Posted on 08/27/2003 7:13:06 PM PDT by maui_hawaii
EXECUTIVE SUMMARY
In the fall of 2000, legislation was enacted by the U.S. Congress to establish a bipartisan commission to investigate, assess, and report to Congress on the economic and security implications of the bilateral economic relationship between the U.S. and China. Unfortunately, to date no government body in the U.S. has had the responsibility for collecting comprehensive national data on the wage and employment effects of trade agreements and policies. Because of this deficit of information, the U.S. Trade Deficit Review Commission contracted with a team of researchers from Cornell University and the University of Massachusetts Amherst to conduct a pilot study to lay the groundwork for more comprehensive research to monitor and analyze the impact of U.S.-China trade relations on workers, wages, and employment in the U.S. The purpose of the pilot study was twofold. The first component involved designing and implementing a media-tracking system to monitor and analyze media coverage of the employment and wage effects of China trade and investment by tracking all media reported production shifts out of the U.S. to China, Mexico, and other Asian and Latin American countries and out of Asian and Latin American countries into China that occurred between October 1, 2000 and April 30, 2001. Because of the lack of government data in this area, the media-tracking study is the first and only national database on production shifts out of the U.S. The second component of the study involved collecting and analyzing macro data on imports, exports, and foreign direct investment in those industries and economic sectors that have an active trade, investment, and production relationship with China. In combination, findings from the media-tracking and macroeconomic data provide further evidence that U.S.-China trade and investment policies have had, and will continue to have, a significant impact on employment and wages for workers in the U.S. and other countries actively involved in trade and/or investment with China. The study also lays the groundwork for future research on the economic impact of U.S-China trade relationships and demonstrates the importance of government-mandated corporate reporting requirements for all companies shifting goods, investments, or production in and out of the U.S.
Major highlights of the research include:
• In the past decade U.S. trade and investment with China has increased dramatically. Today, China has become the U.S.’s fourth largest trading partner, following, Canada, Mexico, and Japan while foreign direct investment (FDI) in China by U.S. firms has increased from only $200 million in 1989 to more than $7.8 billion in 2000. However, contrary to the high expectations that China’s 1.2 billion population would provide an ever-expanding market for U.S. goods, by 2000 the value of goods imported to the U.S. from China exceeded the value of U.S. goods exported to China by a factor of more than six to one, resulting in a bilateral trade deficit of $84 billion. Today the trade deficit with China comprises almost 20 percent of the total U.S. trade deficit and is the largest trade deficit the U.S. has with any single nation.
• The U.S. has not been the only nation expanding its trade and investment relationship with China. Overall, China’s foreign trade worldwide increased from only $20 billion in the late 1970s to $475 billion by 2000. Similarly, by the end of the 1990s the total world FDI in China accounted for a third of FDI in all developing countries combined.
• In the months since the enactment of Permanent Normal Trade Relations (PNTR) legislation with China there has been an escalation of production shifts out of the U.S. and into China. According to our media-tracking data, between October 1, 2000 and April 30, 2001 more than eighty corporations announced their intentions to shift production to China, with the number of announced production shifts increasing each month from two per month in October to November to nineteen per month by April. The estimated number of jobs lost through these production shifts to China was as high as 34,900, compared to 29,267 jobs lost to Mexico, 9061 jobs lost to
other Asian countries, and fewer than 1000 jobs lost to other Latin American countries. However, because we believe our media tracking captures fewer than half of all production shifts out of the U.S. to China and other countries during this period, we estimate that the actual number of jobs lost through production shifts to China and Mexico averages between 70,000 and 100,000 jobs each year for each country. This is in keeping with our preliminary macroeconomic analysis of the employment affects of U.S.-China trade balance that estimates as many 760,000 U.S. jobs have been lost due to the U.S.-China trade deficit since 1992.
• Production shifts out of the U.S. into China are highly concentrated in certain industries: electronics and electrical equipment (37 percent), chemicals and petroleum products (17 percent), household goods (11 percent), toys (8 percent), textiles (6 percent), plastics (6 percent), sporting goods (5 percent), and wood and paper products (5 percent). This contrasts with production shifts out of the U.S. to other Asian countries where nearly two-thirds of production shifts were in electronics and electrical equipment and with production shifts from the U.S. to Mexico, where 20 percent of production shifts were in industries such as automobiles, auto parts, metal fabrication, and machinery. Production shifts to China were also concentrated in certain regions and states, in particular the Southeast and West Coast. California was hardest hit, accounting for 14 percent of all production shifts to China, followed by North Carolina (11 percent), and Texas (10 percent).
• The U.S. companies that are shutting down and moving to China and other countries tend to be large, profitable, well-established companies, primarily subsidiaries of publicly-held, U.S.-based multinationals including such familiar names as Mattel, International Paper, General Electric, Motorola, and Rubbermaid. Most have been in operation for nearly half a century. However, a third have had new ownership in the last ten years.
• The media-tracking data also suggest that the majority of the U.S.-based multinational corporations shifting production to China are not simply targeting a Chinese market. Companies such as La Crosse Footwear (winter boots), Lexmark (printers), Motorola (cell phones), Rubbermaid (cookware and storage products), Raleigh (bicycles), Cooper Tools (wrenches), Mattel Murray (Barbie doll playhouses), and Samsonite (luggage), may have moved their production to China, but still intend to serve a U.S. and global market.
