Posts Tagged ‘TPP

13
Apr
18

Trump reconsiders joining the TPP

Trump considers rejoining the Trans-Pacific Partnership

Trump Proposes Rejoining Trans-Pacific Partnership

New York Times

President Trump made the comments during a meeting on Thursday with farm-state lawmakers and governors at the White House. Credit Doug Mills/The New York Times

WASHINGTON — President Trump, in a sharp reversal, told a gathering of farm-state lawmakers and governors on Thursday morning that the United States was looking into rejoining a multicountry trade agreement known as the Trans-Pacific Partnership, a deal he pulled out of days after assuming the presidency.

Mr. Trump’s reconsideration of an agreement he once denounced as a “rape of our country” caught even his closest advisers by surprise and came as his administration faces stiff pushback from Republican lawmakers, farmers and other businesses concerned that the president’s threat of tariffs and other trade barriers will hurt them economically.

Larry Kudlow, Mr. Trump’s top economic adviser, said in an interview on Thursday with The New York Times that the request to revisit the deal was somewhat spontaneous. “This whole trade thing has exploded,” Mr. Kudlow said. “There’s no deadline. We’ll pull a team together, but we haven’t even done — I mean, it just happened a couple hours ago.”

Mr. Trump’s decision to throw out the Trans-Pacific Partnership and his pledge to tear up the North American Free Trade Agreement were bedrock promises of his populist campaign, which centered heavily on unfair trade practices that he said had robbed American manufacturers and workers.

As he often does, the president started to change gears after hearing complaints from important constituents — in this case, Republican lawmakers who said farmers and other businesses in their states would suffer from his trade approach since they send many of their products abroad.

Then late Thursday, Mr. Trump appeared to shift gears again, saying in a Twitter post at 11:15 p.m. that he would consider re-entering the agreement only if it were “substantially better” than the deal offered to President Barack Obama. “We already have BILATERAL deals with six of the eleven nations in TPP,” he wrote, “and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!”

The discussion on the trade deal began at the White House meeting earlier on Thursday, when Senator John Thune, Republican of South Dakota, questioned Mr. Trump about returning to the pact, arguing that the Trans-Pacific Partnership was the best way to put pressure on China.

Mr. Trump, who has put China’s “unfair” trade practices in his cross hairs, turned to Mr. Kudlow and Robert Lighthizer, his trade negotiator, and asked them to look into re-entering the agreement.

Rejoining the pact could be a significant change in fortune for many American industries that stood to benefit from the trade accord and for Republican lawmakers who supported it. The deal, which was negotiated by the Obama administration, was largely intended as a tool to prod China into making the type of economic changes that the United States and others have long wanted. Many economists say the best way to combat a rising China and pressure it to open its market is through multilateral trade deals like the Trans-Pacific Partnership, which create favorable trading terms for participants.

“The idea was to set a framework that eventually China would have to accommodate,” said David Autor, an economist at M.I.T.

Farmers would stand to benefit from new access to markets, especially Japan, if Mr. Trump rejoins the pact. For instance, ranchers in Australia can currently send beef to Japan more cheaply than ranchers in the United States.

Michael Miller, the chairman of U.S. Wheat Associates and a farmer in Washington, said rejoining the deal would allow his industry to compete on a level playing field with competitors in Australia and Canada, which both remained in the accord.

But rejoining it could be a complex task. The remaining countries, like Japan, moved ahead without the United States, and spent months renegotiating a pact before finally agreeing to a sweeping multinational deal this year. Mr. Trump, who has demanded that any such deal benefit the United States, is unlikely to rejoin the Trans-Pacific Partnership without further concessions for what he has criticized as a terrible agreement. That could complicate talks, since Japan maintains that it has already given all the concessions it could, said William A. Reinsch, a trade expert at the Center for Strategic and International Studies.

Yoshihide Suga, Japan’s chief cabinet secretary, on Friday cautioned against any efforts to change the agreement to accommodate Mr. Trump, calling it a “well-balanced pact” that addressed the needs of the 11 nations that signed the deal.

It is also unclear how serious Mr. Trump is about rejoining. In the past, the president has floated policies that appeared to run counter to his earlier positions, like cooperating with Democrats on legislation governing immigration and gun rights, then quickly abandoned them.

“What he tells people in a room to make them happy does not always translate into administration policy,” said Phil Levy, a senior fellow at the Chicago Council on Global Affairs.

In a statement, a deputy White House press secretary, Lindsay Walters, pushed back on the notion that Mr. Trump was reversing his promises.

The president had “kept his promise to end the TPP deal negotiated by the Obama administration because it was unfair to American workers and farmers,” she said. “The president has consistently said he would be open to a substantially better deal.”

