Promoting Trade & Prosperity Around the Globe
Global economic recovery will require close cooperation among the world’s great economic engines – the United States, China, the European Union, Russia and Japan. The Trade Alliance to Promote Prosperity is an open forum that advances free trade and opposes any law, policy or action that restricts trade, threatens jobs or drives needless wedges between trading partners.
Prevent a Trade War/Build our Partnership with China
Stop job-killing, protectionist tariffs that could trigger a destructive trade war between the U.S. and China.
In a Nutshell
Proponent’s Position: The President Should Not Reject the Resolution
Opponent’s Position: The President Must Reject the Resolution
Who would be hit hardest by a U.S. – China Trade War?
Farmers, Small Towns, Small Businesses
American Workers, American Jobs, U.S. Economic Recovery
Union Workers, West Coast Docks and the Water Trade
U.S. and China as Partners and Friends
In the News
Partnership or Trade War with China? President Obama Must Decide Soon
In A Nutshell
President Obama must decide by September 17 whether or not to reject a recommendation by the U.S. Trade Commission to impose a three-year (55%-45%-35%) tariff on entry-level Chinese tires.
The recommendation from the International Trade Commission arose via a petition by the United Steelworkers (USW) under Section 421 of the Trade Act of 1974 arguing that imports of lower-cost, entry-level tires from China to the U.S. have cost the union some 5,000 manufacturing jobs.
Rejecting the petition helps build U.S.-China trade and bilateral relations at a critical time.
Not rejecting the petition will probably ignite a trade war that impedes U.S. foreign policy objectives, costs U.S. jobs and halts the U.S. economic recovery.
That is why no U.S. president has ever imposed a Section 421 remedy on China.
Proponent’s Position: The President should not reject the USW Petition:
President Obama must take a stand and stop China from undercutting U.S. manufacturers in domestic markets. Tire tariffs against China will encourage domestic production of entry-level tires and help recover lost U.S. jobs.
Opponent’s Position: The President must reject the USW Petition:
The United States and China are working together as partners and friends on a wide range of environmental, energy and security initiatives. Our two nations have far more to gain by continuing to build on an already strong relationship – not tearing it down.
If he fails to reject the recommendation, President Obama will most likely put the U.S. on the road to a disastrous trade war that will jeopardize continued Chinese investment in U.S. bonds (The Chinese Government holds $1.5 trillion in dollar denominated assets (Washington Post) including a current treasury holding of $763.5 billion, making the Chinese Government the largest holder of U.S. treasuries), halt the budding economic recovery, drive up unemployment and make it impossible to fund health care reform and a host of other domestic programs.
This is likely to happen just as the U.S. non-oil trade deficit is beginning to decrease. The June 2009 U.S. International Trade in Goods and Services report by the Commerce Department revealed that the non-oil trade deficit had been reduced to manageable levels and is at its lowest level since 1999.
President Obama is correct in frequently reminding union audiences that many manufacturing jobs lost overseas will never return because U.S. companies can’t be cost competitive on those items. Entry-level tires are a perfect example. U.S. tire manufacturers decided to stop producing them domestically because it is simply not profitable to do so. That decision came 10 years before the first Chinese tire was imported into this country. A tire tariff won’t push U.S. manufacturers back into a market they have already deemed unsustainable.
It is critical for the President to view this decision not from the standpoint of union labor alone, but rather in terms of advancing his entire economic agenda and driving economic recovery. The International Trade Commission’s report to the President indicates that this proposed action would have no positive employment effect for unionized labor while independent experts have predicted up to 25,000 job losses in the general economy if this proposed action is implemented.
Who would be hit hardest by a U.S. – China Trade War?
American Farmers, Small Towns and Small Businesses
When boycotts and trade wars involve agriculture, everyone in rural America suffers the consequences.
President Carter’s decision to cut off wheat exports to the Soviet Union after its 1979 invasion of Afghanistan put thousands of U.S. farmers out of business, with a devastating ripple effect through small towns and small businesses already struggling with high fuel prices and a bad economy. (The Russians simply went to Canada and elsewhere for their wheat.)
Farm exports are a bright spot in America’s trading relationship with China. The U.S. enjoys a $28 billion agricultural trade surplus with China on agricultural products, based on 2008 Census Bureau figures.
China’s demand for soybeans has helped to significantly boost U.S. prices around the world. Soybeans now account for more than half of the value of U.S. agricultural exports to China.
U.S. Farm exports to China bolster rural economies in every region of the nation. Representative annual State to China export values (most recent USDA) include:
| California: | $638.0 million |
| Minnesota: | $741.0 million |
| Wisconsin: | $674.0 million |
| S. Carolina: | $622.0 million |
| Nebraska: | $111.0 million |
| S. Dakota: | $34.0 million |
| N. Dakota: | $13.0 million |
American Workers, American Jobs and America’s Economic Recovery
While late summer is bringing some positive economic signs, America is still mired in one of the worst recessions in history. The first three months of 2009 saw 2 million U.S. jobs lost (and a record 9 million Americans ‘underemployed’). According to the Labor Department, some 5.1 million Americans lost their jobs between January 2009 and March 2009.
