level meetings between China and the U.S. The meetings, he said, "are the best avenue for advancing U.S. interests at this time."
Geithner Counts on Delay to Let China Strengthen Yuan The Treasury’s delay “underscores the urgent need” for Congress to pass such legislation, said Alan Tonelson, research fellow with the U.S. Business and Industry Council, a Washington-based organization representing about 2,000 manufacturing companies.
“There can be no question that attempts to negotiate an end to China’s currency manipulation have failed for eight years and it is long past time for unilateral U.S. responses,” Tonelson said in an interview.
Michigan firms say they are hurt by trade policy with China Alan Tonelson, a research fellow with the U.S. Business and Industry Council, which represents small U.S. manufacturers, warns that a small rise in the yuan's value could be the worst outcome for U.S. exporters. China could make such a step to relieve political pressure, but offset the changes at home through other subsidies, such as cheap credit.
"They've become quite good at playing this type of shell game, and we have been much less good in picking it up," Tonelson said.
US, China look to compromise on yuan Alan Tonelson, a research fellow at the US Business and Industry Council, which represents small and medium-sized manufacturers, argued that the yuan is around 50 per cent undervalued and is causing a slew of US factory closings.
"If China is successful in its goal of relieving the moderately mounting pressure on it, then the US and world economies will face a very serious setback," Tonelson said.
US delaying currencies report amid China dispute Alan Tonelson, research fellow at the U.S. Business and Industry Council, which represents 1,900 mainly family-owned U.S. manufacturing companies, said Geithner's decision "guarantees that at least through June, more U.S. factories are going to be closing down, more U.S. workers will lose their jobs."
U.S. Delays China Yuan Ruling Ahead of Hu Visit The U.S. Business and Industry Council, a trade group, said the administration apparently would delay the release of the report until after the G20 summit meeting in June.
As a result, "for three more months, more American factories will close or cut back production and more of their employees will lose their jobs" because unilateral U.S. tariffs are needed to combat "predatory trade practices."
China moves appear to target Google "Most businesses seem to take the attitude, based on their public pronouncements and actions thus far, that the Chinese government can take advantage of them in any number of ways," said Alan Tonelson, a research fellow focused on China at the U.S. Business and Industry Council, which represents U.S. manufacturing companies. "They've convinced themselves that they're making so much money now that it's worth it, or the prospective market is so big that they can't afford to ignore it."
Defense contractors turning gaze abroad Pentagon budget analysts, however, say part of the industrial decline traces to the Pentagon itself. Procurement rules favor military products made in the United States, but trade analyst Alan Tonelson notes that loopholes abound. For example, the rules allow a weapon system like a guided missile to be considered made entirely in America if at least half the components are made in the United States.
'There are buy-American provisions in the law. They are rarely enforced. The Pentagon's basic attitude related to foreign procurement is don't ask, don't tell," said Tonelson, of the U.S. Business and Industry Council, a trade group representing smaller manufacturers.
Debating the Buy American provision "Your Feb. 18 article contains warnings from the U.S. Chamber of Commerce about the Obama stimulus package's domestic purchasing requirements that don't deserve to be taken seriously.
As the article reported, the Chamber has warned that tit-for-tat "retaliation by foreign competitors [against these requirements] could cause U.S. companies to lose 1% of potential foreign stimulus procurement opportunities and result in 176,800 job losses." Broader adoption around the world of "buy national" requirements would cost many more jobs, the report adds. But the warnings come from a Chamber report whose logic and methodology are fatally flawed. Specifically, the report presents an utterly implausible portrait of the import share of the U.S. federal procurement market. Moreover, it completely ignores the likely effects of the organization's preferred policy response -- a stimulus package with no Buy American requirements at all. Consequently, the report's conclusions about the net effects of the Buy American provisions are equally implausible.
Trade deficit dips; exports, imports fall "The signs of failure on the China trade front keep multiplying, most recently with the plunge in U.S. goods exports to this rapidly growing giant," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents mainly family-owned domestic manufacturing companies.
"Without rebalancing U.S.-China trade," Mr. Tonelson warned, "U.S. factories will keep closing, and U.S. manufacturing workers will keep losing their jobs."
Obama Launches New Exports Push as Trade Deficit Narrows -- but Hard Road Ahead But critics said the key was whether "net exports" rose. "Doubling exports per se does nothing to generate net growth either in economic output or job creation," said Alan Tonelson, research fellow at the U.S. Business and Industry Council.
"As I've said before, China moving to a more market-oriented exchange rate would make an essential contribution to that global rebalancing effort," Obama said in remarks prepared for delivery at the U.S. Export-Import Bank's annual conference.
After all, dealing with the world economy has often angrily divided conservatives since the Cold War ended. Future decisions on trade and related policies will surely affect U.S. employment and living standards — for good or ill — in increasingly prominent ways as the economic slump drags on. And clashing sentiments have already appeared in tea party ranks.
Trading Away Productivity For a quarter-century, American economic policy has assumed that the keys to durable national prosperity are deregulation, free trade and a swift transition to a post-industrial, services-dominated future.
Such policies, advocates say, drive innovation, which leads to enormous labor productivity and wage gains — more than enough, supposedly, to make up for the labor disruptions that accompany free trade and de-industrialization.
The Great Trade Debate: Ian Fletcher - Reply to Dan Griswold on Free Trade Dan’s cheery (if somewhat bubble-inflated) statistics on the recent general prosperity of the U.S. are a mere distraction here, as nothing about these figures indicates whether free trade worsened or improved them. So I will not address them.
Some of Dan’s analytically-relevant assertions, however, are demonstrably false, like his claim that “trade has created better jobs for millions of Americans.” The reality is that the U.S. economy has ceased generating net new jobs in internationally-traded sectors. All our job growth is now in non-tradable sectors like waitresses and security guards.
Selling China the digital rope to hang us U.S. policy toward China increasingly sounds like a spoof from "Saturday Night Live." Google has accused China of launching cyber-attacks on it and least 20 other companies. The Obama administration has all but implicated Beijing in a recent electronic warfare campaign against critical computer networks throughout the U.S. government, military and the broader economy. And for good measure, the Obama Pentagon has identified China's growing military might - powered by is burgeoning technological prowess - as a major threat to U.S. interests not only in East Asia, but also globally.
Yet, all the while, America's outsourcing multinational companies - including Google - are lobbying the Obama administration, so far successfully, to enable them to strengthen China's technological prowess still further. Specifically, these companies have persuaded the White House to support easing America's controls on the export of defense-related goods and technologies to China and other countries of concern.
To debate this issue without bogging down in semantics, we need to make a few things clear at the outset. For a start, the phrase “free trade†has two meanings, which are often confused:
Buy American Issues Surfacing Once Again Responding to the Chamber of Commerce report, Alan Tonelson, a research fellow with the U.S. Business and Industrial Council Education Foundation, charged that the chamber is "run by off-shoring multinational corporations who want to remain free to supply U.S. markets from foreign sources even though the trade and broader imbalances that have inevitably resulted helped trigger the ongoing economic and financial crisis."
The Fight for a U.S. Industrial Policy But using tax breaks to spur industrial growth is likely wishful thinking, according to Alan Tonelson, research fellow at the U.S. Business and Industry Council (USBIC), a left-leaning trade group representing small and midsize manufacturers. He says it's unlikely that corporations would use tax breaks to jump-start U.S.-based manufacturing.
"Large companies have proven themselves to be good at tax avoidance," Tonelson says. "And I have full faith in their ability to hire state-of-the-art accounting talent to run rings around what Washington can come up with."
Doubling exports or double-talk? So President Obama wants to "double our exports over the next five years" in order to "support 2 million jobs in America." I'd have greater-than-zero confidence in this State of the Union goal being reached if I saw any evidence that the president knew anything about exports, employment, and the relationship between them. Tragically, that evidence is nowhere to be found.
The president doesn't even start off on the right foot. It may seem the soul of logic that "the more products we make and sell to other countries, the more jobs we support right here in America."
Pumping up "Buy American" Proponents of the "Buy American" policy say the current U.S. legislation doesn't go far enough. They believe the true resurgence of the American manufacturing industry is essential for a real economic recovery globally. BNN speaks to Alan Tonelson, research fellow, U.S. Business & Industrial Council Educational Foundation.
America must learn to build wealth anew An export initiative is a distraction, said Alan Tonelson, research fellow at the U. S. Business & Industry Council. “We need to replace the imports we consume with products made in our own country,” he said. Congress must quickly post import taxes against China for artificially devaluing its currency, Tonelson said.
Where Will the Jobs Come From? So there have been voices, for example Alan Tonelson, arguing for a resurgence of manufacturing as the only credible exit route from recession. This will certainly not provide any short-term impact but easily raises controversy. Now, for example, when the nation desperately needs jobs, unions are opposing free trade agreements which would increase manufacturing at some locations, but stress it at others. The challenge is exacerbated by demographic projections which show an expanding retired population depending on a shrinking work force.
Yes, he made the now-obligatory factory visit. Yes, he declared that "America's got to make things." And yes, he once more touted "green" manufacturing -- which remains embryonic in scale at best.
Mr. Tonelson, who works for an organization that supports the interests of family-owned or closely held businesses, said that when it comes to manufacturing, the president has done "virtually nothing aside from putting a very leaky Band-Aid on GM and Chrysler."
U.S. Trade Gap Widening in Advanced Technology "It warns that a long-time strength of the U.S. economy is fast becoming a major weakness," said Alan Tonelson, a research fellow for the U.S. Business & Industrial Council Educational Foundation, a Washington research organization studying U.S. economic, technology, and national security policy.
U.S. exports of high tech goods dropped by 11.31% in November, from $23.70 billion to $21.01 billion, while imports of those products stood at $29.3 billion.
Another point of concern is that the increase in overall trade deficit came despite a 10.75% drop in the imbalance against China. According to Tonelson, the manufacturing troubles in the U.S. aren't just limited to trade with the Chinese.
Bon Voyage, Manufacturing? Reading President Obama’s Framework for Revitalizing American Manufacturing makes three conclusions all too clear. First, the president doesn’t understand the main economic reason for revitalizing domestic manufacturing (as opposed to the political reasons – mainly throwing a few real and rhetorical crumbs to his union supporters). Second, knowing nothing about the stakes involved in reindustrialization, the president has no sense of the sector’s most important weaknesses, and how serious they remain. Finally, the president’s ignorance about manufacturing’s real significance has inevitably produced a revitalization program certain to fail – and to deepen the economic crisis even further.
Google-China showdown may alter tech game Even if the human rights and censorship issues don't much matter to company executives, being hauled before Congress, called to account by shareholders and castigated in the media certainly do, said Alan Tonelson, a research fellow focused on China at the U.S. Business and Industry Council, which represents U.S. manufacturing companies.
Tonelson doesn't expect Google's decision to upend the status quo in China, but said companies may step up efforts behind the scenes to ensure they are "not obviously vulnerable to the same kinds of bad publicity that Google and Cisco and Yahoo ran into."
