Smart Talk on China Trade

The Next Debate: China and Trade Deficit

Dave Johnson — Fri, 19 Oct 2012 14:56:15 -0400

Monday's final campaign debate focuses on foreign policy. Will it focus on our policy of running huge trade deficits with China? Every dollar of trade deficits makes our country a dollar poorer. That trade deficit is the deficit that our Washington elites should be worried about.

The China Trade Deficit

For some reason, when we close a factory here,lay off the workers and ship the equipment to China, and then ship the same goods back here to sell in the same stores, that is called "trade." And when we buy vastly more stuff from China than they buy from us, that is also called "trade."

We have a huge "trade" deficit with China. We sent China $28.7 billion dollars in August alone - $295 billion last year. So in one year we transferred $295 billion of our wealth to China.

The trade deficit not only drains the economy and our jobs, it sends essential pieces of our industrial ecosystems out of the country. And this means that it is sending our ability to make a living in the future out of the country, too.

President Obama is working to double American exports, but imports also continue to rise. The problem here is that even if we double exports we continue to drain our economy if the export increase doesn't catch up to the level of imports.

From Trade Deficit - One Root Of Many Problems,

You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff... Finally you're selling off the tools you had used to make a living. That's where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

Trade Deficit Costs Jobs

From, Report On Job Cost Of Trade Deficit With China,

A new report, The China Toll, takes a look at the effect of our trade deficit with China since that country joined the World Trade Organization (WTO) ten years ago, and comes up with some very specific numbers. In summary:

"Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state"

The Economic Policy Institute (EPI) released the report, The China toll, Thursday.

According to the report,

Between 2001 and 2011, the trade deficit with China eliminated or displaced more than half of all U.S. manufacturing jobs lost over that period. The growing trade deficit with China has cost jobs in every congressional district in all 50 states as well as in the District of Columbia and Puerto Rico.

The total losses include 662,100 jobs from 2008 to 2011 alone—even though imports from China and the rest of the world plunged in 2009 before recovering and surpassing the previous peak reached in 2008. The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries. In fact, rapidly growing imports of computer and electronic parts, including computers, semiconductors and audio-video equipment, accounted for nearly 55 percent of the $217.5 billion increase in the U.S. trade deficit with China between 2001 and 2011.

Again: Half of our manufacturing job loss is lost to the trade deficit with China. ... The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries.

Trade Deficit Makes Workers Afraid

The trade deficit and resulting job loss makes workers afraid, so they work longer hours, skip vacations and accept cuts in wages and benefits, which also hurts the economy. From Job Fear From Trade Deficit Is What Happened To Jobs And The Middle Class,

The middle class is disappearing. Our economy is "hollowing out" because the money goes to the top and the people fall to the bottom. This is because we allow American companies to close factories here and open them there, shipping the same goods back here to sell in the same stores, costing jobs, companies, industries and our economy. This makes us afraid for our own jobs and afraid to make waves. By helping a few at the top get fabulously rich, China has essentially recruited our own businesses leaders to fight against our own government - and us.

Trade Actions

The President has filed several trade complaints against China, including actions involving tires, steel pipes and solar panels. This has made a difference. Just yesterday the WTO found in favor of the United States in a dispute challenging China’s imposition of duties on U.S exports of grain oriented flat-rolled electrical steel (GOES). This ruling ensures that American workers and businesses that make certain types of steel won’t face Chinese retaliatory tariffs.

But these trade actions are just one piece of the big puzzle. Another piece is confronting China's currency manipulation.

The Currency Problem

China manipulates their currency. Because their currency is "weak" goods made there cost as much as 30% less than goods made here, even before you take into account the effect of various Chinese government subsidies and other trade cheating.

There is a bill in Congress to crack down on China's currency manipulation. This is a bipartisan bill that has passed the Senate. In past years this bill has overwhemingly passed in the House, and the current bill has more than 60 Republican co-sponsors.

But that bill cannot get a vote in the House, even with more than 60 Republican co-sponsors. Wall Street's front group The Club For Growth has made the currency bill a litmus test. Politico: Club for Growth warns GOP on China currency bill,

The influential Club for Growth is pressuring Republican presidential candidates and lawmakers to oppose bipartisan legislation cracking down on China’s currency policies.

... The Club for Growth has urged lawmakers to vote no on the bill, warning that the vote will be included in the group’s 2011 Congressional Scorecard, used to measure how fiscally conservative they are.

So Speaker Boehner refuses to bring the bill to the floor for a vote -- because it will pass. And the 60+ Republican co-sponsors in the House refuse to sign a discharge petition that forces the bill to come to the floor for a vote because they fear retaliation from Wall Street.

Romney Says he Will Crack Down On China, Refuses To Actually Crack Down On China

On the campaign trail Mitt Roney says he will crack down on China. He says he will do something about China's currency manipulation on the first day he is in office.

But there is something he will not do: he will not actually crack down on China right now, by pressuring Boehner to bring the currency bill to the floor, or by asking the 60+ Repubican co-sponsors of the bill to sign a discharge petition.

If Romney wants to crack down on China he should crack down on Boehner and House Republicans right now. This needs to be part of Monday's final campaign debate.

