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It’s been a couple of weeks since President Obama agreed to enforce U.S. trade laws in a case involving tire imports from China—and you’d think by the reaction in some anti-worker quarters he was creating the equivalent of death panels.
In 2008 alone, China’s tire makers sold more than 46 million low-cost tires to this country for stores like Wal-Mart. More than 5,100 domestic consumer tire production jobs were lost between 2004 and 2008 by the flood of Chinese tire imports that undersold producers in the United States. Domestic tire companies have announced they will close more plants and eliminate another 3,000 jobs by the end of this year. (Check out a fact sheet on the tire decision here.)
In July, the U.S. International Trade Commission (USITC) ruled in favor of a United Steelworkers’ (USW’s) petition filed under Section 421 of the Trade Act of 1974 as amended. The USITC found that tariff relief was needed to urgently reduce those tire imports. The USW, which represents most U.S. tire workers, demanded the Obama administration act forcefully to counter this import surge. And on Sept. 11, the Obama administration agreed to provide tariff relief by increasing the duty on tires from China for three years.
USW President Leo Gerard said in doing so, Obama "showed grit."
The International Trade Commission recommended sanctions under "Section 421" four times before Obama took office. Nothing was done. The result was closed American factories, lost American manufacturing jobs, diminished American dreams.
Not this time though. Not this president. Obama showed he’s made of tougher stuff. By placing tariffs on imported Chinese tires, President Obama put himself in the line of fire for the jobs of U.S. workers, for the preservation of U.S. manufacturing and, ultimately, for the stabilization of the U.S. economy.
Obama’s decision isn’t going over well with vested interests. Those like Ohio-based Cooper Tires, which, in testimony to the USITC, reported that all of the tires it makes at its Chinese plant, under its licensing agreement with China, must be exported until May 2012. As Gerard aptly describes companies like Cooper Tires:
For them, it’s about the money they make today, no matter how or where it’s made. They’ve got no allegiance to the U.S. and don’t care what happens to America’s future manufacturing capability or financial stability.
Others, of course, see Obama’s ruling and incorrectly scream "protectionism."
First, before we knock over the protectionist boogeyman, let’s take a second to look at the economic health of the United States and China, as measured by growth in gross domestic product (GDP).
United States: MINUS 1 percent in the second quarter of 2009.
China: PLUS 14.9 percent in the second quarter of 2009.
Now, back to our regularly scheduled discussion.
As Dave Johnson at the Campaign for America’s Future writes, free trade might be nice in a perfect world. But if the world were perfect, we wouldn’t need police, either.
The idea of "free trade" theorizes that without "government" involvement these disadvantages will disappear and prices will eventually reflect supply and demand instead of tariffs and regulations. Of course, this ignores that government, as constituted in democracies, is a banding together of the citizens for mutual protection, empowerment and benefit. The result of "free trade" is a downward spiral of wages, benefits, worker protection and environmental standards as countries race to the bottom in competition.
But when it comes to doing what every major nation does, protect its own economic interests—China’s economy is not skyrocketing by accident—certain powerful interests are doing just fine now and they want things kept that way.
So they will fight against change in the status quo, no matter how necessary or beneficial to the rest of us. We see this so clearly in the health care reform fight and soon we will be hearing some outrageous lie on the order of "death panels" and "government takeover" to try to scare people away from fighting for their own jobs, wages and benefits by asking for reasonable trade and manufacturing policies.
In short, federal policies are necessary to encourage competitors to pay better wages, improve worker safety and/or stop polluting.
This way [other nations' economies and environment] could improve and their workers would be able to buy the things that we make.
And so utilizing our trade laws, as did Obama, can improve living standards for workers everywhere, while growing our economy and improving our standard of living in the process.
Tires are a small part of the bigger picture. But this example illustrates not only why the United States must have—for lack of a better phrase—an "industrial policy" so each nut, bolt and tire doesn’t have to be ruled on in an ad hoc basis. We must make things to prosper. The last word, natch, from Gerard:
This is a battle. For the U.S. to maintain a viable economy, it must sustain a strong manufacturing base. It must make products of value that can be sold here and overseas—not just swap paper, some of it bogus on Wall Street.
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here’s the road I believe protectionism should take, and yes, of course every local economy needs to protect their labor force but I think it should be directed a little differently then it’s being directed;
I don’t think we should protect an industry from any specific country, I think we should protect an industry from a specific company who violates our labor law
for instance, if they do not pay a living wage that product should realize the commensurate tariff, if they have unsafe work conditions, the same, if they use slave or child labor, the same
if they pollute, the commensurate difference should be realized in tariff
of course this would mean our industry would face tariff abroad as well, and as well it should
for instance, in a country that supports anti global warming policy they should tariff those companies that don’t produce according to standards
another example, in France where they are guaranteed far more days off then we are, they should tariff those companies that don’t allow for the same paid vacation as they guarantee their labor force
so I believe in tariffs but not to protect a particular industry, more to protect labor, the envirnment, healthy productivity
unions – protecting the american worker because corporations and law makers beholding to corporate greed will screw the worker every chance they get
thank you tula.