Reevaluating China’s promise The Google announcement should be a wake-up call to US companies expanding in China, said Alan Tonelson, a research fellow at the United States Business and Industry Council Educational Foundation, a manufacturing trade group in Washington, D.C.
“The Google statement should cause any company that’s doing business in China to ask itself if its investment is really working out, or if it’s a victim of hype about the Chinese market,’’ Tonelson said. “These companies should also be asking themselves if they feel that their intellectual property is safe in China, and if their products are being used to track dissidents and human rights activists.’’
Hoosiers in the grips of a recession state of mind That's a worst-case notion cited by Tonelson, a conservative trend analyst in Washington whose article in the January issue of Harper's magazine argues only a manufacturing renaissance can revive the economy.
Manufacturing coming back into fashion, booster says "Manufacturing is suddenly all the rage," writes Alan Tonelson in an essay titled "Up from globalism," that appears in the January issue of Harper's Magazine.
Or is that just wishful thinking? As a research fellow at the U.S. Business and Industry Council, Tonelson is an unabashed proponent of a reviving U.S. manufacturing and a relentless critic of currency manipulations and other tactics that he believes have disadvantaged American industry.
Tonelson bolsters his argument in Harper's by citing the newfound manufacturing enthusiasm of General Electric chief executive Jeffrey Immelt, including an admission by the latter that "in some areas we may have outsourced too much."
Is Obama's manufacturing fix too late? Will the Obama administration's new blueprint for "Revitalizing American Manufacturing" be a case of "better late than never" ... or "too little, too late"? Two weeks after the document's release, the "late" part is the only certain characteristic.
After all, the ongoing economic crisis stems ultimately from chronic U.S. underproduction. Therefore, truly healthy growth (as opposed to the artificial, unsustainable, government-generated variety) won't return until the nation greatly boosts genuine wealth creation. Manufacturing dominates the segment of the economy that creates real wealth (as opposed to the paper variety to which responsible finance is limited).
The truth about exports? In the most recent edition of Harper's Magazine, for example, Alan Tonelson, a Research Fellow at the U.S. Business and Industry Council, writes: "Today, the idea of maintaining genuine American prosperity without a vibrant manufacturing sector stands exposed as a fairy tale . . . Americans rightly want a high-tech national economy full of 'knowledge workers,' but this goal is unachievable without major reindustrialization . . . A much bigger domestic industrial base is crucial since only manufacturing has ever lifted large numbers of working-class Americans into these ranks."
What a Tangled Web Lots of Americans these days are upset that members of Congress keep voting on legislation – like the nearly 1,100-page stimulus bill, the 2,000-page health care bill and the 1,000-some-odd-page climate change bill – without even reading these measures. But here’s something much more disturbing: Few legislators have bothered to read any of the federal government’s 25-page annual reports on the global operations of U.S. multinational companies, either. If they had, they never would have swallowed the multinationals’ claims that the last decade-and-a-half’s worth of trade deals they’ve pushed through Washington have strengthened the U.S. economy rather than weakened it.
Bold, concerted action is needed to put the manufacturing sector back on track. According to Alan Tonelson of the U.S. Business & Industry Educational Foundation, the stimulus program has created or saved just 2,500 manufacturing jobs. The Obama administration has spent a lot of political capital and resources on health care reform and climate change. Those are hugely important issues. But for now and the foreseeable future, Job 1 for this administration is jobs. More specifically, promoting the creation of private-sector jobs, not public-sector jobs that can't be supported long term by a debt-ridden government. If you want to magnify the effects of your economic investments, manufacturing is a great place to start. Get going.
New president, same result on dispute over China's currency "During the presidential campaign, Barack Obama and Hillary Clinton signed on to the Senate version of a currency manipulation bill. ... They've done nothing to advance that legislation" in office, complained Kevin Kearns, the president of U.S. Business and Industry Council, which also represent small manufacturers.
Kearns suggested taxing China's currency transactions when the Chinese buy dollars with yuan, or imposing a border tax on Chinese goods. A third option is allowing currency manipulation to be considered a violation punishable under trade laws.
Trade rift awaits Obama in China "China's leaders have shown absolutely no interest in working cooperatively with the United States to significantly reduce trade and investment surpluses that helped trigger the global economic crisis and that still endanger the world economy," said Alan Tonelson, an analyst at the U.S. Business and Industry Council, which represents small and medium-sized domestic manufacturers. "Therefore, the time for talking trade with Beijing is over. President Obama needs to show real leadership, use America's still-decisive market power and act unilaterally to rebalance bilateral trade flows."
September trade gap widened 18.2% "If President Obama really wants to create more good American jobs, he doesn't have to wait for the [jobs] summit he's planned upon his return from Asia," said Alan Tonelson of the U.S. Business and Industry Council, whose members mainly include family owned domestic manufacturing companies. "He can tell the Chinese and other regional leaders that he'll be acting unilaterally to slash America's massive job-killing Asia trade deficits with strong measures to combat the region's pervasive trade cheating."
mport surge pushes up US trade gap The US Business and Industry Council, a national business lobby group, said Friday that Obama should threaten action when he met leaders of China and other Asian nations with which the United States was saddled with "huge" deficits.
"He can tell the Chinese and other regional leaders that he'll be acting unilaterally to slash America's massive, job-killing Asia trade deficits with strong measures to combat the region's pervasive trade cheating," said the council's research fellow Alan Tonelson.
"And the president can start by demanding that Congress send him a strong bill to fight currency manipulation," he said.
Why Foreign Businesses Dig Mississippi Alan Tonelson, research fellow at the U.S. Business and Industry Council, has a myriad of arguments to hurl at the country's growing habit of selling off its assets, however.
"We see lots of headlines about new Japanese and German automobile factories opening up, but those kinds of investments are very much the exception," Tonelson said. "Most incoming direct investment takes control of or invests in existing companies, so it's quite questionable from that standpoint how much new wealth most foreign investment really creates."
Tonelson points out that the U.S. followed a similar trend of allowing considerable foreign investment in the late 1800s, but adopted a more protectionist stance soon after due to economic difficulties.
"The salary may be appreciated by local workers, but nobody's talking about how the profits tend to go offshore. They tend to go back to the home country rather than staying here," Tonelson said. "We have no record of how much the U.S. stands to lose from this trend, but we do know that foreign-owned companies are more likely to run up bigger trade deficits than U.S.-owned companies. They tend to import more than they export and they add to U.S. trade debt. They are magnets for foreign imports from their own companies."
U.S.-China trade negotiations useless Last week's Cabinet-level U.S.-China trade negotiations and their lead-in were such an embarrassing flop for the United States that President Obama should probably skip Beijing on his upcoming visit to Asia. The talks, ostensibly aimed at righting the two countries' dangerously lopsided economic relationship, instead have made incontrovertibly clear the pointlessness of holding trade talks with China in the first place.
Not that the evidence hasn't been piling up for years - in the form of continuous American sycophancy, the downright insulting Chinese bluster that invariably follows, plus a Chinese determination to violate commitments nearly as intense as Washington's determination to look the other way or serve up excuses.
Strauss-Kahn Says Yuan ‘Undervalued,’ Will Appreciate The U.S. Treasury, in an April report, refrained from labeling China a manipulator of the yuan’s exchange rate, a decision criticized by the U.S. Business and Industry Council. It accused President Barack Obama of breaking a major election commitment to “fight Chinese exchange-rate protectionism.”
By law, the Treasury has to enter direct talks with a country deemed to be manipulating its currency, and also seek redress through the IMF. The department said in April it would “use every opportunity” to engage the Chinese “to permit greater flexibility” in the yuan, also known as the renminbi.
Overall, the economy is looking up—manufacturing, not so much Alan Tonelson of the U.S. Business & Industry Council and Lloyd Wood of the American Manufacturing Trade Action Coalition spoke at the annual Fall Conference of the American Mold Builders Assn., and presented some disturbing statistics for U.S. manufacturing that directly impact moldmakers, and, in turn, molders.


Tonelson stated that “the health of the U.S. mold industry is an indicator of the health of U.S. manufacturing overall. You are all at ground zero of the efforts to strengthen U.S. manufacturing.â€â€¨â€¨
Tonelson noted in his report that the recession has hit manufacturing especially hard. “Whereas the entire economy grew by 0.74% in real terms in 2008, the non-bubble-ized manufacturing shrank by 2.74%,†Tonelson said. “Manufacturing’s output losses so far in this recession (down 16.70%) already exceed even those of the 1973-1975 recession (15.32%)—formerly the worst U.S. downturn since the Great Depression.â€â€¨â€¨
Manufacturing recovery likely slow to come "Manufacturing output will continue to considerably lag the growth rate of the overall economy, creating tremendous problems for the U.S. economy," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a national business organization whose 1,900 members are mainly small and medium-sized domestic manufacturers.
"If we want to increase our living standards, we can’t just increase savings. We must increase production," said Mr. Tonelson.
Business Group Calls for Caution in Reforming Export Control System The U.S. Business and Industry Council issued Oct. 8 a document outlining the issues it wants addressed as part of the Obama administration’s ongoing review of the U.S. export control system. The document counters many of the recommendations recently advanced by the Coalition for Security and Competitiveness, which the USBIC suggests are not based on accurate premises and do not “realistically address genuine security as well as economic realities.” The USBIC’s arguments include the following.
U.S. exports stall after hefty gains "The 'cash for clunkers' program is a great example of how ill-conceived stimulus programs can leave the nation even further behind the debt eight ball," said Alan Tonelson, research fellow at the U.S. Business and Industry Council, which represents 1,900 small and medium-sized domestic manufacturers.
"Because the program lacked any 'Buy American' or U.S.-content requirements, U.S. government figures show that it mainly spurred the purchase of foreign-brand autos, which remain largely imported and [whose U.S.-assembled vehicles] typically contain high levels of foreign-made parts," Mr. Tonelson said.
G-20 leaders reach broad agreement to head off economic crises Alan Tonelson of the U.S. Business and Industry Council said G-20 statements addressing economic imbalances won't result in a global consensus on what is really needed: addressing China's currency policies that promote exports at the expense of U.S. workers.
"The Chinese follow an export-led model because they are terrified of rising unemployment. They know they can't create and maintain all the jobs they need by selling only to their own market," he said. "The United States is going to have to act unilaterally. It would be great to get more cooperation from the rest of the world, but that has not been forthcoming." Mr. Tonelson said the G-20 will not be in a better position than the G-8 to reach agreement on the issue. "It will mean very, very little," he said. "Creating a new institution or expanding an old one does nothing per se."
Deference to WTO hurts U.S. Neither President Obama nor congressional leaders want to hear this, especially just before the Pittsburgh global economic summit, but U.S. economic recovery and renewed global economic health are facing a big new obstacle: the World Trade Organization.
The organization was sold to Americans as an impartial global trade court. But quite naturally, it has usually advanced the top priority of the 150-odd other members - growing by exporting to the U.S. For years, the WTO helped fuel the global imbalances ultimately responsible for the economic crisis. Today, it's blocking the only hope for genuine global recovery - enough sound U.S. growth to slash America's debts and rebalance a still-lopsided world economy.