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In Other News China Trade Deficit Still Huge

Dave Johnson — Thu, 11 Oct 2012 14:18:28 -0400

The August trade figures are out and they are not good. The terrible trade deficit is where the jobs and the economy went but is ignored because it makes a few elites wealthy. Meanwhile our elites are whipping up fears about the budget deficit instead of the trade deficit, because they can use that fear to herd politicians toward a "grand bargain" that cuts taxes on the wealthy and corporations while cutting the things We, the People do for each other.

The Bad News

AP: US trade deficit rose to $44.2 billion in August,

The U.S. trade deficit widened in August from July because exports fell to the lowest level in six months. The wider deficit likely dragged on already-weak economic growth.

The deficit grew 4.1 percent to $44.2 billion in August, the biggest gap since May, the Commerce Department said Thursday.

Exports dropped 1 percent to $181.3 billion. Demand for American-made cars and farm goods declined.

Imports edged down a slight 0.1 percent to $225.5 billion. Purchases of foreign-made autos, aircraft and heavy machinery fell. The cost of oil imports rose sharply.

[. . .] For August, the deficit with China dipped 2.3 percent to $28.7 billion. U.S. exports edged up modestly, while imports from China fell. For the year, the U.S. deficit is on track to surpass last year's record, the highest ever recorded with a single country.

The widening trade gap with China has heightened trade tensions between the two countries. And it has become a flash point in the presidential race. GOP challenger Mitt Romney has promised a tougher approach than President Barack Obama with trade practices that he says are giving China unfair advantages.

Two key take-aways:

We had an international goods and services trade deficit of $44.2 billion.
The monthly goods deficit with China fell slightly to $28.7 billion from $29.4 billion in July. This is the second highest monthly trade deficit with China this year.

Here is the Census Bureau release.

Here is the Bureau's Trade in Goods with China.

Trade Deficit Drains Jobs, Economy, Makes Workers Accept Lower Wages

The trade deficit, especially the trade deficit with China, costs jobs and jobs and jobs. From the post, Report On Job Cost Of Trade Deficit With China,

So just how many jobs are lost to trade deficits? A new report, The China Toll, takes a look at the effect of our trade deficit with China since that country joined the World Trade Organization (WTO) ten years ago, and comes up with some very specific numbers. In summary:

"Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state"

The trade deficit also drains the economy, and sends essential pieces of the industrial ecosystems out of the country. Note that even if we double exports, as the President is working to do, we continue to drain our economy if this doesn't catch up to the level of imports. From Trade Deficit - One Root Of Many Problems,

You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff... Finally you're selling off the tools you had used to make a living. That's where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

The trade deficit makes workers afraid, so they work longer hours, skip vacations and accept cuts in wages and benefits, which also hurts the economy. From Job Fear From Trade Deficit Is What Happened To Jobs And The Middle Class,

The middle class is disappearing. Our economy is "hollowing out" because the money goes to the top and the people fall to the bottom. This is because we allow American companies to close factories here and open them there, shipping the same goods back here to sell in the same stores, costing jobs, companies, industries and our economy. This makes us afraid for our own jobs and afraid to make waves. By helping a few at the top get fabulously rich, China has essentially recruited our own businesses leaders to fight against our own government - and us.

The trade deficit is the problem we should be terrified by, not the budget deficit. If we fix the trade deficit and jobs that will fix the budget deficit!

Election Or Not, What Happens To Sensata-Style Workers?

Dave Johnson — Thu, 27 Sep 2012 14:48:46 -0400

A group of workers whose jobs are being outsourced to China is touring the "rust belt." They are trying to make an election point. But what about the day after the election?

Sensata Workers - More Jobs Going To China

Two weeks ago I wrote about the workers at the Sensata factory, You Should Know About Sensata - It's What The Election Is About,

Workers facing outsourcing by Bain Capital are camping outside the Sensata factory in Freeport, Ill. They are asking Mitt Romney to show up and help save their jobs. They say they will stay camped there until Romney shows up and stands with them – or with Bain.

Mitt Romney can can use this to show us if he wants to be president of the whole United States, or just president of, by and for the outsourcing 1 percenters.

All Mitt has to do is show up and help these workers. He says he is not part of Bain, and wants to be President of all of the country. Mitt Romney can can use this to show us if he wants to be president of the whole United States, or just president of, by and for the outsourcing 1 percenters. He could - and should - do that.

The Bain Workers Bus Tour

Workers from Sensata have left Missouri and are stopping in are stopping in Iowa, Wisconsin, Michigan, Ohio, Pennsylvania, Virginia, Florida, the presidential debate in Hempstead, NY -- and are (eventually) heading toward Boston where both Bain Capital and the Romney headquarters are located.They want Romney and Bain to ask them not to send their jobs to China. You can read about their progress at BainWorkerBus.com.

The thing is, these workers might be at this plant, run by this company, but there are millions of workers - millions - in the same boat. Or whose jobs have left or are leaving on the same boat, anyway.

The Chart That Says It All

It is more than just these Sensata workers -- they are a symbol of the damage that our terrible "trade" policies have done and are doing to our country. A company can just close a factory here, open it there, bring the same stuff back to sell in the same stores here and call that "trade?" And they can get tax breaks for doing that? They can use the threat of doing that to bust unions and cut our wages? Polls show that We, the People overwhelmingly want this changed, yet it doesn't change.

