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America’s Failed Mole-by-Mole Trade Policy

This American Car Enthusiast Makes The Point

Last week several groups, including the United Steelworkers, petitioned the federal government to whack the latest trade mole – illegally traded auto parts from China.

With President Obama announcing creation of a new trade enforcement unit in his State of the Union Address, the feds probably will investigate. But even if they whack down the auto parts mole, experience has shown a new mole will pop up.

Mole-by-mole trade enforcement isn’t the solution to America’s massive trade deficit. Although conservative candidates revel in ridiculing Western Europe, America could learn crucial economic lessons from Germany, which doesn’t rely on Whack-a-Mole and maintains trade surpluses, including one with China in auto parts.

The Steelworkers – along with the United Auto Workers, the Alliance for American Manufacturing and Campaign for America’s Future – explained why the federal government must smack down the latest trade problem that has raised its ugly head.

China and several other countries promote their auto parts manufacturers by providing subsidies and engaging in additional practices banned by the World Trade Organization (WTO). As a result, the United States imports more auto parts than it produces, a situation that kills manufacturers and manufacturing jobs here. For example, over the past 11 years, as the U.S. auto parts trade deficit increased by 867 percent, the Unites States lost 45 percent of its auto parts jobs – a total of 419,000.

The reason the groups sought action against China specifically is that its exports of auto parts to the United States have increased faster in the past three years than any other country’s and China supports its auto parts industry in ways that violate its commitments to the WTO.

For example, China provided $27.5 billion in subsidies to its auto parts industry between 2001 and 2010. It’s fine with the WTO if countries subsidize industries that sell their products domestically. But it forbids subsidies for exported products because that distorts the free market, wrongly destroying jobs and industries in the countries that buy those artificially low priced goods.

Beijing also aggressively limited import of American-made auto parts. This is hardly startling. In December, China imposed steep tariffs on imported American-made sports utility vehicles and other large cars. And the WTO affirmed last week that China violated its trade commitments by restricting export of key raw materials. Earlier, the WTO supported President Obama’s imposition of tariffs on tires imported from China because Beijing had violated international trade rules. [cont’d.]

CommunityMy FDL

America’s Failed Mole-by-Mole Trade Policy

This American Car Enthusiast Makes The Point

Last week several groups, including the United Steelworkers, petitioned the federal government to whack the latest trade mole – illegally traded auto parts from China.

With President Obama announcing creation of a new trade enforcement unit in his State of the Union Address, the feds probably will investigate. But even if they whack down the auto parts mole, experience has shown a new mole will pop up.

Mole-by-mole trade enforcement isn’t the solution to America’s massive trade deficit. Although conservative candidates revel in ridiculing Western Europe, America could learn crucial economic lessons from Germany, which doesn’t rely on Whack-a-Mole and maintains trade surpluses, including one with China in auto parts.

The Steelworkers – along with the United Auto Workers, the Alliance for American Manufacturing and Campaign for America’s Future – explained why the federal government must smack down the latest trade problem that has raised its ugly head.

China and several other countries promote their auto parts manufacturers by providing subsidies and engaging in additional practices banned by the World Trade Organization (WTO). As a result, the United States imports more auto parts than it produces, a situation that kills manufacturers and manufacturing jobs here. For example, over the past 11 years, as the U.S. auto parts trade deficit increased by 867 percent, the Unites States lost 45 percent of its auto parts jobs – a total of 419,000.

The reason the groups sought action against China specifically is that its exports of auto parts to the United States have increased faster in the past three years than any other country’s and China supports its auto parts industry in ways that violate its commitments to the WTO.

For example, China provided $27.5 billion in subsidies to its auto parts industry between 2001 and 2010. It’s fine with the WTO if countries subsidize industries that sell their products domestically. But it forbids subsidies for exported products because that distorts the free market, wrongly destroying jobs and industries in the countries that buy those artificially low priced goods.

Beijing also aggressively limited import of American-made auto parts. This is hardly startling. In December, China imposed steep tariffs on imported American-made sports utility vehicles and other large cars. And the WTO affirmed last week that China violated its trade commitments by restricting export of key raw materials. Earlier, the WTO supported President Obama’s imposition of tariffs on tires imported from China because Beijing had violated international trade rules. (more…)

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Leo W. Gerard

Leo W. Gerard

Leo W. Gerard, International President of the United Steelworkers (USW - United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union) is in his second full term since being elected in 2005. The USW, the largest manufacturing union in North America,represents 1.2 million active and retired industrial and service sector workers in the U.S., Canada, Puerto Rico and the Virgin Islands.
Under Leo's leadership, the USW’s executive board launched a nationwide mobilization to gain congressional support for health insurance reform, the Employee Free Choice Act, the economic stimulus bill that includes a ‘Buy American’ provision to promote job creation, and climate protection legislation that serves working families.
In 2008, he signed a merger agreement creating the first trans-Atlantic union with leaders of the UK-based manufacturing union called Unite. The new global union, ‘Workers Uniting’ (www.workersuniting.org), is a fully functional and registered trade union in the UK, U.S., Ireland and Canada.
He serves on the AFL-CIO's Executive Council (www.aflcioi.org), where he chairs the AFL-CIO's Public Policy Committee. He serves on the U.S. National Commission on Energy Policy, and is a charter board member of the Apollo Alliance (www.apolloalliance.org), a non-profit public policy initiative for creating good jobs in pursuit of energy independence.
Gerard is a founding partner in 2006 with the Sierra Club of the Blue Green Alliance (www.bluegreenalliance.org), which today includes the Natural Resources Defense Council and four other unions dedicated to expanding jobs in the green economy. He also helped create the Washington-based Alliance for American Manufacturing (www.americanmanufacturing.org), a unique non-partisan, non-profit partnership forged to strengthen manufacturing in the U.S. that’s made up of America's leading manufacturers and the USW.