U.S. trade gap widens sharply in July Alan Tonelson, research fellow at the United States Business and Industry Council, a manufacturing trade group, said the data showed that federal stimulus spending, designed to spur U.S. growth is "hemorrhaging" overseas.
As a result, there is little job creation in the U.S., Tonelson said.
Day's Buy American letter panned "I think unfortunately Canada's provinces and localities have missed the boat here," said Alan Tonelson, a research fellow at the US Business and Industrial Council Educational Foundation.
"At this point, since this deal [Mr. Day is offering] would be negotiated essentially in isolation, in our view it would be a very poor deal for the United States to agree to," he said.
"The US state procurement market is so much bigger than the Canadian. In fact, it's frankly hard to characterize this offer as being the slightest bit serious," he added.
Private Sector Commentary: Pennsylvania's vanishing manufacturing Many people know that Pennsylvania has a huge manufacturing jobs problem. Over the past 10 full years, the state's nonfarm employment rose by 306,100, or 5.57 percent. But the state's 229,500 lost manufacturing jobs equaled more than 4 percent of its total employment, and more than 26 percent of the state's 873,700 manufacturing jobs in 1998.
Through June of this year, we have seen more of the same -- the state's total nonfarm employment has edged up by 0.69 percent (38,900 jobs) but manufacturing payrolls shrank by another 5.15 percent -- or 31,400 workers. These manufacturing jobs matter because as of 2007, they paid fully 18 percent more than the state's average nonmanufacturing job.
Trade ruling against China may open doors for state firms "China has been very reluctant to even specify criminal penalties for intellectual property theft, much less throw people in jail for it," said Alan Tonelson, research fellow with the U.S. Business and Industry Council.
"The only exceptions have been a handful of cases which very much appeared to have been staged for foreign consumption," Tonelson said.
In the dark on globalization, trade policies Imagine a national health care debate in which interested parties such as the insurance companies monopolized the key data and released it only in the most self-serving ways. The chances of getting health reform right would be minimal.
America's long-standing debate on trade policy and globalization has been overshadowed recently by the health care battle, and, generally, by the Great Recession. But its importance must not be slighted by a country choking on debt largely because it has long bought much more from the rest of the world than it sells. And inexcusably, America's chances of getting globalization right are far too slim because interested parties -- specifically, outsourcing-happy multinational corporations -- have for decades monopolized the key data and released it only in the most self-serving ways.
Electric-car grants to bring jobs -- but where? "The U.S. is already running a trade deficit in most green products," said Alan Tonelson, senior economist at the U.S. Business & Industry Council, a conservative trade group in Washington. "There's no reason to expect it will be any different (on electric cars). We're already quite reliant on foreign-made content."
In terms of actual size, the answer is, no. But if size is a proxy for relative health of each nation's sector, the answer is yes.
Anyone who walks the aisles of a U.S. retailer might think China already is the world's largest manufacturer. But, in fact, the U.S. retains that distinction by a wide margin.
Obama calls for deeper U.S.-Chinese ties But U.S. manufacturing groups complain China heavily subsidizes its exports, including by keeping the value of its currency artificially low against the dollar.
"China's multiple predatory trade practices severely weaken America's domestic economy," said Kevin Kearns, president of the U.S. Business and Industry Council.
"The time for simply talking with China is long past. In fact, more chit-chat diplomacy is harmful to U.S. interests."
Obama Calls For Deeper U.S. - Chinese Ties But U.S. manufacturing groups complain China heavily subsidizes its exports, including by keeping the value of its currency artificially low against the dollar.
"China's multiple predatory trade practices severely weaken America's domestic economy," said Kevin Kearns, president of the U.S. Business and Industry Council.
"The time for simply talking with China is long past. In fact, more chit-chat diplomacy is harmful to U.S. interests."
Constrained Momentum The case for the climate change bill pushed by President Obama and passed by the House on June 26 just gets curious-er and curious-er – and not in a good way. For example, the bill’s proponents have just done an almost complete about-face on the biggest question raised by the legislation for domestic manufacturers: whether the cap and trade system central to its plan to reduce America’s greenhouse gas emissions will cripple their competitiveness. At the very least, if the pitch for the American Clean Energy and Security Act has a shelf life this short, how much faith can be justified in the green blueprint it represents for making over the entire economy?
"We will never overcome this economic crisis until we figure out how to produce our way out of it. This crisis resulted from the nation amassing way too much debt, and that, in turn, resulted from our failure to produce many of the goods and services we consume," Tonelson said. "Improved enforcement is by no means a substitute for the kind of trade policy overhaul this country needs."
Fed up with FedEx(cuse) Your editorial "The fate of FedEx" (Opinion, July 9), with its overly dramatic headline, fails to understand the situation involving what is clearly special treatment for one company -- FedEx Express.
Amending the Railway Labor Act (RLA) would affect FedEx Express for good reason. It is the only company in the country whose delivery drivers are governed by the RLA. All other drivers in the nation are governed by the National Labor Relations Act (NLRA). The proposed change in law would place all drivers under the same law, the NLRA. It is an end to a privileged carve-out for FedEx Express and the beginning of a level, competitive playing field for all delivery companies.
Level the playing field in package delivery industry There has always been a “wonderland” aspect to Federal Express. It is certainly a great corporate success story, in which one man’s vision rose as a global delivery dynamo in Memphis.
More impressive yet, it has succeeded in an industry littered with other failed express delivery companies.
But there’s more to the story than genius, hard work, and mastery of free markets by FedEx’s leadership.
Because of an unreasonable classification of its Express division employees, FedEx enjoys a permanent competitive advantage, neither earned nor logical, over its main rival, UPS.
Labor relations law that governs the operations of rivals FedEx and UPS is determined by two statutes: the Railway Labor Act (1926) and the National Labor Relations Act (1935).
2009 Manufacturing Summit US Manufacturing the Engine to Economic Recovery The �Manufacturing Matters� 2009 Manufacturing Summit, held in Portland, was an award-winning summit that focused on the value of manufacturing to economic recovery! Keynote speaker, Alan Tonelson, US Business & Industry Council and author of �The Race to the Bottom� addressed members and guests including Jackie Potter, Senior Policy Analyst, Congresswomen Chellie Pingree�s office. Earlier in the week, we hosted a meeting with business leaders to provide Alan with a Maine perspective. Mr. Tonelson addressed economic recovery plans, noting that by definition a country strapped with too much debt ultimately needs to increase its production relative to its consumption. How do we do that?
Ohio's other manufacturing crisis Everyone knows that Ohio has a huge manufacturing jobs problem. Over the past 11 years, the state lost 25,000 jobs total, less than one-half of 1 percent of its 1997 work force. But its 287,000 lost manufacturing jobs equaled more than 5 percent of total state employment, and nearly 29 percent of its total 1.03 million manufacturing employment, in 1997.
What too few know is that underlying this manufacturing job problem is an output problem in the manufacturing industries that create jobs in the first place. New federal statistics make clear that Ohio industry has suffered not only sluggish growth but actual shrinkage. This data also indicate that mismanaged U.S. foreign trade policies deserve much of the blame.
Manufacturing key to recovery The massive, continuing loss of U.S. manufacturing jobs has figured prominently in the national debate on overcoming the economic crisis - and not just because union voters helped send Barack Obama to the White House.
In recent decades, these jobs have been among America's best-paying and productive on average. For a debt-saturated economy desperately needing to base its affluence on income and earnings again rather than on borrowing, removing them from the endangered species list should have obvious economic advantages.
Tonelson: Maine manufacturers need political might Look, then leap, was the advice directed at attendees of the second annual summit of the Manufacturers Association of Maine. Keynote speaker and author, Alan Tonelson, advised Maine manufacturers to look at distressing data about the health of manufacturing, then leap into personal involvement in federal policy-making.
From Big Three to Little Two Ever since it became clear that both GM and Chrysler were going bust, two thoughts have kept rumbling around my head: First, “Foreign protectionists have won an epochal victory.†And second, “Which domestic industry will be taken out next?â€
I know that President Obama and his auto expertise-light auto task force insist that bankruptcy offers the only chance for survival for the Detroit automakers – or at least for GM and Chrysler. But after months of demanding that these two American industrial icons develop credible plans for viability, it’s more painfully obvious than ever that Team Obama hasn’t a clue about this goal, either. That is, unless everything everyone has said about the auto industry for decades is wrong, and enormous scale really isn’t vital for success.
12 states posted lower '08 GDP "In too many cases, the parts of the economy capable of promoting genuine recovery from the economic crisis by increasing national earnings - principally manufacturing - shrunk from 2007 to 2008," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, whose nearly 1,900 members are mainly small- and medium-sized domestic manufacturers.
"And in too many cases, the parts of the economy that can fuel little more than bubble-ized growth and higher debt levels - principally government and health care - grew during this period. So the new data indicate that at the end of 2008, the U.S. economy was farther away from regaining its health than at the end of 2007."
Trade Diplomat Taps His Deal-Making Past But Alan Tonelson, a research fellow with the U.S. Business and Industry Council, a lobbying group, criticizes President Obama for focusing on completing bilateral trade deals rather than pushing a more ambitious trade agenda and doing more to combat protectionist practices elsewhere.
Critics see little change from Obama on China Alan Tonelson, a research fellow at the U.S. Business and Industrial Council, describes the Obama administration as a rerun of the Bush administration on China. “It seems pretty clear that, we’re seeing much of the same thing,” he said.
Manufacturers' Washington Wish List Small manufacturers, represented by the U.S. Business and Industry Council, are also upset. USBIC President Kevin Kearns argues that Obama's inner circle of advisers does not include a single expert on domestic manufacturing, and he wants the president to support a bill that punishes countries that manipulate their currencies to gain a trade advantage.
A green trade war over climate change Many U.S. business leaders say the costs of cracking down on greenhouse gases will put America's already struggling manufacturers at a competitive disadvantage. Those that can make their products more cheaply abroad will simply move to countries that don't limit emissions, says Kevin Kearns of the U.S. Business and Industry Council.
Rethinking commerce quotient on the border “One of the biggest mistakes the U.S. made after we signed NAFTA was to indiscriminately sign trade agreements with other nations. China has left Mexico in the dust,” said Alan Tonelson, a research fellow at the U.S. Business and Industrial Council in Washington, D.C.
Renewables: America's next heavy industry "We are at the very beginning of this process," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents smaller and mid-size manufacturers. "But this could spark the third or fourth global industrial revolution."
When a big company went bankrupt, such as Bethlehem Steel Corp., the PBGC absorbed its pension shortfall. “The small guys are paying for these big guys,” complains Mr. Kearns.
But now, Kearns says, the problem is spreading to the medium and smaller businesses. He says companies in such areas as metal bending, electronics, heating elements, and anyone in the auto-parts field are preparing for bankruptcy filings.
“Literally, tens of thousands of small businesses are heading the PBGC way,” he says
Trade deficit widens in March to $27.6 billion "A rising U.S. trade deficit amid a steep economic downturn means that foreign trade cheating is still handicapping U.S. domestic producers and undermining American growth. It's time for President Obama to get serious about leveling the playing field," Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a coalition of medium-sized U.S. manufacturing companies, said in a statement.