But the White House is in somewhat of a box when it comes to prodding China to fall in line with global trade rules. The administration is trying to use tariffs to force Beijing to open its markets, but many of his supporters, including business groups and farmers, fear the fallout from an escalating trade war will be even more damaging. China has responded to Mr. Trump’s threat of tariffs on as much as $150 billion worth of its goods by placing its own tariffs on American pork, and threatening taxes on soybeans, sorghum, corn and beef.

Some advisers, including Mr. Kudlow, have indicated that those tariffs may never go into effect, and that they are mainly a prelude to negotiations with the Chinese, statements that have helped calm volatile stock markets. In a recent note to clients, the ratings agency Fitch said that the most likely outcome to the conflict remained a “negotiated solution” and that it was therefore not changing its primary economic forecast.

Mr. Kudlow, in the interview, said that farmers had “a legitimate concern” but added that it would be “at least two months before final decisions will be made.”

“I’m not here to say we won’t use tariffs — everything’s on the table in these negotiations — but I am here to say we don’t know yet,” he said.

Still, White House officials suggest that little to no progress has yet been made in bridging contentious gaps with the Chinese. Administration officials say that back-channel talks have occurred, but they would not characterize them as official negotiations. The Chinese appear impassable on some of the issues that the White House is most concerned about, including their subsidies to cutting-edge industries like robotics, aerospace and artificial intelligence.

The Trump administration says it has ordered the Agriculture Department to create a program to help farmers should the two nations find themselves in a trade war. Trade advisers say the department could draw on the financial resources of a program known as the Commodity Credit Corporation, which provides up to $30 billion to help shore up American farmers by buying their crops.

“Stay with us while we go through this difficult process,” Mr. Kudlow told farm-state representatives during the meeting, according to a White House transcript. He added, “And at the end, if the worst case has come out as the president said, you will be helped. That’s a promise.”

But such a program would be time-consuming and costly and would come as the budget deficit continues to increase. Farmers say that Mr. Trump’s threats have already hurt them by causing the price of futures contracts to fall. They maintain that the easiest way to help them is to avoid a trade war with China in the first place.

Senator Joni Ernst, Republican of Iowa, described the meeting with the president as “productive” and said that she had urged him to re-engage in discussions with countries in the Trans-Pacific Partnership. “Iowa farmers aren’t looking for another subsidy program; rather they want new and improved market access,” she said.

“The best thing the United States can do to push back against Chinese cheating now is to lead the other 11 Pacific nations that believe in free trade and the rule of law,” Senator Ben Sasse, Republican of Nebraska, who attended the meeting, said in a statement. “It is good news that today the president directed Larry Kudlow and Ambassador Lighthizer to negotiate U.S. entry into TPP.”

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30
Sep
16

Manufacturing Has Been the Economic Engine of the USA

Manufacturing has been the Economic Engine of the USA

I want to remind everybody about the importance of manufacturing and its vital importance to the U.S. economy. Manufacturing has been the heart of the soul of America. It has been the main “Job Creator” since the 1800s. It is too bad we have abandoned manufacturing by offshoring millions of these U.S. jobs to other countries over the past three decades. It is not only the United States that has had to deal with the loss of manufacturing, but, also, the countries in Europe (except Germany) and Australia. It has been a very difficult adjustment for all of these countries. This one of the major reasons why there is so much unrest in these countries. For the United States, the areas that have been hardest hit have been small towns. Once upon a time, these small towns were agricultural (farming). Over time, with less need for people to work in the fields, these previous “farm” towns became great places to set up for manufacturing because of its lower cost of living. Many jobs were ciphered from the large cities to the small towns. Many big cities have been able to adjust (not all) with this transition. However, the small towns have been decimated by the loss of manufacturing since 1980.

Let us look at a few issues regarding history and globalization.

Is Globalization good?

It depends on how you look at it. Globalization has meant there has been a great improvement of infrastructure to many third world countries. Global poverty has greatly improved over the past three decades. For Europe and the United States, globalization has meant the loss of manufacturing to these third world countries. In the USA, it has caused the loss of 20 million manufacturing jobs to these lower-cost countries since 1980 (8 million manufacturing and 12 million associated manufacturing jobs). Globalization has meant economic hardship for the US, Europe and Australia.

Manufacturing: The Heart of the US economy for More Than a Century

Question: When did the United States first become a major player in economics?

Answer: 1870. The United States was re-building from the civil war. Government was free to complete infrastructure projects such as building railroads, making new trails, canals, and new shipping ports. Industrialization with its ability to make mass-produced, cheaper and newly innovated products created new jobs. And with its newly improved infrastructure, the US could send its products to its ever-expanding borders as well as exporting its products to other countries. Soon, American steel production surpassed the combined total of Britain, Germany and France. By 1890, the USA surpassed Britain for first place in manufacturing output.