(and wtf is wrong with the idea of protecting america made products)
OT – Gov Deval Parick appoints Paul Kirk
edit: and retains Sen. Kennedy’s staff!
Good post. Fiar trade is a key issue to rebuilding a middle class.
Gotta love Leo Gerard!!
President Obama did the right thing here.
I responded to a Chinese paper’s editorial bemoaning the tire tariffs thusly:
I must respectfully disagree on several points, Mr. Jinwei.
First of all our elected representatives have lost sight of the fact for years that “We The People” have every right to determine what role we will allow trade with other countries to play in our society.
It is a means to an end only, namely creating a just, equitable and prosperous society for the most people possible; but sadly one tool that has proven irrefutably to have played a devastating role in declining living standards for the vast majority and obscene profits for the very few.
As to your undoubtedly genuine concern for all of those American workers dependent upon the wages they earn participating in importing and distributing those goods we mostly used to manufacture ourselves; these jobs largely pay half of the wages earned by skilled manufacturing workers in small communities across America – these high paying jobs were the anchors of our villages and towns that allowed middle class workers to send their kids to college and enjoy a modicum of comfort in their retirements – no more.
Also, the actual effect of protectionist trade policies in the throes of the Great Depression have been estimated by Nobel winning economists to have been only 2-3% of GDP.
Your critique of our stimulas money being directed largely to American companies is interesting in light of China’s own stimulas directive to spend it domestically – something I entirely agree with by the way. I’d venture a guess your country will be far more successful at that than mine.
There are many other groups like the Peterson Institute that have grown powerfully in America over the last forty years with two primary goals:
1) Spread disinformation and propaganda to manipulate ignorant American workers into voting against their own self interests and our Democracy.
2) Continually exploit the results for the obscene gain of the very few oligarchs allowed into the club – while they discuss ways to gain more power, money, and influence over our bought and paid for corporate servant politicians.
We hope to change that now. I’m confident our respective peoples can figure out a way to trade fairly without decimating our societies or our planet.
Why, it’s SOCIALISM, doncha know!!!!
*wink* *wink*
/Sarah Palin
And we are not competitive because our workers don’t have rights like they do in, even, communist china. Of course, they call it a republic. We call the U.S. a republic too.
If the people don’t understand that socialism, but taking care of the rights of everyone, raises the standards to such a degree that it allows anyone to be competitive. Imagine that?
And cooper gets the scooper about no more of their tires, company heads to pooper. I wonder why they bought communist labor instead of American labor?
that’s a great letter jimr, did they publish that?
the funny thing oldtree, there is no way to have a “society” without “socialism”
even a pack of wolves has socialism, a pride of lions and a school of fish demonstrate socialism
if there were only two people on the planet, a man and his wife, they would still demonstrate socialism
Ever notice how protecting middle income jobs is, according to the Rethugs, “socialism” or some other BAD BAD protectionist thing. But protecting bankers, insurance CEO’s, Wall St cronies, Defense/Industrial/Complex, Oil company CEO’s, etc. etc. etc. is a GOOD thing.
Funny that.
nothing, when all of our “competitors” do that very thing. the REAL problem is much less some foreign, semi-hostile power such as china – its american oligarchs that dismantled american manufacturing to end around unions and having to pay their workers, to set up in coutries that allow them to pollute and pay virtual slavery wages, who then expect thier garbage to be treated as if it were AMERICAN. those pigs will make slaves of 80% of us if it continues.
Protecting American citizens from foreign predators is the first purpose of the American government. Just because these citizens are laborers and not owners (for a change) capital is all hot and bothered. But there’s really nothing wrong with having a President who protects American workers — it’s actually why we elected him last fall.
It’s called losing an election, Owners. Get used to it.
If it’s protectionism, so be it. I want to be protected financially as well as physically.
Wal Mart needs to be treated like the economic crack it really is. When we buy cheap globalized crap we are treasonous to sustainability, both to domestic economic development as well as to lowering our environmental footprint.
There should be a trash tax that is lower for better built goods that are efficient and last longer and higher taxes on crappier goods that tend to be less efficient and in need more frequent replacing.
And we need to replace the American ethic of cheap with one of quality by manufacturing high quality goods that people want to buy, because the empire is ending and it can no longer coerce cheap raw materials as inputs. If there needs to be “protectionism” to shield emerging enterprises, then so be it.