Speakers added to economic conference Renowned regionalism expert David Rusk will be joined by three national business leaders when the NO More Business As Usual, Western New York Regional Economic Summit Conference is held from noon to 5 p.m. May 15 at the Marriott Hotel in Amherst.
Panelists include: Alan Tonelson of the U.S. Business and Industry Council
Obama needs input from companies that stay put President Obama's new Economic Recovery Advisory Board (ERAB) could become a invaluable source of policy advice, especially with the recession still deepening, and therefore the need for fresh thinking still growing. But none of the president's efforts to seek outside economic counsel can reach their potential without filling at least one big gap in the administration's advisory circles - the absence of domestic manufacturers.
In D.C., the Ads Tell the Story Countering that, "China's Emissions: America's Problem?" The U.S. Business and Industry Council argues that China already has a weak environmental record compared to the U.S. and if we put in climate-change legislation that will really make it unfair. The ad suggests China is "trade cheating." www.americaneconomicalert.org.
US business ad depicts China as credit card A US business lobby on Tuesday took out a full-page advertisement depicting China as a credit card and urged President Barack Obama to get tougher with Beijing.
In the advertisement in The Washington Post, a mock credit card bears the Chinese flag and lists "Your Child's Name Here" as the cardholder. Expiration date -- July 2020.
"We are leaving future generations of Americans at the mercy of our Chinese creditors," read the advertisement taken out by the US Business and Industry Council.
US senator aims at China yuan after Obama passes Many U.S. manufacturers and labor groups were disappointed by Treasury's decision, especially after Obama's campaign rhetoric suggested he would take a tougher line on the issue than the Bush administration did.
'This report breaks the major commitment candidate Obama made last year to fight Chinese exchange rate protectionism effectively by endorsing the strongest currency manipulation bill proposed in Congress,' said Alan Tonelson, research fellow at the U.S. Business and Industry Council, which represents many small and medium-sized manufacturers.
Geithner Refrains From Labeling China a Manipulator The U.S. Business and Industry Council, which represents domestic manufacturing companies, said the decision not to label China as a currency manipulator “breaks a major commitment candidate Obama made last year to fight Chinese exchange-rate protectionism.”
"This report breaks the major commitment candidate Obama made last year to fight Chinese exchange rate protectionism effectively by endorsing the strongest currency manipulation bill proposed in Congress," said Council Research Fellow Alan Tonelson."His decision not to cite China gives Beijing a green light to keep cheating America’s domestic manufacturers and their employees out of earnings and jobs."
Administration declines to cite China on currency Alan Tonelson, an official with the U.S Business & Industry Council, which represents 1,900 mainly family-owned U.S. manufacturing companies, said the failure to cite China as a currency manipulator represented a broken campaign promise on Obama's part.
"His decision not to cite China gives Beijing a green light to keep cheating America's domestic manufacturers and their employees out of earnings and jobs," Tonelson said.
The report breaks the major commitment Obama made last year as a candidate to fight Chinese exchange rate protectionism effectively by endorsing the strongest currency manipulation bill proposed in Congress, according to council research fellow Alan Tonelson.
“His decision not to cite China gives Beijing a green light to keep cheating America's domestic manufacturers and their employees out of earnings and jobs,” Tonelson said. Obama's failure to cite also shows how clueless the administration remains on fixing the nation's main economic problems. The economic crisis can be truly overcome only if the nation produces its way out – and grounds its prosperity in earnings once again, not reckless borrowing.”
US trade deficit in surprise plunge to 9 year low The data "indicates that the steepest export declines are behind us but given the weak state of overseas economies, it is too early to be thinking about a sustained export rebound," said IHS Global Insight chief US economist Nigel Gault. "The US recovery will not be export-led."
Alan Tonelson, a research fellow at the US Business and Industry Council, agreed.
"A recession-driven drop in the trade deficit unfortunately can't restore the US economy's long-term health," he said.
Washington, he added, should change America's "failed trade policies to start curing the nation's structural addiction to under-producing, over-importing, and over-borrowing."
Obama Needs to Tell the G20 Leaders to ‘Buy American’ President Obama heads into this week’s global economic summit still preaching to a skeptical world the virtues of a coordinated international stimulus program. His plan to end the Great Recession, however, would be more credible if his own domestic strategy wasn’t flopping so spectacularly. Indeed, like the literally trillions in bailouts and loan guarantees and tax rebates served up by his predecessor, the Obama recovery plan will only, at best, buy time and at worst re-bubble-ize the economy.
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.
U.S. Multinational Cos Vital To Economy, Group Says That is because two-thirds of the increase in jobs abroad during that period came in the retail, business services, and food and accommodation sectors. U.S. companies in those sectors added a combined 895,000 overseas jobs from 2000 to 2006. During the same period, U.S. employment in those sectors rose or remained steady.
Manufacturing jobs at foreign affiliates of U.S. companies, by contrast, rose by only 128,300, the study said.
Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a group that advocates for U.S. manufacturing jobs, said the small increase may not account for U.S. companies that contract manufacturing out to foreign non-affiliates.
"A lot of manufacturing they are involved with overseas is no longer done by them as such, it is done by contractors and sub-contractors," said Tonelson, who wasn't involved with the report.
China's Car Sales Surge On Cut In Auto Retail Taxes “Unfortunately, China’s burgeoning auto market will offer the U.S. domestic manufacturing base fewer and fewer sales opportunities with each passing year,” said trade expert Alan Tonelson. “For China’s strategy is to become entirely self-reliant in this critical industry, not to remain dependent on foreign parts and technology. Worse, China’s continuing determination to become a major automotive exporter could eventually create another major threat to American-owned vehicle and parts makers.”
Kaptur presses on to refocus stimulus On the other side of the political spectrum, the U.S. Business and Industry Council, which represents about 1,800 small and medium-sized manufacturers, appreciates her staunch criticism of free trade deals.
Alan Tonelson, a research fellow for the business council, said Miss Kaptur is a good spokesman for the growing campaign to protect American manufacturing from unfair trade deals that allow foreign competitors to sell their products in the United States but don't allow American products in their own countries.
Nissan vies with U.S. automakers for loans "A great deal of this money will be misappropriated to recipients that do not deserve it," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a Washington-based trade group. "The Nissan application, and its possibility of receiving these funds, points to weaknesses in the way this legislation was written."
He faults the program for not requiring that models built using the funds also contain high levels of U.S.-made auto parts and materials. Automakers and industry experts disagree about how to measure domestic or North American content.
The chamber has historically supported expanded trade. But another business group, the United States Business and Industry Council, which represents smaller manufacturers, was critical of the compromise language.
"This legislative caveat sounds humdrum, but it goes to the heart of whether the stimulus package will be effective," said Kevin Kearns, the group's president, in a statement last week.
"All these 'international agreements' include the production and job-destroying trade deals signed under the last two administrations. These shortsighted deals have helped addict our economy and consumers to foreign manufactured goods purchased courtesy of unsustainable foreign borrowing, thus helping to spark the current economic crisis to begin with."
Stimulus bill revives protected trade The U.S. Business and Industry Council, a manufacturing-industry organization, tipped its hat as well to the ''buy American'' provision in the Senate bill. 'A stimulus bill lacking strict 'buy American' provisions will only encourage ever more consumption of foreign goods with borrowed foreign money -- which helped produce today's economic crisis in the first place," council President Kevin Kearns said. ''Any attempts to remove the amendment by multinational, outsourcing special interests should be defeated,'' he declared.
'Buy American' provision worries Caterpillar Taking a stance that is opposite to Caterpillar's, the United States Business and Industry Council praised the Senate for rejecting a proposal that would have killed the "Buy American" provisions in the stimulus package.
"This legislative caveat sounds humdrum, but it goes to the heart of whether the stimulus package will be effective," said council president Kevin Kearns. "All these 'international agreements' include the production- and job-destroying trade deals signed under the last two administrations."
Battle not yet over on 'Buy American' The United States Business and Industry Council, a protectionist lobby group for small American manufacturers, said the watered-down Senate bill will kill U.S. jobs by encouraging stimulus spending on foreign-made goods.
It "keeps firmly in place the trade-agreement chains strangling American sovereignty and undermining sound economic policy-making in Washington," said Kevin Kearns, the group's president.
"The compromise language moves the nation back toward that failed approach, and further away from producing our way out of the crisis - the only possibility for restoring genuine economic health."
Critics Call Gregg Too Conservative For Commerce Alan Tonelson of the United States Business and Industry Council said the Republican will support economic policies Obama campaigned against during the election.
"He is a free-trade purist," Tonelson said. "Judd Gregg has never ever met an outsourcing-focused trade agreement he hasn't loved."
“The selection of Sen. Gregg completely contradicts what domestic manufacturers understand to be the president’s stated views on U.S. trade policy,” said council President Kevin Kearns. “Sen. Gregg has voted nonstop for bad trade deals that have shipped overseas thousands of factories and large numbers of high-wage jobs, helping to create today’s economic crisis.
“The choice of Sen. Gregg makes sense only if the president wants a secretary of Outsourcing,” Kearns said.
His terms met, Gregg says yes to Commerce The U.S. Business and Industry Council protested the appointment. It said he "voted non-stop for bad trade deals that have shipped overseas thousands of factories and large numbers of high-wage jobs."
'Buy American' hotly debated "The 'Buy American' provision should be extended to all manufactured products for government procurement," said Alan Tonelson, research fellow at the U.S. Business & Industry Council Educational Foundation, a Washington research organization.
Taxpayer money "should be spent on the purchase of U.S.-made goods and services to ensure that the economic benefits remain in the United States," he said.
Foreign countries don't need incentives from the United States to restrict trade, Mr. Tonelson said.
"India recently raised tariffs on steel, and China just increased subsidies on 7,000 categories of export products," he said. "In that sense, the trade war is on. What U.S. government officials must decide is what they're going to do about it."
'Buy American' stimulus alarms US businesses, trade partners Kevin Kearns, president of the US Business and Industry Council, said a stimulus bill that lacks strict "Buy American" provisions "will only encourage ever more consumption of foreign goods with borrowed foreign money -- which helped produce today's economic crisis in the first place."
Sen. Dorgan wants 'Buy American' clause in stimulus bill The U.S. Business and Industry Council is throwing its weight behind Dorgan’s efforts. "By including the full range of manufactured goods in the stimulus bill’s Buy American provision, the Dorgan amendment represents a major step forward in the use of the federal government’s massive purchasing power to promote domestic manufacturing," the council said in a statement today.
Byrondorgan "Any attempts to remove the amendment by multinational, outsourcing special interests should be defeated," said Kevin Kearns, president of the council.
China denies charge of currency manipulation The remarks parroted statements made by Obama shortly before his election in November but nonetheless injected fresh hope for manufacturing groups, such as the U.S. Business and Industry Council. The trade group called Geithner's statement a "welcome step forward" in stopping unfair currency policies by China and others that have cost American jobs.