To put the three-month 2009 loss in context, if no more jobs are lost over the next nine months, 2009 would still be the fourth worst year for job losses since the government began tracking the number of U.S. workers back in 1939.
A quick look at major companies that now do a significant amount of business with China provides an idea of the impact on jobs, workers and the nation’s hopeful economic recovery:
Automobiles: General Motors
Technology: Intel, Microsoft, Oracle, Hewlett-Packard
Transportation: Boeing
Financial Services: Citigroup, Morgan Stanley, AIG, Merrill Lynch
Construction: Parsons
Machinery: Caterpillar
Moreover, the Interstate Commerce Commission Report to the President indicates that the proposed action against China would have no positive employment effect for unionized labor.
However, some independent experts have predicted up to 25,000 job losses across the general economy if the action is implemented.
Union Workers, West Coast Docks and Water Trade
A trade war with China would close the largest emerging consumer market in the world to U.S. companies. Union and non-union jobs alike would be lost all across the nation. Along West Coast ports such as Los Angeles and Long Beach, jobs depend on continued cargo imports and exports from China – especially during the current recession.
In fact, according to the L.A. Customs District, trade through the Port of Long Beach is down a staggering 26% this year, already threatening the livelihoods of the 500,000 people directly involved in the port’s activities.
Credit agencies have recently downgraded the ratings of major ports along the coast.
According to the Los Angeles Customs District, U.S. exports to China existing via the West Coast primarily include:
Silk, wool and fabrics
Electrical apparatus
Iron and steel-related products
Magnetic & radio recording and playback devices
Chemical compounds
Machinery
Plastics
Copper and aluminum products
Engines and pumps
Imports from China to the U.S. via the West Coast include:
Machinery
Apparel
Footwear
Furniture and bedding
Toys Engines and pumps
Motor vehicles and parts
The U.S. and China as Partners and Friends
China is America’s willing partner on so many issues vital to the health and success of all our families and our entire nation.
For example, the July 29, 2009 Memorandum of Understanding to Enhance Cooperation on Climate Change, Energy and the Environment (http://www.state.gov/r/pa/prs/ps/2009/july/126592.htm) underscores what the United States and China can accomplish together as friends and partners.
Our two nations have agreed to combine knowledge, resources and market size to advance energy conservation, renewable energy, clean coal, sustainable transportation, modernization of the electrical grid, clean air, clean water and protection of wetlands and nature reserves. This kind of cooperation can benefit all humankind.
Intentionally damaging the U.S. strategic relationship with China over a comparatively insignificant tire business issue, that according to experts does little or nothing to improve U.S. employment, is not in America’s best economic or national security interests.
U.S. national security interests are best served by a strong, mutually beneficial relationship with China.
Mutual understanding that will lead to cooperation on the environment, global security and the further opening of China’s market to the goods and services of innumerable American companies should not be derailed by a needless trade war.
In The News
President Obama’s decision whether or not to reject the Section 421 petition to impose tariffs on Chinese-manufactured entry-level tires.
Visit our blog for the most recent news articles on this issue in September and an archive of past articles below.
ARCHIVE - AUGUST
Ministry of Commerce - China Reduces to Hold the US National Debts to a Large Extent for the First Time (read article)
World Sentinel - Chinese Minister Visits U.S. to Lobby Against Tire Tariffs (read article)
Reuters - China trade official goes to Washington on tires case (read article)
Associated Press - June trade deficit rises to $27B, imports increase (read article)
Reuters - China to appeal WTO ruling on entertainment imports (read article)
Modern Tire Dealer - Tariffs will negatively affect jobs, says economist (read article)
Gadsden Times - Tire Unions Pressing Obama (read article)
Forbes - U.S. could speed up decision in China tires (read article)
Associated Press - China accuses US of protectionism in tire case (read article)
LA Times - China’s limits on entertainment imports violate free trade practices, WTO rules (read article)
Forbes - Obama has many options in China tire case (read article)
Wall Street Journal - World Trade Victory: A blow to Chinese protectionism, and a lesson for the U.S. (read article)
U.S. Department of Commerce - Press Release: U.S. Commerce Secretary Gary Locke Statement on Trade Numbers (read article)
Modern Tire Dealer - Chinese tire imports: an exporter’s viewpoint (read article)
Forbes - China says tyre tariff will hurt US -vice minister (read article)
Christian Science Monitor - China on offensive as US weighs tire import curb (read article)
Washington Post - In Tire Tariff Case, Obama Faces First Chinese Trade Policy Test (read article)
Bloomberg.com - GM, Ford Oppose Steelworkers Bid for Chinese Tariffs (read article)
Wall Street Journal - Obama's Trade Test (read article)