 

A Graph of the Greatest World Economies from Year 1 A.D. to 2008

In the early years it was China and India who had the greatest economies based on their shipping of its wealth of goods.

The following graph shows the history of the World’s GDP and the percentage contribution by major countries.

(Source: History of World GDP)
The shrinking of the US economy started when the U.S. deliberately allowed manufacturing to disappear with the passage of Free Trade Acts in the 1990s. China, as of 2015, is the number one economy in the world.

Why is Manufacturing so Vital for the US Economy?

  1. According to the Bureau of Economic Analysis, every dollar spent in manufacturing generates $1.48 in economic activity, more than any other major economic sector.
  2. Each manufacturing job creates three other jobs. In the U.S., the Economic Policy Institute has found that each manufacturing job supports three other jobs in the wider economy, through something called “the multiplier effect.”
  3. The growth of manufacturing machinery output, (and technological improvements in that machinery), are the main drivers of economic growth.  Just consider the explosion of the Internet, iPhones, and the like — all made possible by a small subset of production machinery called semiconductor-making equipment (SME), which itself is dependent on other forms of production machinery.
  4. Global Trade is based on goods, not services. A country can’t trade services for most of its goods. According to the WTO, 80% of world trade among regions is merchandise trade — that is, only 20% of world trade is in services.
  5. Services are mostly the act of using manufactured goods.
  6. While manufacturing is only 12% of the U.S. economy, it accounts for two-thirds of all private spending on R&D. While it provides only 9% of U.S. jobs, it employs one out of three engineers. Fully 60% of royalties from licensing intellectual property go to manufacturing firms.
  7. Manufacturing is the engine that drives U.S. innovation.

There are still Free Traders who feel that U.S. manufacturing is not important. Of course, the Free Traders have a hard time contradicting the following graph.The graph demonstrates what happens to the middle class when we abandon supporting manufacturing.

When we employed Top Down Economics – We cut taxes. Technology and competition from abroad started whittling away at blue collar jobs and pay. The financial markets took off. And so when growth returned, it favored the investment class — the top 20 percent, and especially the top 5 percent (and, though it’s not on this chart, the top 1 percent more than anybody).

Pew_History_Middle_Class_Families_Income_History-thumb-615x447-96949

How Free Trade Has Hurt The US Economy

Since the beginning of the United States, in order to protect U.S. Businesses from being overrun by products from other established countries, our Founding Fathers did what other countries did to protect their own country’s businesses, they levied an import tax. The import tax kept the price of foreign goods more expensive, giving our own business a fair playing field. The import tax fee was anywhere from 50 – 200% on each item.

Then, in the 1970s, some new school economic geniuses thought that it was silly to stay with the tried and true. So, they pressed for “Free Trade” – which meant import taxes are eliminated. It meant lower prices for imported goods, people would spend more. A win/win situation thought these geniuses. These same geniuses also thought Trickle-down economics would also be beneficial – which has caused 90% of all profits to go to the top 1% and caused the greatest economic inequality since the 1920s. The Free Trade agreements (NAFTA, CAFTA, WTO) did eliminate many import taxes especially into the USA, but corporations started to notice that they could maximize profits by moving their companies to other countries with their lower cost of living. So, they started new companies in China, Mexico and started closing factories in the United States to open factories in these third world countries (offshoring). This is our present situation. The United States is still a Free Trade nation with manufacturing continuing to wobble – making only 4% of what Americans need.

Which Political Party is for Free Trade?

The Libertarian Party is the greatest backer of Free Trade by far. Gary Johnson, their Presidential candidate has said they are definitely Free Trade at all costs and would like to pass The Trans-Pacific Partnership Free Trade Treaty – a deal with the USA and 13 other Asian Nations (not including China at this time).  The TPP waits is Congress waiting to be ratified. The Libertarian Party is Pro- Big Business, feels that consolidation of business into fewer larger corporations (monopolies) is fine, thinks that the “Citizen United” decision is good – Corporations can put unlimited money into elections. They are against “entitlements” like Social Security, Medicare and Medicaid.

The Democratic Party has always been the political party against Free Trade. Backed by Unions who felt that Free Trade jobs would take away American jobs – the unions were correct. Unions within private businesses comprise only 7% of companies where it used to run about 45-50% in the 1950s. The Democrats who have been for Free Trade are the so-called “Business Friendly” Democrats. During the 1990s, when Free Trade was the most popular the split was 60% against Free Trade and 40% for Free Trade. Today, the Democratic Party is 80% against Free Trade and 20% for Free Trade.

The Republican Party has always been Free Trade. They are still 95 to 98% Pro Free Trade. The exception is Donald Trump. Now, the question is whether Donald Trump is truly against Free Trade. He has always said I have been the greatest Free Trader. Trump has always been a follower of polls and once he saw that a substantial number of Americans were skeptical of Free Trade he changed his tune. But he has really no plan. He rarely tells the truth. The question is whether the Republican Party is the Trump Party and would get rid of Free Trade (highly doubtful) or that Donald Trump is Pro- Republican and nothing would change (it is more likely that the TPP would pass silently under the cover of darkness under his administration).