Geithner comments revive China currency bill hopes U.S. Treasury Secretary-designate Timothy Geithner's remarks on Thursday were "a clear signal to Congress to send the new president a strong currency manipulation bill during his first 100 days in office," Kevin Kearns, president of the U.S. Business and Industry Council said in a statement.
Jobless rate jumps to 7.2 percent f the half-million-plus jobs lost in December, 149,000 came from manufacturing. In 2008, the sector lost 791,000 jobs -- 31 percent of the 2.6 million American jobs lost on the year and 5.74 percent of the manufacturing workforce, according to the U.S. Business and Industry Council, a trade group.
"The continued hemorrhaging of manufacturing jobs is particularly distressing given that the nation is going to have to produce its way out of the current recession," said Kevin L. Kearns, president of the council. "We cannot spend, export, print or borrow our way out of this looming economic disaster -- contrary to much Washington and Wall Street conventional wisdom."
Can US Manufacturing Industry Be Saved? But if the Big Three fail what will be left of the U.S. manufacturing base? Televisions, computers, cell phones, radios and other electronics have already been ceded to Asia, particularly to China. The U.S. barely makes cruise ships, Boeing is becoming a relic, and U.S. factories dwindle as China assumes her spot as the factory floor to the world.
"If the automotive sector is dramatically downsized, the overall manufacturing sector takes tremendous hit," Alan Tonelson, research fellow for the United States Business and Industry Council, said, adding much of U.S. manufacturing is somehow related to the auto industry.
But even of more concern for the manufacturing expert is what happens to the middle class if the auto industry is removed from the U.S. manufacturing equation.
"Where else will the middle-class jobs come from? What sector of the economy can we expect to produce them?" Mr. Tonelson asked, noting other sectors, such as retail, services, and government have historically been unable to maintain a vibrant middle class.
U.S. manufacturing is facing a point of no return and Mr. Tonelson believes the crisis was the fruit of our own opportunism.
"The fact is that the overall economy grew at a decent pace since the last recession ended in 2001 and manufacturing grew along with it. But the advent of the financial crisis shows quite conclusively that much, if not most of that growth, reflected the economy's bubblized nature. It was unhealthy growth produced by the unprecedented peace time stimulus of economy by Washington," Mr. Tonelson said, citing a bloated federal budget a low interest rates.
Obama taps another ex-rival: Richardson for commerce However, Kevin Kearns, president of the United States Business and Industry Council, a trade group for small American manufacturers hurt by globalization, said the selection of Richardson was "a missed opportunity" for Obama.
"He could have put someone there that sent a signal to the world, 'Holy cow, this guy's serious about revamping trade policy.' I'd take a major domestic manufacturer, someone who's actually run a major manufacturing business." Instead, Kearns said, Richardson represents a "back-to-the-future" mentality.
Congress to Big 3: Show us your plan The automakers face an uphill battle as polls show 48 percent of the American public opposes a Detroit bailout.
"This all looks like a grand game of chicken, but this is how policy is made in this country,'' said Alan Tonelson, economist at the U.S. Business and Industry Council, a manufacturers trade group in Washington.
The $25 billion on hand at the Energy Department was earmarked by Congress in September for retooling auto plants to make fuel-efficient vehicles. None of the money has been released. Analysts expect it can be repurposed as a cash infusion to pay for the automaker's basic operating expenses and investment in new technology.
"I haven't heard anyone doubt the auto industry needs the money,'' Tonelson said. "But relatively little thought has been put into how this money should be spent, and spent so the majority of benefits are channeled into the American economy.''
Tonelson noted the idea of retooling the plants early on this autumn "shifted to a fairly simple question: Does Washington provide the cash to meet the automakers' short-term financial needs?"
Business group urges focus on manufacturing The U.S. Business and Industry Council is urging President-elect Barack Obama to focus his economic recovery plans on expanding domestic manufacturing.
The Council is a leading industry organization for domestic manufacturing. It issued a statement saying “major surgery” is essential in both U.S. domestic economic policy and international trade policy for “recreating sustainable prosperity.”
"There is more agreement than is widely recognized," said Alan Tonelson, Research Fellow at the U.S. Business & Industrial Council Educational Foundation. Mr. Tonelson believes in the grand scheme of things an Obama trade policy might not be too far apart from Mr. McCain, but the fact that many people are still guessing about Mr. Obama's trade views is cause for some concern.
"One difficulty in predicting how an Obama administration would handle trade policy is due to the fact the candidate said so little about it and does not view trade policy has a high priority," Mr. Tonelson said.
In speaking about domestic matters, specifically his domestic recovery plan, Mr. Tonelson notes Mr. Obama, "Made it clear he will not focus on trade, but instead focus on making domestic investment on everything from education to green technology ..."
Despite the fact the economic crisis is linked in large part to the issue of free trade, the debate over the economy has not focused on the issue. Because of this Mr. Tonelson believes the candidates have shied away.
America: Still number one Part of the reason America will remain the world's largest economy is not because things aren't bad here, but because they're bad - or worse - everywhere else.
Two main things hit consumers in 2008 - high energy prices and falling home values - and both happened more or less worldwide.
Oil is a global market, and the record prices seen in 2008 happened almost everywhere, barring countries like Saudi Arabia and Venezuela that had major gasoline subsidies.
And the U.S. wasn't the only country with deflating home prices. Many European countries saw home values plummet. Some reports indicate China's housing bubble is far worse than that in the U.S., and it's about to pop.
Moreover, because many foreign banks were big buyers of U.S. financial products tied to home loans, a global recession - not just a U.S. recession - is increasingly likely, wreaking havoc on foreign stock markets.
The Dow has lost nearly 30% over the last two months, but so has London's FTSE, Germany's DAX and Hong's Kong's Hang Seng. Japan's Nikkei is off 40%.
"The U.S. will remain number one by default," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council. "Everyone else has major economic problems of their own."
Obama, McCain have vastly different approaches on how to resolve financial crisis Alan Tonelson of the U.S. Business and Industry Council, an organization composed mainly of family-owned manufacturing companies, calls McCain “unrelievedly dreadful” on trade issues, though he gives only faint praise to Obama as a “halfhearted critic” of unbridled free trade.
“One major misconception both of them seem to be laboring under is that the problems related to trade – including losing jobs to offshoring – can be solved through new domestic investments, like reforming education or investing in green technologies,” Tonelson said. “Unless U.S. trade policy is completely overhauled, high-tech jobs are just as likely to be offshored as more traditional manufacturing has been.”
McCain, on the other hand, argues that free-trade agreements help create jobs in America by opening up other countries as markets for our goods and services. “It sounds like a lot of fun to bash China and others, but free trade has been the engine of our economy,” he said. “Free trade should be the continuing principle that guides this nation's economy.”
An output crisis: Manufacturing lags all major economic sectors in growth A recent study of the performance of economies of eight industrial “battleground” states in the 2008 elections reveals those business sectors most affected by U.S. trade policies grew the slowest over the last 10 years. Manufacturing—commonly thought to be central to the formulation of trade policy—was in fact the loss leader, according to the U.S. Business and Industry Council’s (USBIC) report, released in September.
The eight states studied were Illinois, Indiana, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, and Wisconsin.
“U.S. domestic manufacturing has not only been suffering from an employment crisis that gained so much publicity in the campaign, but also from an output crisis,” says Alan Tonelson, USBIC research fellow and author of the report, Globalization and the 2008 Battlegrounds: How U.S. Trade Policies are Weakening the Economies of Key Industrial States.
600,000 jobs lost - and counting Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents smaller and mid-size manufacturers, said that most manufacturers are conservatively managed and have fairly low levels of debt. Tonelson is urging caution on any government bailout, saying banks should not be encouraged to resume their free-lending ways to consumers already overburdened with debt.
Even if businesses aren't yet impacted by the credit crunch, they are certainly planning for slowing sales as credit to consumers dries up. That could mean fewer orders for goods - and fewer people needed to manufacture, ship, stock and sell those goods.
"It's reasonable to expect not only job losses, but wage losses as well," said Tonelson.
Financial Meltdown: What Happens Next For Manufacturers Kevin Kearns, president of the United States Business and Industry Council says the U.S. manufacturing sector has been in decline for 30 years, and that the current crisis requires that the U.S. government take immediate action on prosecuting unfair trade practices and currency manipulation. "If you look at the collapse of the Bretton Woods system in 1971 and 1972, you had Richard Nixon and John Connelly as his Treasury Secretary putting on an emergency import surcharge because our trade deficit was 0.5 percent of GDP. They considered that to be unacceptable. Now we're at 5 or 6 percent of GDP and people couldn't care less." Kearns is not looking for increases in tariffs, but he does believe that when the credit crunch eases, capital needs to flow to companies that make products and provide high-end services, not into financial derivatives or phony investment vehicles.
Calls grow for a new model for global trade "They're going nowhere now," Alan Tonelson, research director at the US Business & Industry Council, a Washington business group that has been critical of US trade policies, said of the proposed new international trade pacts. "They're dead in the water."
Last month, a report from the council said the most globalized industries in the United States, such as manufacturing, agriculture, and mining, saw cumulative growth of 38.4 percent over the past decade, just over half the 66.8 percent growth of the entire US economy. Industries unaffected by global trade, such as healthcare, construction, and personal services, grew 73 percent.
"When you see that our most globalized sectors have lagged behind the economy as a whole, that tells me that our globalization policies have failed the economy," Tonelson said.
Economic growth lags in 7 crucial vote states Seven of eight industrial states that could decide next month's presidential election saw less than average economic growth in the past decade, according to a new study.
The poorest-performing state was Michigan, where the economy grew only about 28 percent — less than half the nearly 67 percent rate of the nation as a whole.
Ohio was second worst with 40.4 percent, followed by Missouri, Indiana, Illinois, Wisconsin and Pennsylvania.
North Carolina was the only state studied that did better than the national average.
The study, released this week by the U.S. Business and Industry Council, drew on federal data and measured total economic output of the states between 1997 and 2007.
The group, an association of about 1,500 manufacturing companies — mainly family-owned — is critical of U.S. global free-trade policies as being unfair to domestic businesses and workers.
Alan Tonelson, the study's co-author, said results of the analysis provide evidence of the need for more restrictions on ''off-shoring factories and jobs.''
Tonelson said the study found the sectors of the economy most vulnerable to competition from abroad, such as manufacturing, suffered the most.
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.
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."
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."
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.
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.
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.
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.
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.”
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.
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.”
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.
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.''
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.
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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.
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."
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.
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.
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.
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.
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."
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.
'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.
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.
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.
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.”
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.
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
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.
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...
"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
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.”
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.
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
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:
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."
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.
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.
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.
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.
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.
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.
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.
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
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.”
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."
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
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."
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.
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.”
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?"
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
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
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.
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.
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.
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
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.
"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.
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.
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.
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."
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.
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.
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.
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.
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."
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.
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?
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.
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.
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.
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."
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.
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.
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."
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.
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.
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."
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."
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.
"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."
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."
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.
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.
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.
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
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.
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.”
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?
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.”
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.
"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.
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.”
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.
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.
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.”
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.
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.
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.
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.”
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.'
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.
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.
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.
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
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."