Look at the chart in this post at Think Progress: After Nearly A Decade Of Declines, Manufacturing Jobs Begin Rebound. It shows what happened to our manufacturing base literally immediately after George 'W' Bush took office. Seriously. Look at this chart and see if you can just guess why we have such a terrible economy today.

During the Bush administration we lost more than 50,000 factories and at least 6 million manufacturing jobs directly to China. (Never mind the effect on the supply chains, the grocery and clothing stores where those people shopped, etc... The foreclosures, the bankruptcies, the misery...) We have a huge trade deficit with China -- money that we send to China and then complain that there is not enough money to do things here.

Imagine how our economy would be doing if we had actual trade with China, where we buy things from them and they buy just as many things from us?

After The Election

After the election the country is going to be diverted into a battle over how much more damage we can do to ourselves. Instead of addressing the trade deficit -- the cause of our budget and jobs deficit -- our plutocrat-funded elites are going to play a Shock Doctrine game of whipping up hysteria about the budget deficit. They are going to terrify the public about "the fiscal cliff" that occurs when the Bush tax cuts expire, and when the deal that put off the hostage-taking over the debt ceiling cuts the military budget, and then the safety net.

Instead of addressing jobs and inequality and wage stagnation and trade and climate and crumbling infrastructure and manufacturing policy and, and, and, they are going to all try to outdo each other offering ways to cut the things that We, the People do for each other -- all to keep taxes low for the super-wealthy. Some call this the "Grand Bargain" where they offer up austerity -- working so well in Europe -- instead of jobs.

Bob Borosage wrote about an alternative approach. Since Jobs Fix Deficits, let's wait on attacking the budget deficit until there are enough jobs. He calls this a "Jobs Trigger" - enough jobs triggers the time to cut the deficit. From Good Jobs First: No Grand Bargain Without A Jobs Trigger,

Poll after poll shows that voters are concerned most of all about jobs and the economy. Yet in Washington and on the campaign trail, attention has turned to deficits and how to get our books in order.

[. . .] The presidential candidates and Congress should be pressed to adopt a budget version of the “jobs trigger.” Putting people back to work is the first step to getting our books in order. So Congress should pass a fiscal trigger as part of any grand bargain: Comprehensive deficit reduction measures will kick in only when the economy is moving, and unemployment comes down to 5 percent or so.

Please go read the whole post, We must all demand a jobs trigger after the election. Jobs first, then fix the deficits.

And to fix jobs, we have to fix "trade." We have to stop this idea that it is OK to close a factory here, open it there, then send the same goods back here to sell in the same stores, and use the threat of doing that to even more of us to force wage and benefit cuts, bust unions, etc.

Ohio Sen. Brown Pushes Revival Of China Currency Bill

Dave Johnson — Thu, 20 Sep 2012 13:15:09 -0400

The "China Currency Bill" has passed the Senate but is stalled in the House by Republican leadership. Republicans are trying to have it both ways on China and manufacturing, saying they want to do something, but blocking doing something. It could come to the floor and pass if just a few of the 60+ Republican cosponsors asked for it. Meanwhile Mitt Romney says he wants to do something about China currency but opposes actually doing something.

Ohio Senator Sherrod Brown is pushing to revive the China Currency bill that has passed the Senate and is being blocked by Republican leadership in the House. Columbus (Ohio) Dispatch: Senate Democrats press Boehner for vote on Chinese currency bill,

More than 20 Democratic senators -- including Sherrod Brown of Ohio -- are urging House Speaker John Boehner, R-West Chester, to allow a floor vote on the House on a bill aimed at making U.S. exports more competitive to China.

The bill, which passed the Senate by a 63-35 vote last year, would require the Obama administration to impose tariffs on Chinese exports to the United States if the U.S. Department of the Treasury concludes that China is keeping its currency artifically low. By doing so, critics charge that China can flood the United States with less expensive goods that hurt U.S. manufacturers.

"Legislation is necessary to actually give American businesses and workers tools to fight back,'' according to the letter, which was written by Brown.

Greg Sargent at The Plum Line, in Ratcheting up pressure on GOP (and Obama) over China,

Senator Sherrod Brown, the lead sponsor, is organizing to increase the pressure on his fellow Ohioan, John Boehner, to hold a vote on the bill. He is circulating a letter today among fellow Senators, addressed to Boehner, demanding a vote, and noting that a similar version passed in 2010 with the support of 80 House Republicans still in office.

... “I’m confident Obama will sign this bill,” Brown said, adding that his conversations with the White House had persuaded him of this. “This will pass if Boehner schedules it.”

Brown added that the bill, and the ideas behind it, resonate heavily with working class voters, such as those in industrial swing states like Ohio and Wisconsin. “People recognize that trade policy and tax policy have undermined the middle class and manufacturing,” Brown said. “The public knows the game has been rigged.”

Who Is Against?

Polling shows that Americans across the political spectrum overwhelmingly want changes, including a crackdown on currency manipulation, "Buy America" policies, ending tax incentives for offshoring jobs, etc. Yet Republican leadership continues to block action.