The future is now.

26
Jun
16

Brexit – Implications for the USA

There is nothing like a good story to breakup writer’s bloc. Brexit was a surprise story that has lots of parallels between United States and England. England voted to leave the European Union because of the following reasons: they were unhappy with its present economic malaise; there was a  feeling that government was not listening to them; and there was fear of more immigrants coming into the country.

One of the sad points of the story, however, is the misinformation which got the vote passed.. It is true that all nations in Europe and the U.S. have been suffering through less than vibrant economic growth. The incorrect assumption is that immigration is the cause of loss of good paying jobs. Which is totally wrong. For example, in the United States, many Americans blame immigrants, especially from Mexico, of taking away many good paying jobs. But the loss of good paying jobs has, mainly, been in manufacturing and its associated jobs, which has nothing to do with immigration. Most of the jobs that immigrants take are very poor paying jobs (often less than the federal minimum wage). And a large percentage of these jobs are in agriculture (and believe me, they are almost no Americans willing to take those jobs – I have seen it in the 2009 recession). Certainly, there are small exceptions, for example, in Southern California, there are immigrants that make clothing, but the pay scale is close to minimum wage. Other than that, immigrant workers are not in the manufacturing area, except for the foreigners which come through working visas (which is altogether different problem that needs to be handled).

The real reason for the economic malaise is globalization and free trade. Put simply: tons of cheap stuff is being made by slave labor, sent without import tax (into US and Europe), underselling home made products. This phenomenon causes the loss of good-paying home-made manufacturing and associated jobs. US businesses pile on to the problem by eliminating American jobs and opening up plants in China, Vietnam, Mexico and India (offshoring). The impact hits hardest on the small towns and small businesses.

There is definitely a correlation between England’s Brexit Vote and the upcoming United States Presidential election. The electorate in the US is, also, quite angry (although for different reasons). The Left is angry due to economic inequality. This is basically The Occupy Wall Street movement which has a mistrust of the Big Banks and large corporations who have passed laws against the will of the people (like the Free Trade agreements such as NAFTA and the WTO and the on-going Trans-Pacific Partnership (TPP) agreement being negotiated). The Occupy movement is tired of the Republican policy of trickledown economics that have sent all the profits going to the top 1% of the population and destroying the jobs and depressing the wages of the middle class. The Right is angry, because it is just angry. This is the Tea Party. It is part nativism – fear of immigrants and people of color and part just angry in general which seems to be all directed at the 44th President of the United States and all government. They do not seem to have a plan for improvement but are against things in general. That is why year after year, the Republicans elect people to obstruct government from working.

Implication for the 2016 U.S. Presidential election.

Anger about the current situation is good, especially if you know the circumstances that are causing it and voting intelligently to reverse it. I can not say the Brexit vote was voted on intelligently – it seemed to be more of a protest vote. As many Pro-Brexit voters said afterwards, “I just voted to protest, I didn’t think it would pass.”  Well, it did pass and now their future is uncertain. Whether the decision for Britain to exit the European Union is good or bad, remains to be seen. If the British government just concentrates on immigration, then most asssuredly the British economic situation will  not improve because it is not the problem for the economic malaise in the first place and it would result most likely will cause a moderate to severe recession.

A lot of people who vote for change for the sake of change, never entertain the possibility that things could get worse. Take, for instance, recent U.S. history. In 2000, the American people were not satisfied with its best economic growth in decades with its rapid decline of the US federal deficit, so the US decided for a change. George W. Bush was elected. Instantly, he put the US into a two year recession and then 5 years later, the greatest depression since the Stock Market crash of 1929. Now, we are looking at replacing a President that has been behind 7 years of continuous economic growth, granted it is not robust, but it never will be – not until the Republican policies of trickle down and unrestricted Free Trade are eliminated.

The Candidates

The Presidential candidate for the Republican Party is Donald Trump who is pure Tea Party. He is a born-millionaire who has never talked to a middle class or poor person in over 50 years. The only issue that separates him from classic Tea Party is “Free Trade”. He says he is all for Free Trade but wants to change the treaties we already have, but without any specifics. Personally, he continues to outsource all of his clothing to China and does not talk about bringing these jobs back to the USA. Also, in a May rally in California, besides the chants for “Build the Wall” one of supporters said “Down with Free Trade and no to the TPP”. The supporter started the chant “No TPP”. Trump joined the chant saying “No PPP”. The fact that Trump who is against certain Free Trade agreements does not even know what the TPP is shows that he is truly clueless. He is definitely not serious about Free Trade or offshoring of US jobs. Nor does he talk about breaking up the big banks, he wants to repeal regulations placed on Wall Street which caused the Great Recession in the first place, and his tax plan gives more tax  breaks and decreased taxes for other millionaires like himself. He is the exact opposite of the Occupy Wall Street movement. His continuance of trickledown economics, his ideas of letting big corporations running things unabated and the continued off-shoring of US jobs is a giant disaster ten times worse than the election of George W. Bush, who was a horrible President.

