Posted by Consumers for World Trade
Wed, 20 Jun 2007 19:54:00 GMT
Trade with China has has become a hot political issue lately. With its enormous
workforce, The People's Republic has been labeled the Factory to the World sending
about forty percent of its GDP abroad as exports. Here in the U.S., Chinese
sourced consumer goods - everything from advanced electronics to footwear and apparel
- has been responsible for providing Americans with a wide variety of competitively
priced goods that has improved many Americans' stand of living.
This booming trade has not gone unnoticed by our law makers on Capitol Hill
that lament our growing trade ties with China. A cadre of our elected representatives
have claimed that Chinese officials have manipulated their economy specifically
to displace American manufacturing in favor of their own production by undervaluing
their currency, the yuan. That is, the Chinese have been accused of purposefully
undervaluing the the yuan to make their goods cheaper in the U.S. compared to
products made in the U.S. In order to right this perceived wrong, our lawmakers
have proposed policies designed to punish China for its currency manipulation.
Below is a digest of many of these proposals.
Section 301: International trade law, outlined by World Trade Organization
agreements, allow governments to punish trade partners for subsidizing production
that specifically distorts trade through the imposition of additional tariffs
called "countervailing duties (CVD)". In the parlance of U.S. international
trade law, this is referred to as Section 301.
On May 15, 2007, House Ways and Means Trade Subcommittee Chairman Sander Levin
and other lawmakers called the Bipartisan China Currency Action Coalition, filed
a Section 301 petition requesting that the Office of the United States Trade
Representative (USTR) investigate China's currency practices and to file a
WTO case at the end of the investigation. Representative Levin claims that China's
continued undervaluation of the yuan acts as a trade distorting practice designed
to displace domestic manufactured goods in the U.S market as well as inflating
the price of U.S. exports to China.
Currency Reform
and Financial Markets Access Act of 2007 (S. 1677)
Introduced by Sen. Dodd (D-CT) on June 21st, 2007. This bill seeks to amend the
International Economic Policy Coordination Act of 1988, making it easier
for the Treasury Department to identify other countries, specifically China,
that are manipulating their currency. It recently passed a Committee vote of
17-4. Click here
to read CWT's letter.
The
Currency Exchange Rate Oversight Act of 2007 (S. 1607)
Similar to S.1677, this bill was introduced by Senators Baucus (D-MT) and
Gassley (R-IA) on June 13th, 2007. S. 1607 calls on the Department of Commerce
to be more agressive in dealing with countries that manipulate their currency's
exchange rate, namely China. Click here
to read CWT's letter.
Fair
Currency Act (H.R. 782)
Introduced by Rep Tim Ryan (D-OH) on January 1, 2007. The bill proposes to allow
the International Trade Commission to impose countervailing duties on products
from non-market economies. This bill amends the Trade Act of 1974 to include
the exchange rate and currency misalignment by China as a condition to determining
a market disruption which then gives warrant for the countervailing duties.
HR 782 would increase the price consumers pay on a wide variety of products
from non-market economies including China and Vietnam
Fair Currency Act (S 796)- Companion bill to HR 782 (above) introduced
by Sen. Jim Bunning (R-KY).
H.R.
1002:
Introduced by Rep. John Spratt (D-SC) on February 12, 2007. The bill calls for
the unilateral imposition of a 27.5% tariff on all imports from PR China in
retaliation for Chinese undervaluation of the yuan. The bill mandates that this
policy will go into effect unless the President certifies that China is no longer
manipulating the exchange rate. :
Currency
Harmonization Initiative through Neutralization Action Act (H.R. 321).
This bill was introduced by Rep. Phil English (R-PA) on January 9, 2007. This
bill directs the Secretary of the Treasury to annually analyze the exchange
rate policies of China and impose additional tariffs to offset exchange rate
manipulation.
H.R.
1958:
This bill was introduced by Marcy Kaptur (D-OH) on April 29, 2007. This bill
suspends normal trade relations with China for 3 months. It was introduced on
4/19/2007 by Rep. Marcy Kaptur and it has no cosponsors. The bill was referred
to the House Committee on Ways and Means. Without much support this bill is
unlikely to be successful. Most bills do not make it out of committee.
S.571:
This bill was introduced by Sen. Dorgan (D-ND) on February 13, 2007 and is the
companion Senate bill to HR 1958.
