Download - 121128 mcs slideshow2
Smart Trade: Fixing Smart Trade: Fixing AmericaAmerica’’s Economys Economy
Michael Stumo, CEOMichael Stumo, CEOCoalition for a Prosperous AmericaCoalition for a Prosperous America
About CPAAbout CPA
Mission: Balanced trade - eliminate the trade deficit. The biggest potential source of jobs and growth for America
Members: Manufacturing, agriculture and worker organizations and companies.
Representing the interests of 2.7 million households through our association and company members.
CPA: Representing American ProducersCPA: Representing American Producers
Brian O’ShaughnessyRevere Copper Products
Kevin KelleyRochester Technology and
Manufacturing Assn
Joe LoganOhio Fmrs Union
Pam PotthoffWomen Involved in
Farm Economics
Burl FinkelsteinKason Industries
Bob BaughAFL-CIO
Biggest Trade ProblemsBiggest Trade Problems
Persistent Trade Deficit - 20 years
Currency Manipulation
Foreign Consumption Taxes (border adjustable)
State-Owned Enterprises
Lawful foreign subsidies and barriers
Lack of a U.S. trade and manufacturing strategy
Why is the trade deficitWhy is the trade deficit a core issue? a core issue?
GDP = C + I + G + NE
Consumption
Investment
Government Procurement
Net Exports:Total Exports minus
Total Imports
Biggest Most Volatile Net Imports/Trade Deficitssubtract from GDP
“Recession” = Contraction of GDP
How much GDP loss?How much GDP loss?...in 2001 the trade deficit was shaving at least one percent per year off our economic growth. This may not sound like much, but because GDP growth is cumulative, it compounds over time. ... America’s trade deficits since 1991 alone have caused our economy to be 13 percent smaller than it otherwise would be. That’s an economic hole larger than the entire Canadian economy. - Fletcher, Ian, “Free Trade Doesn’t Work,” (2011)
Industries We Have Already LostX Fabless chips
X Compact fluorescent lighting
X LCDs for monitors, TVs and handheld devices like mobile phones electrophoretic displays
X Lithium ion, lithium polymer and NiMH batteries
X Advanced rechargeable batteries for hybrid vehicles
X Crystalline and polycrystalline silicon solar cells
X Inverters and power semiconductors for solar panels
X Desktop, notebook and netbook PCs
X Low-end servers
X Hard-disk drives
X Consumer networking gear such as routers, access points, and home set-top boxes
X Advanced composite used in sporting goods and other consumer gear
X Advanced ceramics and integrated circuit packaging.
Have bilateral trade agreements helped?
Not really
Advanced Tech - We are a net importer since 2002.
But we’re moving to high tech, right?
Maybe not.
Well, maybe the service sector will save us!
Obama: Obama: ““Double ExportsDouble Exports””
Bush already doubled exports. Exports increases under Clinton. Our exports have grown almost every year, including to China.
Hourly Compensation Costs in Manufacturing,U.S. Dollars, 2009
It’s not just cheap labor that’s the problem! The U.S. is actually now a laggard in manufacturing wages among developed nations.
Labor Costs?
Persistent Currency UndervaluationA Tariff and a Subsidy
NOT OVERTAXED; BADLY TAXED
The U.S. is not overtaxed EU15 -- 40.3% of GDP US -- 25.4% of GDP
The U.S. is badly-taxed Our tax system relies too
heavily on non-border adjustable income taxes
This hurts Americans’ ability to save and invest domestically
US exports are taxed twice
US imports escape any consumption tax
40.3%
35.0%
25.4%
The US tax system has become increasingly out of step with the rest of the world
More than150 countries apply a consumption tax to their imports, doubling the tax burden on US exports
The same countries rebate their tax on their exports; the US almost alone does not apply an offsetting tax on its imports
Each year America’s two-way disadvantage amounts to an estimated half trillion dollars
•
TRADE IMPACT OF BORDER TAX ADJUSTMENTS
A $500 Billion Trade Distortion Problem
• $143M Assessments on U.S. goods exports• $254M Rebates to goods imports to U.S.• $72M Penalty on U.S. services exports• $48M Rebate to service imports to U.S.• Total Trade Distortion: $500B
No other trade practice distorts trade more.
* 2008 numbersSource: Pat Choate, “Saving Capitalism”
Consumption Taxes(Border Adjustable Taxes/Value Added Taxes)
Value Added Taxes are tariffsValue Added Taxes are tariffs
$356 Billion trade distortion
How they use VATsHow they use VATs
Tariff and a subsidy
Offset other costs like health care, income tax
Offset tariff reduction
Canada/Mexico: 15% VAT after NAFTA
Central America: 12% VAT after CAFTA
Korea: 10% VAT now. Later increase?
China: 19% VAT
State Owned EnterprisesState Owned Enterprises“The state’s influence over China’s economy takes many forms and covers a whole spectrum of companies from fully state owned to those that are nonstate but maintain close ties to the government. China’s state-owned and state-controlled companies and industries are generally the largest ones in China and are operated and managed by the central government of the People’s Republic. They are an instrument of state power as well as the centerpiece of China’s industrial policy. They receive massive government sub- sidies and are protected from foreign competition.”* U.S. China Economic and Security Review Commission, 2011 Report to Congress, November 2011, p 40.
21st Cent. Trade Agmt Principles21st Cent. Trade Agmt Principles
Balanced Trade/Net Exports
National Manufacturing/Security Strategy
Neutralize currency manipulation
Address foreign border taxes
Neutralize state owned commercial enterprises
Reciprocity - benefits vs. concessions
Michael Stumo, CEOCoalition for a Prosperous America
tel: 413.717.0184email: [email protected]
www.prosperousamerica.orgwww.tradereform.org
www.cpabuyamerican.com
Contact info: