Wednesday, October 06, 2010

Schauer and Levin Discuss Fair Trade With China


The question is simple: Do we want manufacturing in this country, or not?

If the answer is "yes", then we have to start tackling the very complex issue of what constitutes fair trade - and we are going to need policies in place that will keep our manufacturing jobs here. The focus lately has been on China due to their predatory behavior when it comes to manipulating their currency and closing their domestic market to our products (not to mention intellectual theft of our technology), but this applies to other countries as well - for just over the horizon is a looming trade pact with Korea, another country known for placing barriers to American products entering their market, and carries the potential of more jobs manufacturing jobs leaving our country. It's not just the Chinese we need to look it, it's our own manufacturing and trade policies in general - and we had better do it soon.

So, do we want manufacturing in this country, or not? If so, we need to give big credit to our Michigan Democrats for raising all these issues in Congress and with the Obama administration, because you get the impression that they are fighting an uphill battle against their own party at times. Just before recess, the US House passed a bill that will allow us to place tariffs on Chinese goods, and, even though it gained overwhelming bipartisan support, its prospects in the Senate are murky - and the White House has been hesitant.

"This was not easy to do, and it came with opposition from many groups," Schauer said. "I'm not sure the president was ready for us to push this aggressively, but we did."

The Obama administration is fond of pushing for renewable energy jobs as one of its main goals, but as it stands now, we are already in danger of losing those jobs just as quickly as we are creating them. Congressman Levin has been telling a scary story when it comes to solar panel manufacturing; he told it to the press before the currency bill passed, and he told it again yesterday as well:

"The manager (of a large solar plant) essentially said that if steps aren't taken -- and this is a huge plant, new technology, was invented in this country -- that if steps aren't taken, in five years, they'll be out of business and all solar panels installed in the U.S. will come from China," Levin said. "This is no longer an academic issue, a theoretical issue."

Although he hasn't named names, chances are he is talking about Uni-Solar - but he could be talking about any American manufacturer that has to compete on this uneven playing field. China is not only "keeping the value of its currency, the renminbi, artificially low by buying huge amounts of foreign currency, in effect subsidizing its exports", it is also running a stimulus program of its own at 3% of their GDP (ours was 2%), devoting a large portion of that towards capturing the world's renewable energy manufacturing market. Having essentially cornered the current market on solar panels, and rapidly gaining ground on wind turbines, they have set their sights on a new conquest - and this should be a big wake-up call to Michigan. Here's Friedman:

Beijing just announced that it was providing $15 billion in seed money for the country’s leading auto and battery companies to create an electric car industry, starting in 20 pilot cities. In essence, China Inc. just named its dream team of 16-state-owned enterprises to move China off oil and into the next industrial growth engine: electric cars.

And for an example of one way they plan to control that market as well, Congressman John Dingell raised the alarm just the other day:

Rep. John Dingell, D-Dearborn, said in a letter today to the Chinese ambassador to the United States, Zhang Yesui, that they should drop plans "to require foreign automakers to hand over electric vehicle technology to their Chinese competitors in exchange for market access in China."

"I am outraged that the Chinese government is considering plans to force foreign automakers to give up proprietary electric vehicle technology to their Chinese competitors in order to be allowed access to China's market. This violates the sanctity of the intellectual property laws we hold so dear in the United States and amounts, in my estimation, to a violation of China's obligations as a member of the World Trade Organization," Dingell wrote, citing recent news reports.

The Obama administration has pledged to get tougher with China, recently filing two new trade cases before the WTO, Tim Geithner testifying before Congress that "we are very concerned about the negative impact of these policies on our economic interests". Yes, we should hope so. It seems ridiculous to throw billions at a renewable energy economy, only to watch those jobs rapidly leave the country as well. Time will tell if the Obama administration is serious about dealing with that "negative impact" or not; trade complaints before the WTO are one step, but they also need to push Congress for stronger trade measures - or we can kiss the cars and batteries goodbye as well.

About the only thing more mind-bending is watching how Republicans such as Tim Walberg complain in his attack ads that the Recovery Act sent jobs to China - while he also says that "outsourcing is good for the nation's economy" and makes the claim that we are getting jobs back from China. Utter contradictory confusing nonsense from the Republicans on the issue - thank God for the Michigan Democrats who are raising the real concerns surrounding trade with their colleagues and the White House. They deserve big credit for fighting this fight - because it's the fight for America's manufacturing future.

Wish them luck, because we are going to need it.