Stopping Over Seas Subsidies Act (S. 974):
This bill was introduced by Sen. Susan Collins (R-ME) on March 22, 2007. S 974
calls for the International Trade Commission to determine China's status as
either a market or non-market economy according to whether the government is
providing producers with subsidies. Countervailing duties will be applied to
China if the Commission determines that the country is a a non-market economy.
H.R. 1229: Companion bill to (S 974) above introduced by Rep. Artur
Davis (D-AL) on February 28, 2007. Click here
to read CWT's letter.
H.R.571:
This bill was introduced by Rep. Tom Tancredo (R-CO) on January 18,
2007. Like the previous bills, HR 571 would require additional tariffs to be
levied on imports from non-market economies including China. The funds procured
by the government from the tariffs would be placed into social security.
Posted in Congress, China | 7 comments
Posted by Consumers for World Trade
Fri, 15 Jun 2007 20:13:00 GMT
Sarah Press
June 15, 2007 -In an effort to respond to concerns over global warming, our lawmakers have developed
a policy designed to provide stocks of cleaner gasoline by using ethanol, a carbon-friendly
bio-fuel. While achieving a readily available supply of "green" gasoline
for our cars and trucks is certainly a laudable goal, this policy has also, in
part, increased food prices paid by consumers. Yet, there is solution to this
problem and it lies with freeing our energy market for more efficient sources
of foreign ethanol through a prudent trade policy.
Ethanol is a clean renewable bio-fuel that can be produced from any cellulose
producing plant that is high in sugar. In the US, this means mainly corn, but
here's the catch: corn ethanol only produces a tiny amount of energy compared
to the energy used to produce it. Ethanol produced from other plants such as
sugarcane, switchgrass, and soybeans are significantly more efficient means
of producing this cost effective and clean fuel.
The most efficient source of sugar for the production of ethanol comes from
sugarcane that produces eight times the amount of energy used to produce it.
The most abundant source of sugarcane for the production of ethanol comes from
Brazil. In fact, sugar cane is so abundant in that country, that Brazilians
solely use ethanol to fuel their cars and trucks with even more left over to
export to other countries.
Ok so you're probably saying, "Great, let's just use sugarcane ethanol,
since it's cheaper and more energy efficient." Yet Congress remains intent
protecting US corn growers - a powerful agricultural interest in almost every
farm state. The US gives a 51 cent per gallon "Blender's Credit" subsidy
that is applied to ethanol regardless of its country of origin. However, a 54
cent per gallon secondary tariff - or border tax - on ethanol imported into
the United States keeps Brazilian sugarcane ethanol out of US markets. Legislators
from farm states seek to maintain the ethanol tariff to appease their corn-growing
constituents. But it's not just the friendly family farm that gets the benefits
of these subsidies. Under the current farm bill, which is up for reauthorization
this year, taxpayers give over $25 billion each year to corn growers, 62% of
which are large, industrial corporate farms.
These enormous ethanol subsidies to primarily corporate agricultural concerns
coupled with the high ethanol tariff designed to keep out foreign sources of
the bio-fuel, have been in part responsible for the rising cost of food paid
by consumers. An
Iowa State University study found that the ethanol market dominated by US
producers has contributed to the steady increase in food prices. The price of
corn can effect the price of many food items especially meat and poultry whose
growers use corn-based feed to nourish their livestock. Lately, this extra cost
has been passed along to the consumer. In fact, a whole slew of consumer
food producers have recently increased the price of many products at grocery
strores thanks, in growing part, to high corn prices.
Of course, if the US government eliminated the high border taxes on foreign
supplies of ethanol, such as efficient Brazilian ethanol made from sugar cane,
Americans could enjoy a carbon-friendly gasoline while also keeping food prices
in check. Basically, the added supply of Brazilian ethanol would help fuel our
cars while US corn growers could meet the demands of our food market. Yet our
Congress remains intent on protecting US corn growers to the detriment of consumers.
While Congress claims that the policy benefits the family farmer it is really
just a handout to big corporate agriculture.
718 comments
Posted by Consumers for World Trade
Fri, 11 May 2007 14:24:00 GMT
Ezra Finkin
May 11, 2007 - Robert Samuelson, the noted economist and columnist, has just remarked on China's
predatory behavior in undermining the U.S. economy and global trade system. According
to his recent column in the Washington Post entitled
China's
Trade Time Bomb, Mr. Samuelson states that China's policy of undervaluing
its currency by as much as forty percent "threatens to wreck the entire post-World
War II trading system." By keeping the value of the Chinese currency low,
Americans are able to purchase an even greater amount of imported consumer goods.