The other candidate from the Democratic party is Hilary Clinton. She has stated she is for more regulation on Wall Street and the Big Banks. She has said that she is against the Trans-Pacific Partnership (TPP). ALthough, previously she said she was for it. Clinton is also in favor of raising the federal minimum age (Trump is against this). The knock on her is that her competition, Bernie Sanders, who is much more left, had vowed to break up the Big Banks and has been consistently against all Free Trade agreements for years. Sander’s message has resonated with the extreme left. Clinton’s more moderate views have left some Democratic voters without the fiery passion that Sanders brings.

The Outcome of the Presidential Election

The outcome of the United States will be determined by many things. The nativism movement – dislike of anybody that is otherwise white and of Western Europe- is popular in about 30% of the US population. This 30% will vote for Trump no matter what other policies he supports. The fear of immigrants is a large issue that touches a broader section of the USA. If Trump can convince Americans that immigrants are the problem, similar to Hitler convincing Nazi Germany that Jews were the problem, then Trump will win.

Mexico is not the problem, there is no net immigration from Mexico for years, they are not coming over the border to take good-paying American jobs. The bigger problem is American companies eliminating American manufacturing jobs, moving these jobs to Mexico. The work visa are actually a bigger problem to good paying jobs and this needs to be fixed.

Free Trade is a double edge sword. Free Trade is great for countries that have the same values, but it puts American jobs at risk in dealing with more impoverished countries with different values.

Financially, the United States is financially strong, it is resistant to recessions of many other countries. However, the middle class has diminished and the new profits need to be shared. Getting rid of trickledown policies would help this. Changing Free Trade policies with impoverished countries including China and investing in more American manufacturing would remedy this. If we don’t do this, eventually we will have no choice but to destroy the whole political process. But I do not think we are at that point – not for another 15-20 years.

Go figure that the American public thinks that Trump would be better for US economic situation. Yeah, if you want to file Chapter 11.

16
Apr
16

Americans Have No Right To Be Angry

Americans really have no right to be angry. Really?! These two newspaper articles prove that we Americans have brought our economic malaise upon ourselves. After so many years and with all of the evidence, a majority of Americans still don’t realize that we have directly caused the middle class to disappear and why all the profits go to the top 1%. The first article is “Americans prefer low prices to items ‘Made in the USA'”. The second article is “Exit Polls: Wisconsin Voters Say Trade Leads to Job Losses.”

Bernie Sanders and Donald Trump have turned conventional politics upside down. A large part of their message is that Americans are sick and tired of losing jobs overseas which has created a decrease in good paying jobs. This has caused an angry electorate. So, why does the angry electorate not decry the Free Trade agreements, or stopping buying slave labor made products?  I think that maybe the angry electorate either has no clue what is causing the problem or are so selfish that since it does not effect themselves personally, it won’t change their actions. I believe it is a little of both.

Is Free Trade Sinking?

Is Free Trade Sinking?

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Source: Poll: Americans prefer low prices to items “Made in the USA” – CBS News

WASHINGTON – The vast majority of Americans say they prefer lower prices instead of paying a premium for items labeled “Made in the USA,” even if it means those cheaper items are made abroad, according to an Associated Press-GfK poll.

While presidential candidates like Donald Trump and Bernie Sanders are vowing to bring back millions of American jobs lost to China and other foreign competitors, public sentiment reflects core challenges confronting the U.S. economy. Incomes have barely improved, forcing many households to look for the most convenient bargains instead of goods made in America.

Employers now seek workers with college degrees, leaving those with only a high school degree who once would have held assembly lines jobs in the lurch. And some Americans who work at companies with clients worldwide see themselves as part of a global market.

Nearly three in four say they would like to buy goods manufactured inside the United States, but those items are often too costly or difficult to find, according to the survey released Thursday. A mere 9 percent say they only buy American.

Asked about a real world example of choosing between $50 pants made in another country or an $85 pair made in the United States – one retailer sells two such pairs made with the same fabric and design – 67 percent say they’d buy the cheaper pair. Only 30 percent would pony up for the more expensive American-made one. People in higher earning households earning more than $100,000 a year are no less likely than lower-income Americans to say they’d go for the lower price.

“Low prices are a positive for US consumers – it stretches budgets and allows people to save for their retirements, if they’re wise, with dollars that would otherwise be spent on day-to-day living,” said Sonya Grob, 57, a middle school secretary from Norman, Oklahoma who described herself as a “liberal Democrat.”

