Best Way to Change Trade Policy on China: Vote NO on CAFTA

AmericanEconomicAlert.org ^ | Monday, July 11, 2005 | Alan Tonelson

[Willie Green]

For education and discussion only. Not for commercial use.

Athletes who fall for obvious head fakes aren't usually rewarded by their coaches. They're usually chewed out and even benched for clueless play.

Deserving of the same fate would be those Members of Congress who trade their "No" votes on CAFTA for a series of China trade promises being dangled by House Ways and Means Committee Chairman Bill Thomas – as clumsy a set of head fakes as Capitol Hill has seen in recent years.

Thomas's promises deal with real, but very minor, China concerns. Many CAFTA critics, especially among the Californian's fellow Republicans, have complained that expanding trade with Central America's micro-economies is pointless as long as the Bush administration keeps ignoring predatory competition from China – including currency manipulation. So Thomas is floating legislative proposals and political deals designed to show that the Congressional leadership and the White House have heard this message.

Yet Thomas' promises are a pig in a poke. The legislative ideas he has warmed to are utterly incapable of solving America's China trade problems. And the stronger China trade bills that have been introduced this session are unlikely to see the light of day in his Committee, which demonstrates pretty convincingly Thomas's lack of bona fides.  Even in the unlikely event that they made it through the House and the even more globalist Senate, they would survive Presidential vetoes only if their vitals were gutted.

Most important, nothing Thomas is offering trade policy critics is likelier to produce major China and other trade policy changes than the political momentum created by defeating CAFTA – a goal plainly within reach.

Thomas's own China proposals, which have been leaked to the media recently, are simply monuments to cynicism. How would the Chairman re-balance the world's most unequal bilateral trading relationship? By adding $4 million in new spending for enforcing America's global trade agreements, and by changing certain customs procedures that would have collected $224 million more in duties on dumped Chinese exports. Compared with the $228 billion in two-way U.S.-China merchandise trade for 2004 and the $162 billion U.S. trade deficit with China that year, Thomas's recommendations give new meaning to the term "chump change."

Thomas would also require the Treasury Department to issue biannual reports that define currency manipulation – presumably to make sure the Department's judgements are based on objective standards not subject to political whim. Yet nothing is preventing any Member of Congress from seeking this definition right now.

Thomas can offer even less to Congressmen sponsoring far more effective China trade legislation. Pennsylvania Republican Phil English, for example, has introduced bills to make China and other non-market economies subject to anti-subsidy provisions of U.S. trade law, and to impose tariffs on China if it refuses to revalue its currency after 90 days. (Thomas, by the way, has already condemned the first idea as too aggressive.)

California Republican Duncan Hunter, chairman of the Armed Services Committee, and Ohio Democrat Tim Ryan, another member of Armed Service, seek to designate currency manipulation as a violation of these anti-subsidy laws, and transfer authority to determine manipulation from Treasury to the politically independent International Trade Commission. Their bill has already attracted 102 co-sponsors, most of them Republicans.

Thomas can indeed help bring these bills to the floor. But if they won enough votes for passage, they would surely fall short of veto-proof majorities, and would be nixed by the White House, which, incidentally, is opposed even to Thomas's sop.  Alternatively, Thomas could persuade the sponsors to vitiate their bills in order to win administration backing – as some reports indicate he's attempting. That might produce some nice headlines for the Congressmen, but would constitute a betrayal of those companies and workers that have been victimized by China's economic predation.

The stranglehold on trade policy currently maintained by the White House, the Republican Congressional leadership, the many knee-jerk backers of free trade in both the Republican and Democratic rank and file, and the outsourcing multinational companies that fund them, won't be broken without a genuine political earthquake – like CAFTA's rejection. As the outsourcers in and out of government fear, the downfall of CAFTA would persuade a critical mass of currently fence-sitting Congressmen and Senators – and possibly the President, or at least some 2008 presidential contenders – that public protests against the current version of globalization and the job-destruction it encourages are too strong to be ignored.

