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Eight Steps To Fair Trade

Introduction

In the past three years, more than 2.5 million Americans employed in manufacturing have lost their jobs. Because each manufacturing job supports two non-manufacturing positions; that means at least 7.5 million people have been affected, directly or indirectly, because of the loss of American manufacturing to overseas companies.

Current so-called “free trade” policies have led many large corporations and retailers to take advantage of cheap foreign-made goods. While in some cases this can lead to a temporary boost for a sector of the economy, notably retailing, in the long run these “free trade” policies are bad for America and its workers.

Even worse, when vital defense-related products are made in foreign countries, our national security is threatened. What would happen if critical components of our defense systems were made in a country that, with a change in geopolitics, suddenly became unfriendly to us?

It is the position of the MAD IN USA coalition that so-called “free trade” policies should be turned into Fair Trade policies. This paper lists the eight critical steps that must be taken for that to happen. top of page.

STEP ONE: End the threat to our national security.

The Problem: As more and more products are outsourced to foreign manufacturers, America is quickly losing the technology involved in manufacturing important components of our defense systems. Many electronic components are now manufactured only outside the United States; the wire industry, for instance, is virtually nonexistent here. We need firm American control of the industries that manufacture the components to protect our country.

The Solution: Congress must ensure as soon as possible that 100 percent of the components and products that are critical to our defense systems be made within the United States. For our own national security, we must be able to manufacture the entire product in the United States without the reliance on foreign sources.

STEP TWO: Enforce existing trade agreements.

The Problem: Trade agreements already on the books provide some protection for American manufacturers. Too often, however, these existing agreements are ignored by foreign manufacturers. Asian countries in particular routinely fail to enforce U. S. patent and copyright laws. Protected products, from switches to high-end software, are copied and sold both here and abroad. Products made overseas do not always follow the required American safety standards, such as UL testing for electrical goods.

The Solution: The U. S. Department of Commerce and the U. S. Customs Department, working with the office of the U. S. Trade Representative, must insist on adherence to existing trade agreements. Stiff penalties are needed, both for the foreign manufacturer and the American buyer, who knowingly purchases products, in instances where product safety, quality, patent, or copyright infringements are discovered.

STEP THREE: Establish and enforce fair currency exchange rates.

The Problem: Some countries have internal economic policies that artificially devalue their national currency and then tie the deflated currency to the U.S. dollar. This has the result of making American products prohibitively expensive in that country, while at the same time making foreign products cheaper in the United States.

The Solution: Trade agreements, IMF agreements and anti-dumping laws must be aggressively enforced and penalties pursued for violations of these agreements. Anti-dumping laws should be strengthened to include efforts by foreign countries to manipulate the price of inputs, like raw materials, or to provide subsidies. This will have the effect of letting local prices and currencies fluctuate naturally; creating a fair market where the true value of products will quickly emerge.

STEP FOUR: Enable American consumers to make informed choices.

The Problem: Because of insufficient labeling requirements, American consumers who want to buy products made entirely or substantially in the United States are unable to do so. Even when a product is labeled “Made in U.S.A.,” it is often impossible to determine which of its components were manufactured abroad. Consumers have a right to all pertinent information when comparing products.

The Solution: Congress must pass laws requiring all products retailing at more than $15 to state clearly on the labels the percentage of components made in the United States.

STEP FIVE: Encourage investing American dollars here in America.

The Problem: Foreign countries, particularly China and countries in the Pacific Rim, have become manufacturing powerhouses using investments from the United States. The result is that the manufacture of more and more products is being moved overseas.

The Solution: Congress must pass laws that simultaneously encourage domestic investment and discourage foreign investment. Creating significant tax credits for companies that invest in American capital will create high-paying manufacturing jobs here, greatly strengthening the American economy. Congress should also press forward with litigation and regulatory reforms and help address the increasing cost of employee health benefits. top of page.

STEP SIX: Stop pitting big American manufacturers against small ones.

The Problem: Large manufacturers and retailers know that smaller companies have difficulty competing within the current trade structure, and sometimes they use questionable tactics in trying to obtain favorable prices. One such practice is to place a large contract order to get a favorable price, then to cancel the contract after only a portion of the goods are provided.

The Solution: The U. S. Commerce Department must set up an investigative unit to look into these practices and establish guidelines to address abuses and establish a unit to allow small manufacturers to confidentially report their complaints.

STEP SEVEN: Ensure a steady flow of qualified manufacturers.

The Problem: Many students who are not college-bound aren’t entering the technical fields of tool making, machining, or other potentially lucrative manufacturing areas, as they once did. For those who will go to college, the fields of industrial, manufacturing, electrical or mechanical engineering are less attractive because of the decline in small American manufacturers. Where will the next generation of American manufacturers come from?

The Solution: Congress must allocate more funds to technical schools, technical colleges, universities, chambers of commerce, and industry associations to keep apprenticeship programs, technical studies, engineering degrees and industry-specific training alive.

STEP EIGHT: Encourage Fair Trade by supporting American small manufacturing.

The Problem: America’s trade deficit with China hit an all-time high of $103 billion in 2002, and this year it is on track for a 37 percent increase. At present, China represents more than 25 percent of America’s total trade deficit. Millions of jobs have been lost here because of this imbalance, and the situation is worsening.

The Solution: Congress must take several steps, including: Creating a Cabinet-level position of Manufacturing Secretary. Passing a law requiring that the sum total of all products purchased by the U. S. government have at least 50 percent of their components manufactured in the United States. Passing legislation that allows for extremely rapid depreciation of capital equipment purchased by small and medium sized (under $25 million in sales) manufacturers and allows them to depreciate the equipment fully. Passing a law to provide tax credits for all new American manufacturing jobs created.