But Trump and Sanders have galvanized many voters by attacking recent trade deals.

From their perspective, layoffs and shuttered factories have erased the benefits to the economy from reduced consumer prices.

“We’re getting ripped off on trade by everyone,” said Trump, the Republican front-runner, at a Monday speech in Albany, New York. “Jobs are going down the drain, folks.”

The real estate mogul and reality television star has threatened to shred the 1994 North American Free Trade Agreement with Mexico and Canada. He has also threatened to slap sharp tariffs on China in hopes of erasing the overall $540 billion trade deficit.

Economists doubt that Trump could deliver on his promises to create the first trade surplus since 1975. Many see the backlash against trade as frustration with a broader economy coping with sluggish income gains.

“The reaction to trade is less about trade and more about the decline in people’s ability to achieve the American Dream,” said Caroline Freund, a senior fellow at the Peterson Institute for International Economics. “It’s a lot easier to blame the foreigner than other forces that are affecting stagnant wage growth like technology.”

But Trump’s message appeals to Merry Post, 58, of Paris, Texas where the empty factories are daily reminders of what was lost. Sixty-eight percent of people with a favorable opinion of Trump said that free trade agreements decreased the number of jobs available to Americans.

“In our area down here in Texas, there used to be sewing factories and a lot of cotton gins,” Post said. “I’ve watched them all shut down as things went to China, Mexico and the Philippines. All my friends had to take early retirements or walk away.”

Sanders, the Vermont senator battling for the Democratic nomination, has pledged to end the exodus of jobs overseas.

“I will stop it by renegotiating all of the trade agreements that we have,” Sanders told the New York Daily News editorial board earlier this month, saying that the wages paid to foreigner workers and environmental standards would be part of any deal he would strike.

Still, voters are divided as to whether free trade agreements hurt job creation and incomes.

Americans are slightly more likely to say free trade agreements are positive for the economy overall than negative, 33 percent to 27 percent. But 37 percent say the deals make no difference. Republicans (35 percent) are more likely than Democrats (22 percent) to say free trade agreements are bad for the economy.

On jobs, 46 percent say the agreements decrease jobs for American workers, while 11 percent say they improve employment opportunities and 40 percent that they make no difference. Pessimism was especially pronounced among the 18 percent of respondents with a family member or friend whose job was offshored. Sixty-four percent of this group said free trade had decreased the availability of jobs.

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It is strange that the party that has always supported the Free Trade Agreements are more likely than the Democrats to look unfavorably towards the Free Trade agreements. It is, also, paradoxical, that any Bernie Sanders supporters would support the Free Trade policies as he has been the only candidate who has consistently been against the Free Trade policies.
If you want to know more about the consequences of Free Trade, see my concise blog entry Why Free Trade is Devastating to the USA.
The United States is by no means out of the woods when it comes to offshoring jobs to other countries – companies are closing down plants in the United States and moving to other countries every week, see Carrier, Ford. While multi-national companies like Tyson Chicken continue to shut down all their US plants while expanding to other countries, like Hershey’s Chocolates did soon after NAFTA passed. The USA is bringing back some jobs back from other countries, but it is a trickle. And do not forget that it is quite likely that your own jobs is potentially offshorable in the next five years. According to the Congressional Research Service 25% of all service US jobs (or 40 million jobs) may be offshored. That is on top of the manufacturing jobs that are continuing to be offshored.
Spread the word: Buying Made in USA is very important and Free Trade Agreements are THE reason why we are losing so many good paying jobs.
22
Mar
16

Why Free Trade is Devastating to the USA

Why Free Trade is Devastating to the USA

1) The Original Idea

This is a quick look at Free Trade. I am not against trade. Trade between countries is beneficial as long as all the countries follow the rules. Historically, all countries have placed import taxes of products coming into their countries to protect their own businesses from being destroyed. Some import taxes have been much higher than others. So, in order to improve trade, Free Trade Treaties were created (only 25 short years ago) which basically repealed the import tax. Theoretically, if agreements between countries with the same standards- like the USA and Canada – were created, this would be a good idea.

Free Market Tonic

2) The Problem

The problem with the real life treaties is that the countries do not have similar economic conditions or moral convictions. A third world country will always have a lower cost of living, little regulation in the treatment of workers, unregulated working conditions and no protection of the environment  which creates a great advantage in making very inexpensive products compared to developed nations. In addition, many countries have been breaking the underlying principals of trade: some countries have: 1) de-valued their monetary units towards the U.S. dollar (thereby gaining an advantage in exporting into the US); 2) have persistently engaged in the practice of dumping – making so much a product that it artificially lowers prices and puts the other country’s businesses out of business; and 3) have been using slave labor and childhood labor.