Consequently, the effects of CAFTA's demise would extend far beyond Central America. Irresistible momentum for major China policy reforms would be created. A slew of outsourcing agreements being readied for signature and Congress's approval – like the Western Hemisphere-wide Free Trade Area of the Americas and the current Doha round of global trade talks – would be put on ice. And efforts to re-do existing inequitable arrangements like NAFTA and the World Trade Organization would attract powerful support.

The looming demise of CAFTA and the resulting likelihood of a U.S. trade policy revolution are exactly what has prodded Thomas into action. The increasingly desperate outsourcing lobby knows that an anti-CAFTA vote would shatter the globalization status quo they have championed for so long in the Executive and Legislative Branches, in spite of the sentiment against it in the heartland.

In other words, trade policy critics like Hunter, Ryan, and English now hold the upper hand. If they are serious about pushing their bills – and all indications are that they are, they can achieve their aims without first securing White House or Republican leadership backing. All they need to do is hold fast on CAFTA, and on their own bills. Acceding to Thomas's phony deals would needlessly let the outsourcers snatch victory from the jaws of defeat, and set back the cause of sensible, sustainable trade policies for many years.

[Willie Green]

ping

[cripplecreek]

I called my representatives office this morning and left a vote no message with the person answering the phone.

[woodb01]

I am as ANTI-China as anyone, and while I do NOT agree that "Free Trade" is truly free trade when it's on a different playing field, CAFTA is REQUIRED!

China does NOT want CAFTA to be approved.  By approving CAFTA, along with NAFTA, the Western Hemisphere then becomes the beneficiary of Free Trade.  Right now the USA is FINANCIALLY supporting the development of one of America's SWORN ENEMIES in China.

China is STRONGLY OPPOSED to CAFTA and has been funding much of the opposition to CAFTA.

Don't kid yourself, CAFTA is not good for America (uneven playing field), but it is better for America than trade with China.

[bayourod]

Did you get your tomato plants in the ground in time for them to make this year? If not, the best place to get tomatoes right off the vine is at the Atkinson's farm at 3217 Spring Cypress. They're $6 for a 25 lb box.

[hedgetrimmer]

Good for you. If you can write a letter to the editor of your local paper as well. The truth about this "free trade" agreement must be told.

[kaktuskid]

Neither does big (subsidized) American sugar...which is why Chicago is no longer the candy capitol of the US.

[Mind-numbed Robot]

We should subsidize trade with China like we do the milk industry. Look at the price of milk. Chinese goods would then be unaffordable.

[hedgetrimmer]

The pro-CAFTA crowd are the ones kidding themselves. We can never never compete against China, or maintain any kind of technological supremacy to China if we sign away our sovereignty to a bunch of corrupt socialist, communist and totalitarian countries in the western hemisphere through trade agreements.

That IS what CAFTA does. I had a pro-CAFTA lobbyist for an international manufacturing group tell me that on friday. She said, all our treaties give up our sovereignty, and she supports CAFTA because she will make money by giving OUR sovereignty. The problem is, so what if an international manufacturer is willing to give up her sovereignty, NO "free trader" has any right to take sovereignty away from the American people.

Its just like our property rights, we've been told they are actually a "bundle" of rights and the bundle has been broken and the rights taken away one at a time, til the Supreme Court says we no longer have any. Our sovereignty is the same. Our border is part of our sovereignty, its been broken out of the "bundle" and taken away. All other sovereign rights will go the same way with these "free trade" agreements. It is what "free trade" is designed to do.

You want to take care of the China problem? A few well placed tariffs and bans on some products will go a very long way to fix the problem.

[hedgetrimmer]

USAID should stop giving them money, that'd be a good start.

[Mind-numbed Robot]

I take it you are not buying the milk analogy.

[hedgetrimmer]

No the lure of slave labor to the manufacturers is why they have left Chicago. They have stated categorically that they moved for lower labor costs, the price of sugar doesn't change their bottom line that much.