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.
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.”
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.
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.
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.
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.
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.”
Beijing takes the hard line The second Strategic Economic Dialogue brought a record number of high-ranking Chinese officials to Washington. They took a quick measure of their American counterparts, concluded there was no serious push coming from the other side and thus felt no need to compromise on any point of contention.
U.S. trade policy still needs major overhaul to aid U.S. producers If House Democratic leaders and the Bush administration really think their new compromise will fix the main problems plaguing U.S. trade policy, they should think again. In fact, the plan announced May 10 is almost completely irrelevant to the nation's — and the world's — biggest trade policy challenges. With this major reform opportunity squandered, several trade bills introduced recently in Congress that actually can achieve meaningful change have become more important than ever.
Ostensibly taking their cues from interest groups that long have dominated the trade policy debate among Democrats, the new Congressional leadership focused its compromise efforts on adding strong, enforceable provisions to protect the environment and worker rights in the core text of all new trade agreements.
U.S., China don't get much closer on trade issues Bill Hawkins, at the U.S. Business and Industry Council, represents them. He says they've given up on the Bush administration's trade negotiators — led by Treasury Secretary Henry Paulson. BILL HAWKINS: Henry Paulson was, of course, CEO of Goldman Sachs, which was a very active investment bank in China. Sorta get the impression that he was taking the pose of being almost a neutral referee between the United States and China, trying to keep things smooth so that his business partnerships could continue.
Good will but few concrete results for the two countries Kevin L. Kearns, chairman of the US Business and Industry Council, which represents small and medium-size manufacturing companies, the White House's approach to negotiations with China has been a “failure” and “the ball is [now] clearly in Congress' court.”
From Trade Talks, A Lesson About Checks, Balances "There do seem to be more complaints voiced by Congress about the state of U.S.-China trade relations, but we're still seeing no significant action," said Alan Tonelson, a research fellow with the U.S. Business and Industry Council, which represents businesses that say they are being hurt by China's currency policy.
China Talks Don’t Resolve Major Issues But Alan Tonelson, a research fellow at the United States Business and Industrial Council, a group that generally opposes deals to reduce trade barriers and supports efforts to protect American industry from foreign competition, said the dialogue with China “stands exposed as a cynical Bush administration exercise in spin and P.R.”
Yuan Isn't the Cause of U.S. Trade Deficit, Wu Says She's not conceding on any of our points,'' said Alan Tonelson, research fellow of the U.S. Business and Industry Council, which represents about 1,500 smaller manufacturers in Washington. ``This is insulting.''
Steel exec calls for action by China the head of the U.S. Business and Industry Council, which represents small and medium-sized companies, said "no meaningful results are in sight for competitive U.S. domestic producers and workers."
Such assessments angered Kevin Kearns, president of the U.S. Business and Industry Council, representing small and medium-sized manufacturers. The talks were nothing but a "cynical Bush administration exercise in spin and PR," Kearns said in a statement. He urged Congress to pass legislation to stop Beijing's "predatory trade policies."
Currency dispute raising specter of U.S. retaliation "We call it chit-chat diplomacy," said Alan Tonelson, an analyst for the U.S. Business and Industry Council, which says it represents smaller American companies victimized by Chinese imports and the undervalued yuan. "It is simply an exercise in public relations."
Congress Quiet On China "This whole Strategic Economic Dialogue has been set up to diffuse tensions, not solve problems," says USBIC's Hawkins. "This is an alternative to negotiations, it's a dialogue. Negotiations are expecting an outcome. Dialogue is just sitting around chit-chatting. The Chinese understand the meaning of words very well."
US, China Make Modest Progress on Trade The U.S. Business and Industry Council, which represents small and medium-size manufacturing companies, said the administration should scrap the new dialogue process based on the poor results so far.
"It's clear that this dialogue has been nothing but a cynical Bush administration exercise in spin and public relations," said Kevin L. Kearns, president of the council. "The failure of the White House's approach is now clear, so the ball is clearly in Congress' court."
A trade-confused Congress On May 9, there was an unusual joint hearing in the House of Representatives by the trade subcommittees of the Ways and Means, Financial Services and Energy and Commerce committees. With their new chairmen, the Democrats had a chance to move beyond their criticism of Bush administration trade policy and propose action. The topic was "currency manipulation and its effects on U.S. business and workers." China was the main focus. The next day, Democratic leaders and the White House announced their new bipartisan approach. Core international labor and environmental standards would be added to trade agreements, along with quicker access to generic drugs for developing countries. That's it? However idealistic, these measures do nothing to advance the interests of U.S. business and workers, and will not alter the trade flows that generated a deficit of $763 billion last year. They are geared to bettering conditions overseas, not here at home.
Tonelson at the Maine Citizens Trade Policy Commission On May 9, there was an unusual joint hearing in the House of Representatives by the trade subcommittees of the Ways and Means, Financial Services and Energy and Commerce committees. With their new chairmen, the Democrats had a chance to move beyond their criticism of Bush administration trade policy and propose action. The topic was "currency manipulation and its effects on U.S. business and workers." China was the main focus. The next day, Democratic leaders and the White House announced their new bipartisan approach. Core international labor and environmental standards would be added to trade agreements, along with quicker access to generic drugs for developing countries. That's it? However idealistic, these measures do nothing to advance the interests of U.S. business and workers, and will not alter the trade flows that generated a deficit of $763 billion last year. They are geared to bettering conditions overseas, not here at home.
Trade deal misses mark If House Democratic leaders and the Bush administration really think their new compromise will fix the main problems plaguing U.S. trade policy, they should think again. In fact, the plan announced May 10 is almost completely irrelevant to the nation’s — and the world’s — biggest trade policy challenges. With this major reform opportunity squandered, several trade bills introduced recently in Congress that actually can achieve meaningful change have become more important than ever.
Trying to raise global standards through trade policy is a worthy goal. Unfortunately, many of America’s major trading partners in the third world are so big, and their combined populations so enormous, that the measures proposed in compromise are totally unenforceable. After all, how many million American bureaucrats would need to be inspecting how many million factories in China alone to document abuses? And why would Washington do a better job enforcing labor and environmental protections than it currently does safeguarding intellectual property rights?
Study reports global marketplace affects state jobs Who's to blame? Others blame Washington and big business for rising trade deficits. Alan Tonelson, research fellow with the U. S. Business and Industry Council, said the country has had a failed trade policy for the last 30 years.
"Washington has done a lousy job, and Democratic and Republican presidents have turned our trade policy from one focused on expanding exports and finding new markets for U.S.-made goods and services into an exercise in outsourcing,” Tonelson said. "It's designed to help multinational companies send production and jobs overseas.”
Tonelson said it's hard to trace exactly how trade affects jobs.
But it's no surprise that trade-related jobs have grown because recent economic policies have subsidized the American consumer.
Large swings from federal budget surpluses to deficits, as well as record-low interest rates, have fueled a buying binge, he said.
"Our foreign trade partners keep lending us the money to buy their products,” Tonelson said.
"If our entire economy wasn't being subsidized by the central banks of East Asia, then our overall import and consumption levels would be much lower, and the job levels would be much lower too.
"Much of what we consume is still made here.”
Tonelson said Congress should take a more active role in trade agreement negotiations and stop ceding its authority to the executive branch.
"The U.S. no longer does trade policy right,” he said. "We've forgotten how to do it so it stimulates production at home.”
Can Democrats Take Yes for an Answer? But there are some forces in the Democratic Party and elsewhere reluctant to abandon the old rhetoric -- or the old fights. Bloggers such as David Sirota and interest groups such as the U.S. Business and Industry Council condemned the new agreement and vowed to fight the issue.
New trade policy no fix, trade groups say Kevin L. Kearns, president of the USBIC, said the new guidelines are "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."
Kearns said that the new framework "itself won't change world trade blows one bit and doesn't address the issues of unfair competitive practices faced every day by U.S. producers and their employers at home and abroad.
K Street vs. Middle America DOMESTIC MID-SIZED MANUFACTURERS SAY DEAL IS “A SELL OUT”: The U.S. Business and Industry Council - the group that represents mid-sized domestic manufacturers - released a statement condemning the deal. “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 group said. …”
Secret Trade Deal Battle DOMESTIC MID-SIZED MANUFACTURERS SAY DEAL IS "A SELL OUT": The U.S. Business and Industry Council - the group that represents mid-sized domestic manufacturers - released a statement condemning the deal. "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 group said.
Trade agreement wins qualified union support The U.S. Business and Industry Council, composed of smaller U.S. manufacturers hurt by globalization, doubted the deal would deliver any real change. President Kevin Kearns called the labor and environment provisions unenforceable.
Domestic Manufacturers Group Says “New Trade Policy” Ignores Producers’ and Workers’ Real Interests 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.”
Top U.S. labor group wary of bipartisan trade deal the U.S. Business and Industry Council, which represents smaller American companies, called the agreement a "sell out" unless more comprehensive trade policy changes were made.
This just came across the transom from the U.S. Business and Industry Council - the group that represents mid-sized domestic manufacturers:
“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.”
Full details of the trade proposal have still not been released, almost a full day after the Bush-Democratic press conference.
Trade gap puts dent into Q1 growth "I don't see anything out there that would improve the U.S. trade imbalance," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council in Washington.
Relatively low interest rates and a U.S. dollar that has dropped by about 30 percent since its peak in early 2002 are factors that would normally boost economic growth, but in recent quarters that has not happened.
"As long as we keep buying so much more from the rest of the world than we sell to them, the benefits of that stimulus will keep leaking overseas," Tonelson warned.
A fair shake on trade It was a message brought home to Maine lawmakers last week by Alan Tonelson, an analyst and trade policy expert with the U.S. Business Industry Council, who addressed the Legislature at the commission's invitation.
"Our trade policy is failing Maine," Tonelson told a Sun Journal editorial board in advance of his Augusta speech. "If something is not done soon, our production base - the wealth-creating part of the American economy - well ... it's hard to imagine our economy going forward."
Speaker says Maine ignored in federal trade agreements Alan Tonelson, a research fellow at the U.S. Business & Industry Council Educational Foundation in Washington, D.C., traveled through Maine this week to give a series of public talks about his opposition to trade pacts such as the North American Free Trade Agreement and the Central American Free Trade Agreement. Tonelson was interviewed at the Bangor Daily News between speaking engagements at the University of Maine and in Augusta.
Tonelson’s organization lobbies on behalf of more than 1,500 private manufacturing companies nationwide, each of which employs between five and 500 workers. Tonelson rejects the notion that the manufacturing industry has slowed because of new technology. He said manufacturers are simply in need of better support from the federal and state governments.
Free trade encourages outsourcing Alan Tonelson, a research fellow at the U.S. Business and Industry Council Educational Foundation, said the trade agreements should be called "outsourcing agreements," because that's their practical effect. Tonelson spoke Monday night at the University of Maine and is speaking today at a meeting of the Maine Citizen Trade Policy Commission. The title of his book neatly summarizes his take on free trade agreements: "The Race to the Bottom -- Why a Global Worker Surplus and Uncontrolled Free Trade are Sinking America's Living Standards."