So who could possibly be against this? Aside from China, there are a few American interests making a ton of cash off of shipping jobs, factories, industries and our prosperity. Over at FDL, David Dayen writes in, Sherrod Brown Tries to Jump-Start Languishing Currency Manipulation Bill, Which Covers More Than Just China,

The constituency that really doesn’t want to see a currency manipulation bill pass Congress would be multinational corporations, who see value in siting their factories overseas and taking advantage of the low currency to deliver cheap imports.

OK, there is on -- giant multinationals. And there is another interest: Wall Street. The "Club For Growth" is a Wall Street front group, that has made the China currency bill a litmus test. Politico: Club for Growth warns GOP on China currency bill,

The influential Club for Growth is pressuring Republican presidential candidates and lawmakers to oppose bipartisan legislation cracking down on China’s currency policies.

The anti-tax, free-market group on Thursday called on GOP presidential contenders to take a stand against the bill, authored by Democratic Sens. Sherrod Brown (Ohio) and Chuck Schumer (N.Y.), that would slap tariffs on imports from China and other countries that artificially keep their currency low.

And, just this week the Club for ~~Wall Street~~ Growth asked both Presidential candidates to lay off China.

So on one side we have overwhelming support from Americans with both Republicans and Democrats polling up into the 90s. On the other side we have Wall Street, multinational corporations and, of course, China itself. And we have the Republican leadership and Presidential candidate siding with ... guess which side? But they are able to block action, and here we are.

Why The Latest Trade Complaint Against China Matters

Dave Johnson — Tue, 18 Sep 2012 12:57:00 -0400

The Obama administration has filed a trade complaint against China for violations involving "extensive" government subsidies for autos and auto parts.

From Reuters, at HuffPo: Barack Obama: China Auto Subsidies 'Directly Harm Working Men And Women',

"These are subsidies that directly harm working men and women on the assembly lines in Ohio and Michigan and across the Midwest," Obama told a campaign rally. "We are going to stop it. It is not right, it is against the rules, and we will not let it stand."

Why This Matters

The auto industry is targeted for takeover by China because it is seen as a(nother) key provider of high-paying jobs, export revenue and therefore national economic strength. The Seattle Times explains, in WHY IT MATTERS: China's auto parts industry.

The United States, China and other governments see the auto industry as an important source of higher-paid jobs and export revenue. The 2008 global crisis fueled complaints in the West that Chinese policies on a wide range of industries might be wiping out jobs abroad.

Chinese automakers exported only about 500,000 autos last year, mostly to the Middle East, Southeast Asia and other developing markets. But its producers of tires, aluminum wheels, radios and other components are making inroads in U.S., European and Japanese markets. They have yet to break into the top ranks of suppliers along with companies such as Delphi, Visteon or Europe's Michelin and Bosch. At the lower end of the market, Chinese suppliers are increasing their global share, putting pressure on smaller Western competitors.

China's strategies, from the same article,

Beijing has an array of strategies to support industries targeted for development, ranging from clean energy to mobile phones to autos. Companies can receive tax breaks and low-cost bank loans, energy and land.

The WTO allows research grants and some other aid, but critics say China violates rules that prohibit making exports a condition of support. They say Chinese policies have encouraged auto parts manufacturers to shift production to China, hurting employment abroad.

The key:

Employment in the U.S. auto parts sector shrank by roughly half between 2001 and 2010, while U.S. imports of auto parts from China have increased seven-fold, according to the Obama administration.

400,000 Jobs Lost, 1.6 Million More At Risk

In January three separate reports were released showing how China's illegal subsidies and other trade violations were causing job loss and damaging our supply chains. The Alliance for American Manufacturing (AAM) described the reports in New Reports Show China’s Illegal Trading Practices Endanger U.S. Auto Supply Chain,

More than 400,000 jobs in the U.S. auto supply chain have been lost since 2000. One major problem is China's persistent violations of World Trade Organization (WTO) rules, and another 1.6 million U.S. jobs are at risk unless China's illegal trading practices are curtailed, according to three separate reports released in January of 2012.

Taken together, these three reports show beyond a shadow of a doubt that China's blatant use of illegal government subsidies and a web of predatory trade practices on a massive scale are undercutting companies in the U.S. auto supply chain.

The three reports from January:

Growing Threats to the U.S. Auto-Parts Industry from Heavily Subsidized Chinese Tires and Parts, conducted by Robert E. Scott and Hilary Wething of the Economic Policy Institute (EPI), notes that a substantial portion of jobs in the U.S. auto industry are in the auto-parts sector, with direct and indirect auto parts jobs in virtually every state. The report concludes that “every one of these [1.6 million U.S.] auto-parts jobs is individually at-risk from this unfair trade competition.” Research by AAM has found that the auto parts sector comprises 75% of employment in the U.S. auto industry.
Putting the Pedal to the Metal: Subsidies to China’s Auto-Parts Industry from 2001 to 2011, conducted for EPI by Usha C.V. Haley, cites $27.5 billion in government subsidies to the Chinese auto-parts industry and notes that China’s central government has committed to disbursing an additional $10.9 billion in subsidies for industrial restructuring and technological development of the industry.
China’s Support Program for Automobiles and Auto Parts Under the 12th Five Year Plan, by Stewart and Stewart, a prominent law firm that has won cases challenging China’s unfair trading practices, offers evidence that the massive government subsidies being given to Chinese producers, which are in violation of China’s WTO commitments, will continue for years to come unless challenged by Congress and the President.