By the way, did you know that sugar plantations in the Domincan Republic use slave and child labor? That many of them would never be allowed to operate in this country because they have no sanitation, no running water or sewage? Is that where you want your food to come from? Under "free trade" the US cannot require other countries in a trade agreement to have the same level of food sanitation as we do, it would be considered a "barrier to trade" and in violation of the trade agreement. NAFTA and CAFTA have set the clock back to the 19th century when it comes to food sanitation. In Mexico its legal to irrigate green onions and other row crops with sewage. Guess where the green onions came from that killed those people who ate at Chi Chi's?

[Willie Green]

Did you get your tomato plants in the ground in time for them to make this year?

I managed to get two plants going.
Due to the late start, I'm getting a very low yield.
But the few tomatoes I'm getting are tastey enough to have been worth the effort.
I also have some seedlings started to be set out in August for a fall harvest.

If not, the best place to get tomatoes right off the vine is at the Atkinson's farm at 3217 Spring Cypress. They're $6 for a 25 lb box.

Thanks for the tip!
Mapquest tells me that's about 12½ miles away, but since Spring Cypress passes right next to our development, it should be easy for me to find without getting lost! It'll be nice to have a supplemental source until the second batch of plants are ready!

[Willie Green]

Don't kid yourself, CAFTA is not good for America (uneven playing field), but it is better for America than trade with China.

What a bunch of globaloney disinformation.

Desperate Deception: CAFTA as Antidote to the China Trade Juggernaut
CAFTA: The Expanding Trade Deficit with China by Another Name?

[Mase]

No the lure of slave labor to the manufacturers is why they have left Chicago. They have stated categorically that they moved for lower labor costs, the price of sugar doesn't change their bottom line that much.

You still trying to sell that lie? What do you know about the confection business and how much sugar impacts their profitability or what percentage of the final product is comprised of sugar?

If cheap labor was all they were looking for why didn't they leave years ago? They didn't need NAFTA to relocate to Mexico or Canada. Why, just in the last decade?

Did you see the most recent issue of National Review? Right on the cover: How Sugar Interests Rip Off America And Harm The National Interest

From the article:
Faced with high domestic prices, some confectioners have moved to other countries without sugar price supports, such as Canada. Others have simply shut down. A study commissioned by the Sweetner Users Assoc. found that between 7,500 and 10,000 jobs were lost from 1997-2003 as a result of high sugar prices. Seven thousand candy-making jobs have been lost in the Chicago area alone over the past decade. If opportunity costs are taken into account, those numbers certainly underestimate the sugar program's impact on employment.

The obstinancy of sugar producers looks especially unreasonable when one considers that protectionism has increased their share of the market from 55% in the late 1970's to 89% in 2002.

Dennis Avery, a former agricultural analysts for the Department of State, explains: 'Yields of sugar in the tropics are twice as high and the costs half as high as growing sugar in a temperate climate.' The U.S. sugar program thus defies both nature and economics; in guaranteeing an artificially high price for sugar, it encourages American farmers to plant sugar instead of crops that could grow more efficiently.

[TXBSAFH]

The best way to end the middle class, vote yes on cafta. This thing is a killer.

[Willie Green]

You're an old man, Mr. Green.

Yes, I consider myself quite fortunate to have been educated prior to the widespread socioeconomic revisionism that contaminates and degrades college curricula nowadays. It has proven very helpful in exposing the convoluted disinformation that is spread by special interests, misleading the American People for their own financial gain.

I don't believe you'll ever accept the positive nature of free trade.

There is nothing "free" about thousands of pages of compex details negotiated by multinational bureaucrats. The misnomer "free trade agreement" alone should tell you what hypocrits we have for political leadership.

[ex-snook]

Take a rain check on CAFTA until all those good jobs promised by NAFTA are realized. [Good jobs in Walmart, Government, lobbying, or packing factories for export excluded]

[hedgetrimmer]

If cheap labor was all they were looking for why didn't they leave years ago?

Because they would have had import quotas and tariffs to bring the candy back into America. NAFTA eliminated those and removed a lot of the food inspection and safety criteria that used to exist on food imports.

Its no lie the candy manufacturers reduced their labor costs by relocating to Mexico and its disingenuous for you to imply otherwise.