US arms industry eager to gain foothold in India US Defence contractors are clearly eager to "get in on the ground floor of the Indian defence market," said Alan Tonelson at the US Business and Industry Council, adding that the nuclear deal had energised efforts that had been under way for some time.
But analysts and executives say the drive to expand arms sales to India remains complicated by concerns about proliferation; the impact on China; whether growing ties with India could alienate Pakistan, a key ally in the global war on terror; and cumbersome US export regulations.
"This is a very difficult balancing act," said Tonelson.
Paulson May Be Unable to Get China, U.S. Off Collision Course John Walker says China's currency policies have already cost 100 jobs at his Lewisburg, Tennessee, die-casting company. He wants the U.S. Congress to do ``whatever it takes'' to force an increase in an undervalued yuan that he contends gives an unfair advantage to Chinese competitors.
Offshoring hits home Tonelson said the U.S. Business and Industry Council notes that migration of manufacturing from the United States to Mexico, China and other countries "has been a very vigorous trend" for nearly two decades.
"But I like to date the problems that dominate the scene today to negotiations of NAFTA in the early 1990s," he said. The North American Free Trade Agreement lessened regulations and opened borders among the U.S., Canada and Mexico. Critics maintained NAFTA allowed companies to close U.S. operations and relocate them to Mexico.
"And China has eclipsed Mexico and most developing production sites in the strategies of most multi-national corporations," Tonelson said.
The difficulty of dealing with the Chinese government is also a hardship for American companies locating operations there, Tonelson said.
Factory jobs: 3 million lost since 2000 High-tech industries, where the U.S. is still seen as having the edge, include pharmaceuticals, medical devices and airplanes.
But even high-tech industries are facing pressure from imports. The U.S. Business and Industry Council, which represents small- and medium-sized manufacturing companies, found that between 1997 and 2005, 110 of the 114 U.S. industries it studied had lost ground to imports in the U.S. market. That was the case even in such sectors as computers and telecommunications hardware.
Getting Tougher on China Trade Discussing whether the Bush administration is too late on getting tough with China, with Alan Tonelson, U.S. Business & Industry Council; Daniel Ikenson, Cato Center for Trade Policy Studies; and CNBC's Mark Haines
“I see nothing on the horizon that will reduce the deficit significantly,” said Alan Tonelson, a research fellow at the United States Business and Industry Council, which favors tariffs as a remedy. “Growth here is slowing, and there has been some pickup in growth overseas. And you have a weaker dollar, which makes our exports less expensive. But these are not enough.” Click here to read the article...
Chinese trade issues escalate Meanwhile, lax Chinese enforcement of copyright laws is causing U.S. makers of movies, music and software to lose about $2.5 billion in sales, according to industry estimates.
While the White House actions "are welcomed," they are insufficient, said Alan Tonelson, trade policy analyst for the U.S. Business and Industry Council, which represents small businesses hurt by Chinese imports.
"We need much more sweeping responses. Compared with the scope of the China problem, this all adds up to very little," he said.
The incredibly short life of China's trade drop "I have no doubt there are various shifts in export tax credits going on. But I also have no doubt that the net effect will be to boost exports in the long-term," said Alan Tonelson, a research fellow at the U.S. Business & Industry Council, which represents small and mid-size U.S. manufacturers.
China trade action overdue Chinese officials and state-run media again proclaim Beijing will strive to reduce its "excessively large" trade surplus. This is meant to head off increasing action in Washington to counteract unfair trade practices that have generated a 5-1 imbalance between China's exports to the U.S. and its imports. Though Beijing has often tried to downplay the size of its trade surplus, last month The People's Daily proudly proclaimed China's success: "In 2006, China recorded a sizzling economic growth of just under 11 percent, largely powered by strong exports that rose by 27 percent to $969 billion U.S. The soaring exports expanded China's trade surplus to a record $178 billion, up 74 percent."
Nations that derided IMF mandates may soon seek its aid ALAN TONELSON McClatchy Newspapers Nothing symbolizes the IMF's straits better than the gaggle of new left-wing leaders in Latin America. Ironically, they are maintaining solid growth rates despite breaking nearly every international economic policy rule in the IMF's book -- especially its cherished principles of free trade, domestic deregulation and fiscal prudence.
Even many sympathizers now ask whether the IMF has become obsolete. Venezuela, Argentina, Russia and other developing nations that once complained about IMF mandates are enjoying windfall earnings from lofty prices for oil and other raw materials that tend to oscillate wildly in the medium term. When the current boom ends, and when global interest rates begin to rise, they will quickly regret their free-spending ways and failure to introduce greater efficiencies and diversity into their economies.
Is retreat just the start? The World Policy Institute has released a "roundtable" of articles on what the Democrats should do about national security now that they control Congress. It appears in the new issue of the group's quarterly journal World Policy. Like previous WPI blue prints, it is a call for America's unilateral disarmament and global retreat. The WPI is located at the New School which styles itself as a "progressive university." Its Greenwich Village campus in Manhattan prepares students "to bring actual, positive change to the world." Among such self-styled progressives, this mission is identified with embracing radical foreign regimes while restraining American power. One of the WPI's top projects is to foster "engagement" with Fidel Castro's dictatorship in Cuba and drop the "unilateral embargo" on trade and investment in the Marxist state. It has held "summits" to promote "national reconciliation" in Cuba. The 2003 summit featured former Soviet leader Mikhail Gorbachev as the keynote speaker. While the WPI is suspicious of Washington's push for democracy in foreign lands, it has a very uninhibited idea of how democracy should evolve in the United States. Its Immigrant Voting Project "promotes research and discussion about reinstating voting rights in local elections for all community residents, regardless of their citizenship." Foreign voters can thus decide American elections.
Editor -- Your April 5 editorial ("A terrible tariff'') correctly noted that in "non-market countries such as China, where economies are directed by the state ... it is difficult to pinpoint illegal subsidies." But it then drew the wrong conclusion.
Policy must be results oriented. Non-market economies are the ones most able to use subsidies, non-tariff barriers, currency manipulation and other elements of industrial policy to gain unfair trade advantages. They require more scrutiny and stronger enforcement tools that do open economies.
The Bush administration, under pressure from Congress, is finally starting to provide better tools which American firms can use to protect themselves from foreign predators. This is long overdue and will, it is hoped, help reverse the truly terrible record of the last decade of deteriorating trade balances.
Automotive not alone in suffering from ill-advised trade policy It's been all over the news: Imports have helped decimate the U.S.-owned automotive industry. What hasn't been as widely reported, though, is that literally dozens of other U.S.-based manufacturing industries are suffering similar losses in their home market.
The bottom line, as revealed in a new study by the U.S. Business & Industry Council-while the U.S. remains a military superpower, it is steadily becoming an industrial has-been.
The council's survey of import levels in domestic manufacturing shows that 111 of 114 key U.S.-based industries lost domestic market share to foreign-produced goods between 1997 and 2005. From 2004 to 2005 alone, import penetration rose for 83 of these sectors and fell for just 31.
These industries, moreover, are exclusively the kinds of high-value, capital-intensive sectors, like aircraft engines and wireless communications gear, that make up backbone of any world-class national manufacturing base. Lower-value, labor-intensive sectors that were long ago overwhelmed by foreign competition-like apparel, toys and low-end consumer electronics-were left out of the study
The Future of American Exports NPR goes to Caterpillar and John Deere and high-tech Palo Alto, to see how successful exporters do it.
March 2007
U.S. to hit China with new trade fee "These tariffs are welcome, but come awfully late in the game,'' Alan Tonelson, a research fellow at the U.S. Business and Industry Council, said Friday. "And paper is only one of scores of industries illegally subsidized by Beijing. If the White House is serious about fighting China's predatory trade practices, it will need much more comprehensive responses, such as the proposed currency-manipulation bill, or the bill to rescind China's permanent normal trade relations status.''
Back To The Future With China Alan Tonelson, a research fellow at the U.S. Business and Industry Council, an advocate for domestic manufacturing interests, says Dorgan's proposal is "an absolutely excellent idea and quite a bit overdue given China's determination to violate trade norms."
Moreover, he says the view of the WTO expressed by Bhagwati is "profoundly naïve" because the international organization is not an impartial arbiter of trade disputes.
"It's essentially political," he says. "It's comprised of 150 countries more interested in keeping America's market open to their products than keeping their markets open to our products. We're the engine of growth for everybody else and they want to keep it that way."
Imagine the reaction if, having botched the Iraq War, President Bush asked Congress for even greater powers as Commander in Chief. He would rightly be laughed out of Washington.
Because of a comparably disastrous record on trade policy, the President’s recent request that Congress renew his sweeping authority to negotiate new international trade agreements deserves the same response.
Congress’ current system of granting presidents trade negotiating authority, which began in 1974, not only permitted them to seek deals like the North American Free Trade Agreement and the global pact that created the World Trade Organization. They were designed to boost the odds of formal Congressional approval by prohibiting all amendments and sharply limiting debate - a practice known as "fast-tracking."
Bush joins carmakers for talks on energy Alan Tonelson, a research fellow at the U S Business and Industry Council in Washington, said Toyota should be able to discuss energy issues with the others.
But as for trade policy and other business topics, he said there are "very valid reasons" to exclude foreign manufacturers.
"The best research I have seen is that they don't add as much value to the American economy as the 'Big Three' automakers," Tonelson said
China's Taste for Trash Alan Tonelson, a research fellow at the U S Business and Industry Council in Washington, said Toyota should be able to discuss energy issues with the others.
But as for trade policy and other business topics, he said there are "very valid reasons" to exclude foreign manufacturers.
"The best research I have seen is that they don't add as much value to the American economy as the 'Big Three' automakers," Tonelson said
Fast Track to Nowhere Is trade important you? It should be. In the past, bad trade policies only hurt blue collar laborers by sending jobs overseas. But that’s changing. Now even white collar jobs aren’t protected. If fact, because of something called fast track, no one is safe anymore.
Says Kearns, "Renewing fast track would allow the President to stay on a policy course that has wracked up nearly $3.6 trillion in merchandise trade deficits, lost huge chunks of vital domestic manufacturing markets to imports, and hemorrhaged millions of high-wage manufacturing jobs to foreign competitors."
News Briefs Industry sources agreed that increased U.S. exports helped reduce the trade deficit last January, and the Commerce Department noted that exports to China last January were up about 25 percent compared with January 2006. However, the U.S. Business and Industry Council noted that U.S. exports to China dropped from December 2006 ($5.19 billion) to January 2007 ($4.37 billion).
Congressional Group Backs New Trade Policies The Washington-based US Business and Industry Council (USBIC) — which represents some 1,500 small and medium-sized companies — strongly supports the coalition, saying its legislative goals could ensure the survival of US manufacturing. USBIC joined other organizations in attacking currency manipulation, value-added tax rebates and extension of TPA; and went even further by calling for a moratorium on additional FTAs.