In fact, our appetite for cheap imported goods is so great that it continues to
erode our trade balance, namely the difference between our exports and imports.
According to the article, if we don't do something quick to wean us off our addiction
to Chinese imports, this trade imbalance will throw the U.S. into penury.
How do you do this? By making Chinese imports more expensive. Congress and
the U.S. government are currently considering policies to punish China for its
currency manipulation by claiming that such actions are illegal government subsidies
according to international trade law. As such, the U.S. may impose unilateral
tariffs, or border taxes, on all Chinese products designed to inflate the price
of these goods in the U.S. In theory, as prices rise U.S. consumers won't purchase
as much imports as before and our trade balance will get better so we can all
rest assure that there won't be another Great Depression. However, a more realistic
analysis reveals that unilateral U.S. action to inflate the price of Chinese
imports won't reduce our consumption. Most likely, Americans will buy the same
T-shirts, shoes and electronics as before but at much higher prices. This will
even further inflate the value of our imports worsening the trade deficit.
A much more reasoned approach to improving the trade deficit is to realize
that our trade imbalance has two sides. Instead of punishing consumers for purchasing
imports, our government should focus on efforts to stimulate our exports abroad.
Rising exports also improves our trade balance. By focusing on export promotion,
we can have our cake and it eat too. American consumers get access to cheap
imported consumer goods, American industry gains access to foreign markets for
its products and services and the trade balance doesn't look so bad.
With regards to export promotion to China, the U.S. unfortunately seems keen
to restrict the export of many products to our largest trading partner. The
Department of Commerce is moving full steam ahead on a regulation designed to
stem the sale of many U.S. products to China out of an effort to hinder Chinese
military modernization. Unfortunately, the many parts and components needed
for a modern army are also the same parts and components required for an advanced
industrial economy. This regulation would impose many bureaucratic hurdles involved
in the export of many run-of-the-mill high-tech communication, aviation and
even advanced textile products to China. In all likelihood, the U.S. would loose
market share in these industries responsible for a vital and healthy export
market to our Japanese and European competitors.
Posted in China | 41 comments
Posted by Consumers for World Trade
Mon, 09 Apr 2007 18:20:00 GMT
Robin Lanier, Executive Director
April 9, 2007 -- Every three months the government issues statistics
on the value of imports and exports, and for more than thirty years the news
has been all about the U.S. "trade deficit." Basically, for almost
my working life, the U.S. has imported more than it has exported.
To listen to the trade deficit hawks, this is like the hemorrhaging our national
wealth. These deficit critics have--for as long as I can remember--urged our
policy makers to take steps to turn the deficit around. These days the arguments
center on trade with China--not because the deficit is new, just because China
is now our biggest trading partner and the country with which we maintain the
largest deficit. A decade or more ago, the debate was all about Japan.
Nevertheless, today the deficit hawks out there want us to convert our trade
deficit with China into a surplus.
But how?
One proposal--introduced in Congress last year--would impose a massive 27.5%
tax on all imports from China in an effort to "fix" the perceived
"currency manipulation" that deficit critics say lies at the root
of our trade imbalance with China. Supporters of this proposal claim that China
purposely undervalues its currency in order to keep its exports competitively
(some would say "unfairly") priced. But the basic idea of the 27.5%
import tax is to discourage Americans from purchasing Chinese products by making
them a lot more expensive.
The latest proposal comes from the Bush Administration. The Department of Commerce
has recently announced that it may consider treating China's currency policy
as a kind of "unfair" subsidy. The latest proposal would impose something
called "countervailing duties"--just another name for high tariffs--to
make Chinese exports more expensive and to discourage consumers from buying
them. The Commerce Department apparently believes that the high border tax will
"level the field," making sure that the "subsidy" is erased.
It all sounds faintly justified until you stop and think that proponents of
this policy want to tax every blessed thing that comes from China, including
products like shoes, clothing, home electronics, not to mention tools, ceiling
fans and a wide variety of things you might find at a variety store. Basically,
if you put it on or turned it on this morning, chances are it was made in China,
and the some folks in government would like to tax it.
Many of these items--shoes come immediately to mind--aren't even made in the
U.S., so this is not about protecting U.S. industry. It's about imposing some
kind of neat little ledger balance that says our exports have to equal our imports.