Report On Job Cost Of Trade Deficit With China

Dave Johnson — Fri, 24 Aug 2012 00:02:34 -0400

We as a country have been running enormous trade deficits that enormously benefit our 1% at the expense of the rest of us. As a country we get poorer while they get richer, so they want things to stay just the way they are. And that is where we are today -- an increasingly poorer country with an increasingly richer 1%.

Trade Deficit

As a country, a trade deficit is very bad for us. A trade deficit means we as a country buy more from other countries than we sell to other countries. This is a way that a country actually is like a household. A household has to bring in at least as much as it spends, or it eats its savings and then borrows. (A government's budget is not like a family's finances, but that is another story -- our real deficit problem is the trade deficit.)

But the problem is that the things that cause that trade deficit benefit a few wealthy, powerful and influential people here enormously. And those people of course want things to stay the way they are. If YOU get rich closing a factory, laying off the workers, moving the machines to China, bringing the same goods back here to sell in the same stores, YOU are doing just fine. But the people who worked in the factory, and the places where those people bought their clothes and food, and the town the factory was in are, and the wages of the rest of us in the country ... well look around you at any town that had a factory and you can see what happens.

But ... the person who closed the factory is rich, and THAT person can use that money to buy corporate/conservative think tanks that tell lies, and buy ads that tell lies, and elect politicians that keep things the way they are for the people who are making all the money off of the way things are. And that is where we are today -- an increasingly poorer country with an increasingly richer 1%.

New Report On Job Loss To China

So just how many jobs are lost to trade deficits? A new report, The China Toll, takes a look at the effect of our trade deficit with China since that country joined the World Trade Organization (WTO) ten years ago, and comes up with some very specific numbers. In summary:

"Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state"

The Economic Policy Institute (EPI) released the report, The China toll, Thursday.

According to the report,

Between 2001 and 2011, the trade deficit with China eliminated or displaced more than half of all U.S. manufacturing jobs lost over that period. The growing trade deficit with China has cost jobs in every congressional district in all 50 states as well as in the District of Columbia and Puerto Rico.

The total losses include 662,100 jobs from 2008 to 2011 alone—even though imports from China and the rest of the world plunged in 2009 before recovering and surpassing the previous peak reached in 2008. The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries. In fact, rapidly growing imports of computer and electronic parts, including computers, semiconductors and audio-video equipment, accounted for nearly 55 percent of the $217.5 billion increase in the U.S. trade deficit with China between 2001 and 2011.

Again: Half of our manufacturing job loss is lost to the trade deficit with China. ... The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries.

Scott Paul, Executive Director of the Alliance for American Manufacturing (AAM), said of the report, “The EPI report offers convincing evidence that, unless China’s trade violations and currency manipulation are challenged forcefully, our growing trade deficit will continue to cripple the fledgling U.S. jobs recovery.”

“Exports to China may have increased since 2000, but imports have soared dramatically in that time,” explained Paul. “This report helps to quantify the millions of U.S. jobs lost due to this widening gulf.”

Map Of Job Loss By State

From AAM: The study found the hardest-hit congressional districts were in California, Texas, Oregon, and Massachusetts, and Minnesota. Some districts in North Carolina, Georgia, Colorado, and Alabama also were hit especially hard by job displacement in a variety of manufacturing industries, including computers and electronic parts, textiles and apparel, and furniture.

The Alliance for American Manufacturing has an interactive map showing job losses by state.

German Solar Companies Also Bring Trade Complaint Against China

Dave Johnson — Thu, 26 Jul 2012 13:58:22 -0400

American solar companies are not alone in their battle with Chinese trade cheating. The Obama administration recently imposed tariffs because Chinese "dumping" was hurting American companies (like Solyndra). German solar companies are also bringing trade complaints against China for pricing their products below cost to try to put companies in other countries out of business.

Oil-backed Republicans are fighting our solar industry tooth-and-nail, complaining that the Obama administration attempted to foster an alternative-energy industry that could bring us a share of millions of new jobs and trillions of dollars. They even trumped up a phony scandal about Solyndra

Businessweek: Solarworld-Led Group Files China Anti-Dumping Case in Europe,

Solarworld AG (SWV), Germany’s largest solar-panel maker, led a group of manufacturers in requesting the European Commission investigate whether Chinese competitors dumped products at below-market rates on regional markets.

The EU ProSun group filed the anti-dumping complaint in Brussels after a similar request in the U.S. resulted in duties on solar imports from China. The group has 25 members including companies from Italy, Spain and Germany’s Sovello GmbH, EU ProSun President Milan Nitzschke said today.

“A majority of the European solar industry backs the complaint,” Nitzschke said by e-mail. “Chinese companies are offering their products below manufacturing costs despite their own massive losses.”

In May I wrote about the Obama administration imposing tariffs on Chinese solar panels: Will Conservatives Support American Companies ... Or Chinese?