3) Manufacturing Towns Take a Big Hit

As the Free Trade Advocates like to say so easily about Free Trade Treaties, there will be some “losers”. It was predicted that some manufacturing would be hurt, but nobody thought for a second that it would be this severe. It was acknowledged that major manufacturing cities would get hit – they were. (Think of Detroit and Flint, Michigan). But so were the small towns.

NAFTA would create jobs

Within 8 years after NAFTA (North American Free Trade Act) passed, 700,000 American jobs were sent to Mexico. Here is a classic example of NAFTA: Hershey’s Chocolates no longer make any chocolate in the United States, it is all made in Mexico. As Hershey’s offshored all of its US jobs to Mexico. It has created numerous manufacturing ghost towns of cities like Oakdale, CA, Robinson, IL, Hazelton, PA, Stuart’s Draft, VA  Naugatuck, CT and, Hershey’s PA. From 1994 to 2015, the Labor Department certified that more than 216,000 workers in North Carolina were displaced by global economic pacts and qualified for assistance — making it the hardest-hit state in the country. (Ref 1).

Loss of US manufacturing jobs 1980-2012. NAFTA 1994, WTO 1995, China joins WTO 2001

NAFTA 1994, World Trade Organization 1995, China joins WTO 2001

4) The Loss of U.S. Manufacturing and Other Jobs

The loss of manufacturing jobs is sometimes called deindustrialization.  Since 1998, not only have we lost a “net” 8 million manufacturing jobs to offshoring, we continue to shed manufacturing jobs very fast almost at the same rate as we can create new ones. Also, Free Trade Advocates never mention (among many other things) is that we have lost many “associated” manufacturing jobs, like transportation, affiliated jobs, and community jobs that serviced the manufacturing workers which is usually equal to 2.5 to 3 jobs per manufacturing job. In addition (totally separate from manufacturing), there are the millions of service jobs that have been offshored to other countries just so large corporations can make greater profits.

chinas import

The winner of Free Trade: China. Loser:United States

5) Free Trade Lowers Middle Class Wages

One thing that both Republicans and Democrats can agree on is that middle class wages have been stagnant, and most agree that it is due to disastrous Free Trade Treaties. (Interesting reading, Jared Bernstein’s article: The Era of Free Trade Might Be Over. That’s a Good Thing. – The New York Times). The reason wages are not increasing: 1) manufacturing used to be good paying jobs, but now we have much less manufacturing jobs and the “new” manufacturing jobs that are coming back are paying less; and 2) almost all jobs can be readily off-shored, so it makes it difficult to ask for raises. In fact, 25% of all service jobs or 40 million US jobs could be sent overseas in the next few years. (Ref 3).

6) Which Party Likes Free Trade Treaties?

So, who is to blame for these Free Trade Treaties? Although they are considered “bi-partisan”, it is really more partisan. You can decide for yourself. The North American Trade Agreement NAFTA) was started by Bush’s father, George H.W. Bush in 1990 and signed into law by President Bill Clinton in December 9, 1993 after being ratified by the House 234- 200 (Yeas: 132 GOP, 102 Dems, Nays: 43 GOP, 156 Dems) and the Senate 61-38 (Yeas: 34 GOP, 27 Dems, Nays: 10 GOP, 28 Dems).

Fast Track

The Trans-Pacific Partnership Pact (TPP) which will probably pass during the lame duck session (see my entry When Will the TPP Become Law)  has had a similar vote. In order to help pass the TPP, Fast Track (meaning you can not filibuster or add amendments to the the TPP), also known as the Trade Promotion Authority (TPA) was added. The vote in the Senate: passed 60-38 (Yeas: 47 GOP, 13 Dems; Nays: 7 GOP, 31 Dems & Ind.). The House vote: The vote was 218-208 (Yeas: 190 GOP, 28 Dems, Nays: 50 GOP, 158 Dems).

One of the things that have made Republicans so mad (besides listening to right wing media) is that their political party has consistently made their lives worse by supporting Trickledown economic theories, with the worst one being the Free Trade Treaties. And yet, the Republicans want to pass an even bigger one, the TPP, which is expected to cost the US 2 million jobs in just one year. (Ref 2).

stop the TPP

7) Other Criticisms of Free Trade

There are many arguments besides economic against Free trade policies. First, Free Trade heavily favors large corporations destroying infant industries as well as the small and medium sized companies. It undermines long-run economic development – it is difficult to revive manufacturing ghost towns, and difficult to plan for growth when American jobs can be offshored at any time. Free Trade has definitely caused income inequality, and environmental degradation.

Born to Work Picture from the Daily Beast in 2009

Born to Work
Picture from the Daily Beast in 2009

Free Trade is supportive of countries sticking to their native practices which often means supporting child labor and working in sweatshops where workers get no benefits in often poorly ventilated and dangerous work environments.

