This Sneak Proposal On Trade Numbers Would Mask Reality

Dave Johnson

Should an iPhone made in China and sold in England be counted as a U.S.-made manufacturing export? If a sneaky new proposal to change the way our trade deficit is measured is allowed to sneak through, this is exactly what will happen.

At Least We Know It’s Enormous, Humongous

We have an enormous, humongous trade deficit. This means we buy more from there than they buy from us, which means that the dollars we spend send jobs, factories and entire industries there instead of bringing them here. Unfortunately for 99 percent of us this works to the benefit of an already-wealthy few – especially the Wall Street sector of the economy – so the problem continues.

The thing is, at least we know we have this enormous, humongous trade deficit. So we know how many jobs and factories this costs us, and how much of our standard of living it is draining. (Note: This is a real problem. Just one part of the trade deficit’s cause – China’s currency manipulation – costs us up to 5.8 million jobs, 2.3 million of those in manufacturing, and up to $720 billion a year of lost GDP.)

Instead of fixing the causes of the trade deficit by renegotiating job-sucking trade deals like NAFTA and our trade relationship with China, there is a proposal sneaking its way through the bureaucracy to change the way the trade deficit is measured.

“Factoryless Goods”

In May a proposal to change the way goods made elsewhere are counted in the trade data was published in the Federal Register. The idea is to reclassify American firms that have their goods made elsewhere (offshore) as “factoryless goods” producers and manufacturers. So the trade reports would count the value of U.S. brand-name products made outside of the United States and imported here as manufacturing “services” imports, not imported goods. The result would be to make it appear as if the U.S. manufacturing trade deficit is lower than it is.

Also, white-collar workers at firms that have offshored their production would be counted as manufacturing workers, making it appear as if there are more manufacturing jobs in the U.S. than there really are.

This is another “sneak law”. This is really obscure stuff, but it would end up making a huge difference in our standard of living. Congress and others depend on getting the correct numbers that accurately reflect what is happening, so they might (if Republicans stop obstructing everything) be able to implement policies that help our country and the people in it. And increased public knowledge of the seriousness of our enormous, humongous trade deficit would lead to political pressure to start bringing the jobs,factories and industries back.

James P. Hoffa, Teamsters general president, said of the proposal, “The only reason you would classify an iPhone made in China as a U.S. export is to hide the size of our massive trade deficit.”

Getting Attention

The proposal to rig the trade numbers has been getting a bit of attention. Organizations have been contacting their members to let them know. A week ago more than 26,000 people filed comments opposing the factoryless goods proposal by the end of OMB’s comment period yesterday. For comparison, the last time something like this was in front of the regulating body, they received 10 comments.

Last week Rep. Rosa DeLauro (D-Conn.) and others held a conference call for reporters to discuss letters being sent to the Census Bureau and the Office of Management and Budget. These letters protest the Administration’s proposal to reclassify American firms that offshore production as “factoryless goods” producers and as manufacturers. Rep. George Miller, (D-CA) was supposed to be on the call but was delayed on the House floor. Also on the call were Celeste Drake, Trade & Globalization Policy Specialist of the AFL-CIO and Lori Wallach, Director of Public Citizen’s Global Trade Watch.

“Bad Data Leads To Bad Policy”

On the call Rep. DeLauro said the proposal “seems to be another attempt to manipulate the system, to make NAFTA-style agreements like TPP look less harmful for American workers.”

DeLauro said this is “cooking the books, getting a skewed and deliberately deceptive view of our economy. American workers were promised more good manufacturing jobs, instead they have been aggressively offshored.”

She said, “Bad data leads to bad policy.”

The AFL-CIO’s Celeste Drake said the proposal “will hide the negative impacts of 20 years of trade and globalization policy, will hide effects of bad trade deals. It will change the number of employees in manufacturing without adding one job.”

She said that Congress and organizations “need data to identify surges of imports. This hides unfair competition and distorts the need for trade adjustment assistance.”

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