Labor Voices U.S. needs competitive industrial policy
By Mark Gaffney
First printed in The Detroit News 05/19/2006China has a manufacturing policy where the government and the banks it owns assist development of manufacturing locations and China purposefully works to manipulate the value of their national currency, the yuan, on world markets.
Japan includes in their industrial plan an agreement, backed by the government, between the Japanese auto workers union and Japanese auto makers to build about 8 million cars in Japan every year (before locating offshore).
Governments in South America are taking more control of their oil industries and governments all over Europe negotiate trade agreements that protect their indigenous agriculture and manufactured products and that also act to protect their wage levels. In our country the only national manufacturing/industrial policy we have is to sign free trade agreements that cause the outsourcing of our jobs to lower wage countries.
That lack of concern by our federal government coupled with those badly negotiated trade agreements have produced an annual trade deficit of $726 Billion in 2005. That means every day workers from other countries sell us $2 billion worth of goods more than our workers sell overseas. That overall trade imbalance has accounted for the loss of over 2 million manufacturing jobs in America since George Bush became president. It is producing the hollowing out of America’s manufacturing sector.
The loss of tens of thousands of manufacturing establishments and millions of experienced workers reinforces the threat to our national security of our current trade policies. All of these establishments and workers were part of a greater industrial base that met both commercial and defense needs. The factory floor serves as a source of experimentation, innovation, and product development. Many of the engineers, scientists, and skilled workers who work on commercial products one week are the same ones who work on defense application the next. This vital link between production and innovation, however, is being cut as manufacturers move plants offshore.
To continue down this path is near madness. The gutting of middle America’s manufacturing base is occurring too quickly, too comprehensively and too recklessly, to be considered a healthy or natural “adjustment of the marketplace economy.”
We must slow down the critically harmful job loss while still continuing to engage in global trade. We must raise the level of concern for American workers while still buying and selling goods and services with other countries. And we must balance our country’s and our community’s economic health with the need for business profits.
How do we do that? With a strategic plan. With a true American industrial policy.
Clearly, the first step is to stop signing and negotiating new trade agreements based on the flawed NAFTA and CAFTA models. While every new trade deal is presented as a market-opening agreement, the reality is that each new agreement just digs us deeper into the hole we’re in. Our trade deficit with our NAFTA partners has grown fourteenfold since we entered into NAFTA in 1994, our deficit with China has more than doubled since the grant of permanent normal trade relations (PNTR) in 2000, and our global trade deficit has grown eightfold since we helped create the WTO in 1995. At some point, the rhetoric has to come face to face with the reality that these policies have simply failed. These deals reflect precisely the wrong model for trade: excessive protection of corporate rights and little concern for workers, farmers and the environment.
The second step is for the Bush Administration and Congress to start enforcing our current trade laws effectively and to stop giving tax and financial incentives to corporations that ship jobs offshore. It is time for the labor movement to lead on a bold course of action: to levy a temporary import surcharge to help bring our trade deficit under control, relying on the balance of payments exception under WTO rules. This is explicitly allowed under Article 12 of the WTO, which allows countries to restrict imports in order to “safeguard [their] external financial position and [their] balance of payments.” The WTO has written this exception into its rules precisely because the international trade community understands that severe imbalances in one country ultimately threaten global economic stability. Financier Warren Buffet proposed one version of such a plan in a provocative article in Fortune magazine. Billionaire Investor Wilbur Ross, who refinanced the American steel industry and is now putting together an auto supplier conglomerate, has also begun calling for such a temporary tariff on imported manufactured parts.
Third, we must put in place adequate domestic policies to ensure that America’s workers have the best training and education in the world, and to ensure that displaced workers have the income support, as well as the training, to make necessary transitions. We can pay for this through the WTO sanctioned tariff collections.
Fourth, we must ensure that our health care and retirement security systems can accomplish our social objectives without creating unnecessary competitive burdens for companies struggling to survive in the global economy. It is well past time for a national healthcare plan to relieve competitive pressures on American manufacturers. Now is also the critical time to protect and rebuild the promise of worker’s pensions, especially in the manufacturing sector.
Finally, When the big 3 automakers meet next month with George Bush our automakers should remind the President that a national policy of industrial support helped save Chrysler from bankruptcy. It is doing well today. Although Bush has shown his disdain for our manufacturing problems by canceling the first scheduled meeting, these issues should be put on the table. Then they should be implemented.