Ironically, these proposed taxes won't stop Americans from buying necessities
like shoes. They will probably make other import suppliers more competitive--so
your shoes might come from Bangladesh or India or Viet Nam instead of China--a
move that will do nothing for the trade deficit. These taxes are unlikely to
move shoe manufacturing back to the U.S. And no one seriously believes that
the U.S. could ever become a competitive world supplier of shoes. Shoe manufacturing
isn't our "comparative advantage." We are much more likely to compete
on high tech or agriculture. So imposing a neat little trade ledger balance
isn't really going to do anything positive for the economy.
One thing is absolutely certain, though, taxing imports will make these products
more expensive for every one in America.
If our elected officials truly believe in achieving a trade balance, perhaps
they should focus less on punishing American families for buying shoes and socks
and spend a little more time promoting U.S. exports abroad. The Bush Administration
has focused its export promotion strategy in concluding a string of Free Trade
Agreements (FTAs) with over 20 developing economies. While a step in the right
direction, the Progressive Policy Institute concludes that together, these recent
FTAs only account for about 12 percent of U.S. trade.
Posted in Congress, China, Clothing | 144 comments
Posted by Consumers for World Trade
Fri, 06 Apr 2007 20:22:00 GMT
Christopher Wilken, Legislative Representative
April 6, 2007 -- Easter is upon us -- that time of malted eggs, chocolate
bunnies, and hidden taxes.
Hidden taxes? Yep.
They take the form of a high border tax--called an import tariff--on sugar,
which, when coupled with import qutoas on the sweet stuff serves to make the
U.S. price of sugar twice what it is on the world market. Every candy maker
in the U.S. has to pay this price for the stuff you will put in your Easter
basket this Sunday. A portion of that price increase is passed along to each
and every one of us. Not only when we purchase our Peeps this weekend, but every
time we eat a candy bar.
According to the Organization for Economic Cooperation and Development (OECD)
the U.S. sugar program costs consumers roughly $1.5 billion dollars a year.
This is an enormous amount of dough. And keep in mind that while the costs of
the program are paid by all American consumers , 42% of the benefits are handed
to 1% of all sugar producers, or 150 farms. The difference between the domestic
price of sugar and the price abroad is essentially a hidden “protection
tax.” It can also be seen as an indirect payment by consumers to special
interests as compensation for an effective lobbying operation. It's the worst
kind of corporate handout.
Unfortunately, the cost of the sugar program is not limited to what consumers
pay at the checkout. The Florida Everglades are slowly shrinking, in part because
sugar price supports have fueled the expansion of the sugarcane industry in
an area where large corporate farming would never have been possible. As a result,
this program leads to the degradation of an additional three to five acres of
the Everglades every day. In addition, US protection of the sugar industry hurts
developing countries by denying them access to one of the largest markets for
one of their most competitive crops. Industries that consume sugar, such as
confectioners are impacted by the high price of sugar. In fact, Brach’s
and Life Savers are just two American candy makers that have moved their operations
off-shore in part to gain access to sugar at world prices. For the remaining
US confectioners these high prices cut into their bottom line and reduce what
they are able to allocate towards other costs such as employing workers. If
you don’t mind shelling out double for big sugar, you may want to think
about the impact of the sugar program on the environment, developing countries,
and U.S. employment.
Just a few things to think about during this holiday season.
Posted in Sugar | 5 comments
Posted by Consumers for World Trade
Thu, 05 Apr 2007 14:26:00 GMT
Christopher Willen, Legislative Representative
April 5, 2007 -- The Congressional elections last fall highlighted voters'
concerns about the effects of international trade on our economy. Unfortunately,
not much airtime is being given to the impact of trade for our international
security. While it may be clear to many that imports have a positive effect
on our standard of living, we often neglect to consider the ramifications of
trade on international stability.
Our consumption of imports often serves as a springboard for growth in less
developed and often volatile countries. Just as we don't feel guilt about giving
aid abroad we ought not feel guilty about buying clothes made in Bangladesh
or coffee from Colombia. The ability of trade to help spur economic development
is indeed the premise behind our trade preference programs, such as the Generalized
System Preferences (GSP) and the African Growth and Opportunity Act (AGOA).
The desperate and squalid conditions that all too often serve as the breeding
ground for civil wars and international conflicts recede when markets flourish.
Can you imagine a Pol Pot or an Idi Amin rising to prominence in a country of
wealth and stability? This is because the development of a vibrant market economy
creates an army of stakeholders, whose livelihood depends on stability. Think
of the economic impact of even the discussion of a military conflict between
the U.S. and China?