In March I laid out the case: Tariffs On Chinese Solar Might Help Prevent The Next Solyndra

Job Fear From Trade Deficit Is What Happened To Jobs And The Middle Class

Dave Johnson — Wed, 11 Jul 2012 12:13:48 -0400

The middle class is disappearing. Our economy is "hollowing out" because the money goes to the top and the people fall to the bottom. This is because we allow American companies to close factories here and open them there, shipping the same goods back here to sell in the same stores, costing jobs, companies, industries and our economy. This makes us afraid for our own jobs and afraid to make waves. By helping a few at the top get fabulously rich, China has essentially recruited our own businesses leaders to fight against our own government - and us.

Yesterday's Jobs Emergency Hollowing Out The Middle Class examined the reasons that our economy has shifted in ways that enrich a few at the top while the rest of us fall further and further behind. This is called "hollowing out" because the middle class is disappearing while the money goes to the top and the people fall to the bottom. In it I quoted Dean Baker on the real cause of the hollowing out. I want to repeat this part of the post for emphasis. Baker writes that last decade's manufacturing job loss is because of the trade deficit. From the post:

Dean Baker responds, in Income Is Definitely Being Redistributed Upward, but Why Do We Think It's Technology? at the Center for Economic and Policy Research's Beat the Press, (emphasis added to emphasize):

...the piece refers to the millions of manufacturing jobs that the United States lost over the last decade. The biggest factor behind the job loss was not technology; productivity growth in manufacturing was not markedly faster in the 2000s than in prior decades. The main factor leading to job loss was the growing U.S. trade deficit.

The predicted result of an over-valued dollar is the loss of jobs and lower wages in the sectors of the economy that are exposed to international competition. However, the availability of low-cost imports raises the living standards of those who are protected from international competition.

The latter group would include highly paid professionals, like doctors and lawyers. Note that it is not technology that protects these professionals from seeing their wages depressed by competition from their low-paid counterparts in the developing world, it is deliberate policy. While it has been the explicit goal of trade policy to put manufacturing workers in direct competition with workers in the developing world, the barriers that make it difficult for qualified doctors, dentists, and lawyers in the developing world to work in the United States have been left in place or strengthened.

Once again, for even more emphasis: "The main factor leading to job loss was the growing U.S. trade deficit. The predicted result of an over-valued dollar is the loss of jobs and lower wages in the sectors of the economy that are exposed to international competition. ... it is deliberate policy."

And for more emphasis: "The main factor leading to job loss was the growing U.S. trade deficit. The predicted result of an over-valued dollar is the loss of jobs and lower wages in the sectors of the economy that are exposed to international competition. ... it is deliberate policy."

Job Fear

When you close factories and ship them out of the country people lose their jobs. And the rest of the people are afraid of losing their jobs, so they "keep their heads down." Companies can make them accept lower wages. They work longer hours. They even stop taking vacations and sick days. They certainly don't ask for raises or better working conditions. This terrible job fear everyone has helps a few at the top get even richer.

This is why corporate profits are the highest ever. From the recent post, Here Is Why Our Elites Are Not Fixing The Economy,

When we had democracy, We, the People made the rules and we ran our country and our economy for our benefit. Now that we are a plutocracy things are different. The reason our elites are not doing anything to fix the economy is because from their viewpoint, things are just fine.

... The reason our leaders are not doing anything to fix the economy is because, from the viewpoint of our real leaders, the economy is working just fine.

Trade Deficit Is The Root

From last month's post, Trade Deficit - One Root Of Many Problems,

You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff... Finally you're selling off the tools you had used to make a living. That's where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

The Root

Pick a national problem, and the odds are that our trade imbalance is aggravating it. Our trade deficits literally suck money out of the country. When looking up the numbers I had to double check, our annual trade deficits are so huge. In the chart below that first line under the dates represents $100 billion. Look at what happened in the late 90s, when we opened the China flodgates. (Click to enlarge):

In the 70's the trade balance dipped below zero because of oil, and the country responded with conservation and the beginning of the search for alternatives -- until Reagan. To make matters worse, Reagan preached "free trade" -- as in use cheap foreign labor to break American unions. (But Reagan also enforced rules against "dumping" and other trade violations.) The real break in our balance of trade clearly begins around the time that NAFTA and the World Trade Organization went into effect, and then went absolutely nuts after China was brought in. Between 2001 and 2009 we lost 1/3 of all of our manufacturing jobs, more than 50,000 factories, and entire industries. We drained trillions of dollars out of our economy.

Why Can't We Fix This?

This is so hard to fix because the trade imbalance that drains our country transfers great wealth and tremendous power to a few. The trade deficit results from allowing companies to just pack up American factories and industries and move them to China. This lowers labor costs, which translates to profits for the few at the top. This wealthy few use some of that wealth to buy off our government and shower us with propaganda to let them keep this scheme going. And it creates jobs fear.

Job fear makes people want to "keep their heads down," not make waves, not appear demanding or ungrateful, lest they lose their jobs. It keeps people inside. It keeps people from organizing unions. The organizers are fired, and the threat to just hire cheaper people if you don't stop this is very real. People are afraid.