• According to our media-tracking data, from October 2000 to April 2001, 4,909 U.S. union jobs were lost due to production shifts to China, which represents 14 percent of all jobs lost to China during this period. This contrasts with production shifts to Mexico, where during the same sevenmonth period unions lost a total of 13,560 members through production shifts to Mexico, which represents 46 percent of all jobs lost through production shifts to Mexico from October 2000 through April 2001. The smaller number of union jobs lost to China reflects the fact that companies moving to China are concentrated in industries with lower union density, such as electronics and electrical equipment. However, all this may change once China enters the World Trade Organization (WTO), and, as they did with NAFTA, employers begin to look to our China trade policy as an opportunity to weaken or eliminate existing unions where they do exist and prevent unionization where it has not yet taken hold.
• While at one time the majority of production shifts into China may have been concentrated in relatively low-skill, low-wage jobs in light manufacturing industries such as apparel and textiles, our media-tracking data paint a much more complex picture of the work that is leaving the U.S. to go to China. Just as our macroeconomic findings suggest that U.S. firms are increasingly investing in more complex, higher-end industries in China, including petrochemicals, machinery, finance, metals, and electronics and electrical equipment, our media-tracking data suggest that an increasing percentage of the jobs leaving the U.S. are in higher-paying industries producing goods such as bicycles, furniture, motors, compressors, generators, fiber optics, clocks, injection molding, and computer components. As our data show, it is these higher-end jobs that are most likely to be unionized and therefore more likely to have a much larger wage and benefit package. Many of those who lost their jobs were high seniority, top-of-the-pay scale employees, who have a great deal invested in their jobs and in their communities.
• In combination our media-tracking and macroeconomic findings suggest that there is a direct linkage between increases in trade deficits and foreign direct investment in certain industries and production and employment shifts out of the U.S. and into China in those industries. The U.S.- China trade deficit is highest ($17 billion) and increasing the fastest in electronics and electrical equipment, the industry where we found the greatest number of U.S.-China production shifts and the industry where we found the highest level of FDI in China by U.S. firms. We also found high (and rapidly increasing) levels of trade deficits in other industries where U.S.-China production shifts were concentrated including textile/apparel, toys and sporting goods, household goods, and wood and paper products. This is further supported by the preliminary findings of our regression analysis on the impact of FDI on trade, which suggests that for every 10 percent increase in U.S. FDI in China there was a 6.3 percent increase in the level of imports from China to the U.S., with no statistically significant effect on the level of exports from the U.S. to China.
• The employment effects of these production shifts go well beyond the individual workers whose jobs were lost. Each time another company shuts downs operations and moves work to China, Mexico, or any other country, it has a ripple effect on the wages of every other worker in that industry and that community, through lowering wage demands, restraining union organizing and bargaining power, reducing the tax base, and reducing or eliminating hundreds of jobs in the related contracting, transportation, wholesale trade, professional, and service-sector employment in companies and businesses.
• The wage and employment effects of U.S.-China trade relations are not felt in the U.S. alone. Our media-tracking findings suggest a massive shifting of employment around the world, from the U.S. and Europe to Asia and Latin America, and from Asian and Latin American countries to other countries within or outside their regions, always in the quest for the lowest production costs and the greatest profits. Contrary to the promise of rising wages and living standards that free trade and global economic integration were supposed to provide, in many countries these global production shifts have led to decreases in employment, stagnating wages, and increasing income inequality.
• In conclusion, our research suggests that the U.S. and other countries have moved ahead with trade policies and global economic integration based on faulty arguments and incomplete information. The findings from this pilot study are a first step toward better informing the U.S.- China trade policy process. The findings also point to the critical need for government-mandated corporate reporting on production, trade and investment flows in and out of the U.S, and for further research on the impact of those trade and investment flows on workers, unions, families, and communities in the U.S. and around the globe.
Otherwise, the impact has been negative. I shouldn't have talked about job growth in the security area. Now they'll want HB1 guys and gals to fill the jobs.
The findings also point to the critical need for government-mandated corporate reporting on production, trade and investment flows in and out of the U.S
"Noooooooo!" scream the corporations, "We're capitalists! All we need from government are the Ex-Im Bank, OPIC, and other tax payer funded subsidies and guarantees!"
I would have re-worded that part though... its not just unions. Its employees in general...
Frankly, I see a need for collective bargaining when dealing with large corporations. It is a balancing act. Now I disagree with a closed shop philosophy because it ultimately steals the right of an individual to contract with the company. That right should remain in tact. However, not at the expense of collective bargaining. That right is as much a right as individual contracting.
Also, I am disenchanted with fellow conservatives who demonize unions premised upon a presumption that the body itself approves of the misappropriated actions of national union leaders.
Ultimately, corporations and unions have shown that they can work together and compromise for the good of all. High paying jobs are as much a benefit to the economy as company profits. It has been proven, as in the corporation that I work for, that it can be done.
As a matter of fact, I just read a study that is showing, especially in the service industry, that the exporting of these jobs to foreign countries are starting to show that they are not as cost-saving effective as originally thought.
As aformentioned in the above study and others, NAFTA and GATT has done nothing to bring down the trade deficit, to the contrary, it has increased. Now if there was a long term vision that calls for patience in the implementation of these treaties, then I would give SOME latitude. However, these treaties were sold to us under the auspices of "creating" jobs-which has shown to be a huge lie.
And so goes the world...meeting it's own demise.
Arnie's for amnesty.
That's going to be a big kick in the teeth to the (largely Republican I bet) supporters of Prop 187.
He's a populist.. Hell, anyone can be a polulist. It's easy!
Just get a good pollster and tailor your response to fit the polling data.
Now being a leader, that's a completely different matter.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.