It is not only American workers who need protecting,it is also American consumers. Whether it’s pet food, toys with lead paint on them or dangerous chemicals inside of them, tires that blow up and cause fatal vehicle accidents, toothpaste with diethylene glycol in it, furniture made with shoddy supports and brackets that fail or other products that US companies have made in China and then sell in the US that are shoddy, dangerous, and not worth buying, it is the US government’s responsibility to protect consumers as well. In the case of China, they have industrial policy that promotes full employment at all costs – and if that means that their companies get to poison, kill, or maim people with their products, then I guess it is ok with the Chinese government. Their government NEEDS full employment – they need that stability. To not have everyone employed, paid on a regular basis, able to pay for housing, fuel, and food is a dangerous and destabilizing situation for them and the Chinese have a very long memory for what happens in their society when things get destabilized. On the other hand, we do NOT have industrial policy in this country – if we did, we would, like many other places in the world, be turning out technically trained people, engineers and scientists, and the education would be for free because…it is part of industrial policy that the country invest in its people. If we had industrial policy, we would take the position that it is imperative for the US to make anything and everything and do it in the most effective and efficient manner possible – and therefore people would be able to find good, well-built things, from shoes and clothing to high tech instruments and machinery. But, we have capitalism – so we can hardly make anything of our own anymore. And if anyone for example WANTED to start making shoes in this country again, they would have to start completely from scratch because there are no companies who make all the equipment that is necessary to make shoes in this country any longer. We need to industrialize this country from the very ground up. That is the only way to win this war – and do not mistake me — as far as the Chinese are concerned, that is exactly what it is.
Thanks Tula … excellent post !
Fair Trade is what we get to after a strong Health Care Bill. Leo Gerrard speaks for me !
Teddy !
Congress has a responsibility to protect America from foreign and domestic predators, a responsibility that it has not met for many, many years.
To the contrary, the duopoly has been actively undermining workers, not just unions, but in outsourcing jobs and insourcing cheap labor in the professional fields.
These people have spent more than a generation dismantling and financializing the US economy, they’re not about to give up now. If progressives and the conservatives can’t find common ground on this, then the US truly is a failed state.
Thanks, perris; it was actually posted at Watching America by Guang Ming Daily News.
So far, mine is the only comment.
I’ve been passionate about fair trade for decades, making my living in technical service on CNC machinery. The devastation I’ve seen…
Right. and the scary thing is that we have a long way to go (down) before some critical mass is reached and there is a popular movement to replace the system. it could be a long, long, miserable scrape.
good response
The american model belongs to the past. the “free market” only exists within the US. and the “third world” other developed nations protect they’re interests. The american system only benefits american supply side plutocrats, capital, and only in the
realtive short term.
Now that the Soviet Union is gone, socialism to many people means France, and I think that many Americans would prefer 6 weeks of vacation and health care to caged death match capitalism.
These are actually neoliberal policies. Reagan, Thatcher, Clinton were the most egregious offenders.
Neoliberalism promised that free trade would generate as many benefits as it caused disruptions. It did not work out that way.
The fact is that the policies put forth by the neoliberals have failed us miserably and need to be demolished on the merits rather in terms of a mass fantasy. We’ve got to reject the neoliberal frame rather than continue to legitimate it by using it.
Any country that can slow the race to the bottom for workers is doing a good thing for the entire human race, and protecting one country’s tire industry from destruction is a step in the right direction. But instead of using the word “protectionism,” which has the ill-deserved connotation of unfair tariffs, it would be more useful to define the issue in terms of preventing unfair outcomes. When one country, through low wages, dangerous working conditions and environmental destruction, can destroy an industry in another country, the outcomes are identical to predatory dumping. Since no one can really know whether China intended to destroy the American tire industry, the focus of trade policy should be, for the U.S. or for any country, on averting the imminent danger of such an outcome.
I agree completely and would add China had no chance to compete for much of anything until our tax code made it more profitable for American corporate entities to coldly calculate profits above all else and move there – until very recently we were essentially “competing” against Americans who love money over country.
It’s always been so, to a degree, but the brilliant decision by the supremes to equate money and speech let loose a veritable onslaught of tax breaks for cash.
Dan Quayle headed something as V.P. like the competitive council or something like that. They solicited companies with tax breaks to close down and move offshore, that otherwise might not have even considered it, in order to fulfill some Republican pie-in-the-sky initiative.
Hopefully this is just a beginning.
I heard opposition retorting that if President Obama stays with this these american ctire companies that moved to China will be forced to move to some other country that is not being tarriffed by the U.S. so to get around this tariff.
Would liketo see more Big Gov’t watch dogs hired to scutinize this sort of free market mischief.