High unemployment helps the rich get richer. It brings them more power. Every claim to "create jobs" gains power, be it through cutting taxes on big corporations, cutting government oversight of what corporations do, passing laws restricting unions, you name it -- hand the treasury over to big corporation sand they will "create jobs."

So don't count on the "job creators" to be creating very many jobs, as long as high unemployment means the highest profits in history, and a "job fear" public that will vote to support any big-corporate scheme that promises to "create jobs."

In Why Can't Apple Make Your IPhone In America?, presented at Netroots Nation,

When people have a say they say they want better pay, health care, retirement, vacations, sick pay, protections, worker safety, clean environment and taxes to support the country – things like that – the very things China offers to let our businesses escape from.

So what China offers is that China is “business-friendly.” Because people there do not have a say, so they can’t ask for the things people should have.

Corporate conservatives here say we should be more business friendly, we should lower wages, lower taxes, stop taking care of the environment, stop all those pesky health and safety and environmental inspections, stop telling businesses what they can and cannot do, and all the rest. They say we should be more like China.

What they are saying is that we should abandon the benefits that democracy brought to We, the People – the 99%

in order to enrich a few people – the 1%.

When we opened up our borders to goods from China, and let this treatment of workers and the environment offer advantages to our elites,

we made democracy a competitive disadvantage.

... China offers these things to our business leaders for a reason. This is the reason : China sees itself as a country, and we no longer do.

China competes with us as a country. But our businesses see themselves as GLOBALIZED, not as part of a country.

So since we – at least our businesses – no longer see themselves as part of a country we are not responding to this competition. We are not mobilizing to fight back.

In fact, China has essentially recruited our own business leaders to fight against our own government.

By helping a few at the top get rich China has essentially recruited our own businesses leaders to fight against our own government.

Again: By helping a few at the top get rich China has essentially recruited our own businesses leaders to fight against our own government -- and us.

China Exports Trouble to U.S.

Leo Gerard — Tue, 12 Jun 2012 09:30:00 -0400

Over the years, China exported all sorts of toxic, dangerous and killer products to the United States.

There was the tainted made-in-China Heparin blood thinner that killed more than 100 Americans. There were the recalled made-in-China toys, jewelry and clothing fasteners containing toxic levels of lead. There was the made-in China drywall that emitted hazardous levels of sulphur that sickened families and corroded wiring.

Now China is exporting a different kind of problem to the United States. It’s sending America its economic downturn. In May, China resumed purposely devaluing its currency, which is a tactical maneuver that tilts trade in its favor. American industry, American workers and the American economy suffer from China’s currency manipulation. Dithering by the U.S. House of Representatives on this issue has reduced America to victim status.

For years, China deliberately diminished the value its currency. This artificially reduces the price of Chinese exports. Simultaneously, it artificially raises the price of U.S. exports to China.

The Peterson Institute for International Economics, hardly a liberal think tank, estimates the renminbi to be undervalued by between 25 and 40 percent. That means on every made-in-China sneaker sold in the United States, there’s at least a 25 percent discount. And on every U.S.-made aircraft sold in China, there’s at least a 25 percent premium layered on top of the price.

This price distortion has contributed to the shuttering of 56,000 American factories and the destruction of 2.8 million American jobs since 2000. It has abetted record annual trade deficits with China, with last year’s just shy of $300 billion. In April, the U.S. trade deficit declined by more than $2 billion overall, but the specific deficit with China increased by nearly $3 billion. China’s currency manipulation also means the gross domestic product rose 2 percent in the United States last year, while it increased more than 9 percent in China.

China’s growth is projected to decline to 8 percent for this year – still among the fastest in the world. Eight percent during grave financial troubles worldwide is massive. But it’s not good enough for Chinese government officials. So they’ve taken two steps. They’re stimulating their economy with a government injection of cash estimated at $150 billion. And they’ve resumed devaluing the renminbi.

Under international pressure, including the threat of sanctions if the U.S. Treasury Department declared China a currency manipulator, China had agreed to allow the value of the renminbi to rise. That began to occur in microscopic steps in June of 2010, until it had increased by nearly 12 percent. But that stopped in January. For months it remained unchanged.

Noting that stagnation, the Treasury Department in its report on international exchange rate policies this spring urged China to abide by the commitments it has repeatedly made to its trading partners to allow the renminbi to attain a more equitable value.

This is particularly important to the United States as the economy in the EuroZone cools, reducing the amount of Chinese goods European countries buy. China may dump those products on the United States instead by further cutting the value of the renminbi. As artificially cheap as those imports would be, American industry and workers cannot afford them.

The Treasury Department determined that the renminbi remains significantly undervalued, but it concluded that China did not meet the standards required by U.S. law to be declared a currency manipulator. The report uses data on the renminbi up until May 15.

It was right about then that China began slashing the value of the renminbi. The value dropped nearly 1 percent in May, a record decline in record time.

In your face, U.S. Treasury!

Well, really, that should be: In your face, U.S. factories!

That’s because it will be factories and workers who will suffer as China distorts international trade to its advantage.

In the last session of Congress, the U.S. House of Representatives passed a bill that would have eased that suffering by changing the standards under which the government legally determines that a country manipulates currency. But the Senate didn’t pass it. This time, in a rare bi-partisan vote, the Currency Exchange Rate Oversight Reform Act passed the U.S. Senate by 63 to 35.