Don't take my word for it. Just look across the pond. The hope of deterring
conflict through economic ties was the driving force behind the creation of
the European Union (EU). In 1950 when French Foreign Minister, Robert Schuman,
proposed the creation of the European Coal and Steel Community, the predecessor
of the EU, he spoke of a Europe where war would one day be "not merely
unthinkable, but materially impossible." Today, it certainly looks like
that is the case.
Thomas Friedman, author of "The Lexus and the Olive Tree," has termed
this notion the "Golden Arches Theory of International Relations."
He held that no two countries that both have a McDonald's ever fought a war.
At the time of publication the conflict between NATO and Serbia, which is of
course not an EU member, had yet to occur. Nevertheless, Thomas Friedman's larger
point, that as countries open their economies they have a disincentive to engage
in conflict seems to be widely accepted.
So if you're feeling odd about buying products from abroad because they are
affordable, keep in mind that you are doing your part to alleviate poverty and
international conflicts. Inexpensive imports, world peace, and a clean conscience,
not a bad deal, eh?
Posted in Developing Countries | 8 comments
Posted by Consumers for World Trade
Tue, 03 Apr 2007 20:51:00 GMT
Robin Lanier, Executive Director
April 3, 2007-- On March 28th, CNN "Journalist" Lou Dobbs testified
before the House Foreign Affairs Committee. The title of his testimony: "There's
nothing free about free trade." As expected Mr. Dobbs railed against all
kinds of open markets, claiming trade was responsible for "flooding America
with cheap imports," eroding middle class wages, and putting 3 million
Americans out of work since 2000.
As a solidly middle-class person who supports free trade, let me say right
up front that I have an issue with Lou Dobbs representing me on this issue.
So, to strike a blow in the name of middle-class shoppers everywhere, let me
say that I find enormous value in being able to shop for a wide variety of goods
at affordable prices. The fact that a pair of shoes costs less for me to purchase
because of inexpensive imports is a benefit that goes right to my personal bottom
line. I hate to think about how expensive tea, coffee and spices might be if
we didn't have open borders.
Back in 2003, CWT commissioned a study to see how imports benefitted consumers,
and how efforts to close off markets harmed them. The study, entitled Protectionism
in America: Watch Your Wallet showed that middle class consumers pay
a hidden, and sometimes unnecessary, tax to "protect" certain U.S.
manufacturers from foreign competition that was essentially "fair."
Ironically, the United States continues to impose border taxes to discourage
shoe imports, even though the U.S. shoe industry no longer produces many shoes
in the United States. So the point is that protection for manufacturing industries
in the form of high import tariffs dosen't protect manufacturing very well. Protectionism
just makes things cost more for the middle class. The study clearly also points
out that working American familes are the ones who pay the most for misguided
attempts to protect some American workers at the expense of all American
consumers.
And while I'm at it, consumers aren't the only ones who benefit from open markets
and free trade. Just take a look at a recent
study completed by the Port of Long Beach California about the the millions
of jobs in America that are tied to imports and exports. Many of those jobs
are middle class jobs in tranportation, warehousing and retailing. The study shows that trade through this single port created 2.2 million jobs between 1994 and 2005. A growth of 200%. And before
you get too hot and bothered about the wages of these non-manufacturing jobs,
just consider that most of the nation's longshore workers, railroad workers
and truckers are unionized and make wages equivalent and often better than manufacturing
workers.
Mr. Dobbs is just plain wrong about trade and the middle class.
Posted in Middle Class | 5 comments
Posted by Consumers for World Trade
Tue, 03 Apr 2007 18:11:00 GMT
Robin Lanier, CWT Executive Director
April 3, 2007--Welcome to the Consumers for World Trade Web Log. We're
launching this interactive site in the hopes of fostering debate on the key
issues of international trade. In the future we plan to invite some guest bloggers
to provide their thoughts on the benefits of open makerts for U.S. Consumers.
In addition, we intend to spend a good deal of time talking about how imports
benefit every American consumer, including the middle class.
We hope you'll take time to read what we post and post comments and views along
with us. Although we are passion free traders at CWT, we invite others with
dissenting views to share them here so we can foster a dialog. Our staff bloggers
are happy to take questions and suggestions for articles and issues that are
of interest to our readers. So feel free to contact us by email. Also, we invite
you to become a sustaining member of CWT to help us support this and other consumer
education and advocacy efforts. You can visit our main webpage, and the webpage
of our Foundation--World Trade Library--from the links on the side bar.
1492 comments