USBIC President Kevin L. Kearns noted the United States has lost 3 million manufacturing jobs since 2000 and had a record $763 billion trade deficit in 2006. He said that while international labor and environmental standards are important goals, they cannot by themselves create new US jobs and help domestic manufacturers. “The only market that we can truly regulate is our own, and we need to use that lever of access to promote our own domestic industries,” Kearns said.
Dubai Ports rejection helped US economic growth Sooner or later, the American people are going to figure out just how foolish the advice is that is being given by the trade-deficit ostriches. Their heads are so firmly planted into the ground that they say things that are totally disassociated from reality. It is almost unbelievable that the Bush administration can claim that we need OPEC financial investment when our real problem is that the dollar is too strong, that Jack Kemp can argue that American corporations are spreading democratic capitalism when they are really building communist totalitarianism, that Larry Kudlow can claim that free movement of capital across borders is pro-growth when it is actually threatening the U.S. with a huge economics contraction.
Sooner or later, the American people will begin to listen to the advice of those leaders, lobbyists, and economists who have been examining the problem like eagles. Leaders like Pat Buchanan, Warren Buffett, and Byron Dorgan, lobbyists like William Hawkins, Alan Tonelson, and Bob McIntyre, and economists like Giuseppe Ammendola, Peter Morici, Robert Blecker, and Eamonn Fingleton.
Democrats divided over free trade "We'll have to see how much of an impact the caucus has on the seniority system," said Kevin Kearns, the president of the U.S. Business & Industry Council, which represents smaller U.S. manufacturers who oppose further trade liberalization. "This is uncharted territory ... it's anyone's guess how things are going to turn out."
Trade Deficit Slides 3.8 Percent in Jan. Alan Tonelson with the U.S. Business and Industry Council, which represents small manufacturers, said the 16 percent decline in U.S. exports to China in January was "an insult to America's competitive domestic manufacturers."
U.S. trade policies a source of heated debate The total U.S. trade deficit reached $763.6 billion in 2006, up more than 6.5 percent from 2005's $716.7 billion, according to the U.S. Business and Industry Council, which supports small manufacturers in their efforts to preserve U.S. manufacturing facilities and reduce the trade deficit.
``If President Bush deserves blank-check trade negotiating authority from Congress with this record, then Paris Hilton deserves to be Girl Scout of the Year,'' said Alan Tonelson, a research fellow with the USBIC Educational Foundation.
US trade deficit takes a dip Alan Tonelson with the US Business and Industry Council, which represents small manufacturers, said the 16% decline in US exports to China in January was "an insult to America's competitive domestic manufacturers".
A tax that could aid business WILLIAM HAWKINS There's much debate in Washington right now as to how to deal with the federal budget deficit. The U.S. government is currently borrowing roughly $1 billion each day just to stay in business - leading to an annual shortfall of more than $300 billion.
This continuous borrowing has provoked great consternation and has generated a number of suggested fixes. In its January budget review, the Congressional Budget Office concluded: "Either a substantial reduction in the growth of spending, a significant increase in tax revenues relative to the size of the economy, or some combination of spending and revenue changes will be necessary to promote the nation's long-term fiscal stability."
Small-business group hits free-trade pacts Council President Kevin L. Kearns has said that renewing trade-promotion authority would allow President Bush "to stay on a policy course that has racked up nearly $3.6 trillion in merchandise trade deficits, lost huge chunks of vital domestic manufacturing markets to imports and hemorrhaged millions of high-wage manufacturing jobs to foreign competitors." The group dismisses the notion that the authority is needed for the United States to make trade deals with other countries. That idea is "nonsense," Mr. Tonelson said. The U.S. market, he said, is "far and away the biggest prize of any significant world trade negotiation," and the market everyone needs to be in.
Not So Fast on Fast Track Opponents of trade promotion authority - emboldened by the Democratic-controlled Congress - have geared up their own effort, working closely with the office of Rep. Mike Michaud (D-Maine). Michaud's staff is meeting regularly with representatives from the AFL-CIO and other labor unions, Sierra Club, Friends of the Earth, Public Citizen and the U.S. Business and Industry Council.
Peter Chandler, Michaud's chief of staff, said his boss, along with Rep. Linda Sánchez (D-Calif.), is working with the groups to come up with a wholesale alternative to fast track and plans to unveil a package in the coming weeks. "A simple labor fix isn't enough," Chandler said. "It would look drastically different. We're going to come up with some sort of model that will be far better." That model will include international labor organization standards, and is expected to draw widespread opposition from business groups.
Yvette Pena Lopes, a legislative representative for the Teamsters, attends the Michaud meetings every other week in the Cannon House Office Building, as do Brett Gibson, who handles trade policy for the AFL-CIO, and Alan Tonelson, a research fellow with the U.S. Business and Industry Council.
CSPAN Free Trade Agreements discussion with Alan Tonelson Opponents of trade promotion authority - emboldened by the Democratic-controlled Congress - have geared up their own effort, working closely with the office of Rep. Mike Michaud (D-Maine). Michaud's staff is meeting regularly with representatives from the AFL-CIO and other labor unions, Sierra Club, Friends of the Earth, Public Citizen and the U.S. Business and Industry Council.
Peter Chandler, Michaud's chief of staff, said his boss, along with Rep. Linda Sánchez (D-Calif.), is working with the groups to come up with a wholesale alternative to fast track and plans to unveil a package in the coming weeks. "A simple labor fix isn't enough," Chandler said. "It would look drastically different. We're going to come up with some sort of model that will be far better." That model will include international labor organization standards, and is expected to draw widespread opposition from business groups.
Yvette Pena Lopes, a legislative representative for the Teamsters, attends the Michaud meetings every other week in the Cannon House Office Building, as do Brett Gibson, who handles trade policy for the AFL-CIO, and Alan Tonelson, a research fellow with the U.S. Business and Industry Council.
Trade authority at stake The U.S. Business and Industry Council, which represents predominantly small and medium-size U.S. manufacturers that have seen factory jobs go overseas, opposes even a minimalist, one-year renewal.
"(Bush) apparently believes that the way to solve the problem of our gargantuan trade deficits and the rapid decline of our manufacturing base is to pass more of the same trade deals that created the current unsustainable situation,'' said council President Kevin Kearns. "Free trade is another one of his stay-the-course, don't-learn-from-your-mistakes policies.''
The Hunter-Ryan China Currency bill (now titled the HR 782, the Fair Currency Act of 2007), was first introduced in 2005. The bill is WTO compliant and will “… lead to sanctions on currency manipulators, put a stop to foreign government manipulation of currency markets and lead to appropriate exchange rates,” said Kevin L. kearns, president of the U.S. Business and Industry Council.
China, Taiwan and Korea were all found to be in violation of the 1988 Trade Act’s currency provisions. The U.S. trade deficit in goods with China has been climbing each year and is currently $233 billion.
Delaware workers sing blue-collar blues "It's clear that the future of blue-collar employment not only in Delaware but throughout the United States is looking increasingly grim," said Alan Tonelson, research fellow at the U.S. Business and Industry Council. The nation's leaders are allowing foreign nations to stack the deck when it comes to "free trade," putting U.S. industry at a competitive disadvantage that even its own officials sometimes don't recognize, he said. "The Big Three automakers ... are astonishingly incapable of either understanding the true global competitive situation they face or, certainly, articulating this."
Tonelson wants America's leadership to impose emergency tariffs on some imports until other nations stop the subsidies and other manipulations that give them much of their advantage over U.S. manufacturers. "It creates a hidden subsidy for foreign products coming into the U.S., and it imposes a hidden tax on U.S. products that are sent into foreign markets," Tonelson said.
Editorial: Trade deficit a real threat Bush is asking Congress for new "fast track" authority to negotiate trade agreements that Congress would not be allowed to change to include protections for workers or communities in the United States. The latest dramatic increase in the trade deficit ought to convince Congress that giving the president the go-ahead to cut more deals like NAFTA is a ridiculous response to what Alan Tonelson, a research fellow with the U.S. Business and Industry Council, sees as an exceptionally serious problem. "If President Bush deserves blank check trade negotiating authority from Congress with this record," muses Tonelson, "then Paris Hilton deserves to be Girl Scout of the Year."
Backlash grows against free trade "We need to declare a moratorium on new trade agreements until we figure out how to do this right," says Alan Tonelson of the US Business and Industry Council, which represents companies concerned about the erosion of US manufacturing.
Plant's absence will be felt through state "It's very difficult to replace an entire factory in a community. The decision to shut a factory down is monumental," said Alan Tonelson, a research fellow at United States Business & Industry Council in Washington, D.C., which represents small and midsized U.S. manufacturers, some of which are auto industry suppliers.
If the plant is finally idled, those hardest hit will be the auto workers, who face the loss of jobs that pay an estimated average of about $61,000 yearly -- and their families.
"They will never see jobs this good again," Tonelson said. "Manufacturing is the only sector of the economy in U.S. history that has enabled working-class people to lead middle-class lives and have secure retirements. Agriculture didn't do it and services can't do it."
New Presidential Coins Mean Payday for South Korean Subsidiary "This is just one more example of how the U.S. government attaches a very low priority to ensuring that the interests of domestic U.S. companies are adequately safeguarded in global competition," said Alan Tonelson, a fellow at the U.S. Business & Industry Council. "Especially when it comes to South Korea, which is a proven subsidizer and which has not been devoted to free trade principles. It seems that U.S. government agencies ought to be obligated to look very carefully at those bids to make sure that the prices that are being quoted are in fact the result of free-market forces."
Paulson picks Holmer as China point-man Meanwhile, the U.S. Business and Industry Council threw its support behind the new House currency bill Tuesday. Incoming USBIC Chairman Douglas Bartlett said all lawmakers should join in passing the bill. "Given the astronomical trade deficit with China and its blatant history of currency manipulation and unfair trade practices, no member of Congress has an excuse not to join Congressman Hunter and Congressman Ryan on their bill and support domestic American manufacturers," Bartlett said in a statement Tuesday.
Made in U.S.A.: Record trade gap The U.S. Business and Industry Council, a group of small and mid-size businesses critical of the Bush administration's trade record and supportive of a tougher stance on the Chinese yuan, said the trade report shows the administration should not be extended fast-track authority for another year.
"If President Bush deserves blank-check trade negotiating authority from Congress with this record, then Paris Hilton deserves to be Girl Scout of the Year," said Alan Tonelson, a research fellow with the group.
Trade Deficit Surged to Record $764B in 2006 Critics of the administration's trade policy pointed to the record trade deficit in calling for Congress to deny the president the extension he seeks.
"If President Bush deserves blank-check trade negotiating authority from Congress with this record, then Paris Hilton deserves to be Girl Scout of the Year," declared Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which argues against the administration's trade policies and further globalization.
Should Congress renew President Bush’s fast-tracking authority on trade?: The deals produced by fast-tracking trade are endangering global financial stability as well. Collectively, they have addicted the rest of the world to growing by exporting to the United States. At the same time, the unprecedented excess of U.S. consumption they have encouraged over U.S. production is weakening America’s ability to play this role, to pay for its consumption responsibly, through earnings instead of borrowing. Thus, even a soft landing for the U.S. economy, which grows less likely the longer this situation continues, could produce a deep, protracted global slump.