A similar bill in the House has 233 co-sponsors, including 65 Republicans. But Republican House Speaker John Boehner has refused to bring it up for a vote.

U.S. Sen. Bob Casey, D-Pa., wrote Boehner last week asking him to schedule a vote on the legislation to protect American jobs and the American economy.

Boehner won’t do it. And that’s odd since his party’s presidential candidate claims that if he’s elected, he will name China a currency manipulator by fiat on his first day in office – whether or not the U.S. Treasury legally makes that determination or the legislation passes in Congress. By contrast, Boehner is content to allow China to dominate, to render America a cowering victim.

Victimhood doesn’t suit Americans well. America stands up to aggressors. The House needs to pass that legislation.

Trade Deficit - One Root Of Many Problems

Dave Johnson — Mon, 04 Jun 2012 12:56:27 -0400

You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff... Finally you're selling off the tools you had used to make a living. That's where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

The Root

Pick a national problem, and the odds are that our trade imbalance is aggravating it. Our trade deficits literally suck money out of the country. When looking up the numbers I had to double check, our annual trade deficits are so huge. In the chart below that first line under the dates represents $100 billion. Look at what happened in the late 90s, when we opened the China flodgates. (Click to enlarge):

In the 70's the trade balance dipped below zero because of oil, and the country responded with conservation and the beginning of the search for alternatives -- until Reagan. To make matters worse, Reagan preached "free trade" -- as in use cheap foreign labor to break American unions. (But Reagan also enforced rules against "dumping" and other trade violations.) The real break in our balance of trade clearly begins around the time that NAFTA and the World Trade Organization went into effect, and then went absolutely nuts after China was brought in. Between 2001 and 2009 we lost 1/3 of all of our manufacturing jobs, more than 50,000 factories, and entire industries. We drained trillions of dollars out of our economy.

Causes

Energy. The trade imbalance started with OPEC and the oil price shocks in 1970s, and oil imports since then. This is a huge problem but the beneficiaries of this trade imbalance fight to keep things the way they are. (By the way, next time you hear someone of FOX running down our country's green energy efforts, knocking the Chevy Volt or denying climate change, think abougt this: Fox's second-largest shareholder is a billionaire Saudi oil prince. Also, FYI, Koch brothers == oil.)

"Asymmetries." One-sided trade relationships are now draining money from our country at a dramatic rate. We are much more open to imports than many of our "trading partners" are. We buy from them, they don't buy from us -- and we just let this continue year after year.

"Strong" dollar policies, combined with currency manipulation by others. A strong dollar is great for Wall Street, but is terrible for manufacturers and producers. When the dollar is "strong" it means that goods made here cost more than goods made elsewhere. The dollar went way up in the early 1980s because of the borrowing following the Reagan tax cuts for the rich and the trade deficit went up along with it. Dollars had to be purchased to buy our bonds, creating a "demand" for them, which increased their "price," contributing significantly to the then-record U.S. trade deficits. Meanwhile, we let countries like China manipulate their currencies to make them "weak," which means goods made there cost must less in world markets.

Trade cheating. Many countries violate trade rules (like manipulating currency), which brings them a competitive advantage in world markets. We don't call them on it for various reasons, largely because powerful interest groups benefit from the cheating. When goods from elsewhere cost less than they should it undermines our own manufacturers and producers, but the lower prices enrich distributors, retailers, and others.

The Trap

Here is the trap of our one-sided trade agreements: these "free-trade" agreements increase exports. The reason this is a trap and a problem is that they increase imports more. So, on the one hand the agreements create and enrich interest groups that push for continuation and expansion of the agreements, while on the other hand they increase trade deficits, which drain our economy.

Example: We opened up trade with China. China lets their imports grow, so we have some appearance of increasing sales to China, but they keep barriers while manipulating currency and subsidizing their companies, and their exports to us grow faster than their imports from us, which increases the imbalance. They can steadily reduce their import barriers and let their currency rise slowly, giving the appearance of moving toward open trade and providing what appear to be incentives to keep the relationship going, but by also increasing their exports they continue to drain us.

The Answer: Balance

We must balance our country's trade. Of course, to do that we must understand ourselves as a country again. Our competitors certainly do.

We're A Country. Deal With It.

Here's the important thing to understand, even if you think the idea of "countries" is out of date, and don't think of the United States as a country is important anymore: Others see themselves as countries and they organize their countries to win as countries. And you don't live in those countries. They see us - this geographic region we live in -- as a country, even if we do not, and they plan their efforts accordingly. They attack us as a country and you happen to live in the geographic region called a country that they are attacking. So as they seize the jobs and factories and industries from our country all of us who happen to live within the geographic borders that we refuse to call a country lose out economically, whether we believe we are part of this country or not. This means we have to respond as a country regardless of whether our ideology says we shouldn't. We are under economic attack as a country, so national government still matters as the only force capable of organizing a national response.

Our government must say that the amount coming in must match the amount going out. Period.

(Note, The Causes of the U.S. Trade Deficit, Robert A. Blecker, Ph.D., August 19, 1999 is a good read.)