Bangladesh factory collapse

Bangladesh Clothing factory collapse

Free Trade has definitely caused the race to the bottom, wage slavery, accentuating poverty in poor countries, harming national defense, and forcing cultural change. One additional criticism is that it allows large corporations to ignore local, state and governmental rules and laws: U.S. Appeals WTO Ruling on Meat Labeling Laws – where the American Meat Institute refused to label their meats as to where the originated. The Congress has successfully repealed the Country of origin labeling law this past winter. Instead of raising global standards, free trade tries to lower standards of countries that are more advanced. We need to stop all of these Free Trade Treaties, because they are devastating to the USA in so many ways.

free-trade-at-last-cartoon

02
Mar
16

Celebrity President

Celebrity President

(The Background)

With the Presidential Primaries halfway through, it is important to see which Presidential candidate will bring back U.S. jobs from overseas and bring back manufacturing, which will strengthen our economy. Since this is a popular sentiment, any candidate that does not mention this is obviously not a candidate who is interested in stopping offshoring and stopping the Free Trade treaties like the Trans-Pacific Partnership Pact (TPP). The candidates who are silent on this subject are: Ted Cruz, Marco Rubio, Ben Carson and John Kasich. That leaves three candidates: one Republican and both Democratic candidates. Of the Democratic candidates, Bernie Sanders for years has been consistently against the Free Trade treaties, against offshoring US jobs, against the TPP and for keeping jobs in the USA. Regarding Hilary Clinton, the jury is still out. In years past, she was for Free Trade Policies, but during this campaign, she has said: “I am against the TPP as it is currently written.” This could mean if they change some language, then she might be for it. Regarding the Republican candidate, Donald Trump, it is an even bigger question mark. He says he will tax China’s imports, he will make Apple makes all their phones and computers in the United States. But how he will do this is anybody’s guess. It appears inevitable that Donald Trump will be the Republican standard bearer. So what if he won the general election for the Presidency, would he bring back jobs from China?  Or is it just another ploy to garner public opinion. The following is a fictional scenario, if Donald Trump became President.

—————————————————————————————————————————————————————————–

The Celebrity President: Season One, Episode One

The Setting: The Oval Office, the day after the inauguration.

Omarosa (“famous” reality TV star from The Apprentice) walks in, holds the double doors open and calls out: “Everybody, right this way.”

An army of  people carrying cameras, lights and microphones come in. A person (named Jerry) directs where to put all the equipment in their correct places.

Omarosa: “President Trump will be right with you.”

Trump enters, “Hello, Jerry, thanks for doing this, this will be the greatest reality show the world has ever seen. Set up your stuff wherever you need to. And make sure that each one of your staff gets one of my coffee mugs that says “Donald Trump 45th U.S. President.” It’s free to all the staff, but I am charging $20 to everybody else. Jerry,  I am sure you already know Omarosa”. They shake hands.

The cameras start rolling, Trump starts,”Okay, let’s bring them all in. All of you, for the Press Secretary position.”

Ten people of different ages, races, heights, weights and backgrounds all file in, including one familiar face.

Trump: “George Stephanopoulos, so good to see you.” They shake hands. Trump continues: “What brings you around here? You know you are totally over-qualified for this gig.”

Stephanopoulos (ABC News Anchor and previous Press Secretary to President Bill Clinton): “Well, it is in my wheel house being a previous Press Secretary, but, you, being the President, this is the biggest story of the decade and I wanted to be right there when something happens.”

Trump: “George, you know you can’t report this stuff on the news until we air it on Celebrity President, right? I mean, all of this should make a really great book, maybe even a TV series, movies, franchises… I’ll be set for life, baby. I’ll go easy on you at first, George, but, then you will be just like all of the other schlubs, I mean apprentices.”

Stephanopoulos: “Don’t give me any special treatment, just act like you don’t know me.”

Trump: “Okay”. He gives him a thumbs up sign.

Jerry, the director of Celebrity President, says to Trump, “Would you like to meet all the new candidates?”

Trump: “Not really, I mean, you can shoot those scenes when I am not around, I’ll eventually learn their names. Why don’t we get started?”

The lights go on, the cameras start rolling.

Trump: “Omarosa, you have been since last week, right? Thanks for starting early. As you know, I have been on vacation these last six weeks, because I know I won’t get another break for the next four years. Hoo, Boy! So, what do we have?”

Omarosa: “Well, we have a lot of things. First, did President Obama get a hold of you?  He said it was important, about giving you the run down on things? And something about codes. He left a 500 page binder of your desk.”

Trump, rolling his eyes, “No, he didn’t get a hold of me. And he should be addressed as Ex-President Obama or simply Obama. There’s only one President and that is me. What does he know? He’s a Muslim, born in Kenya, the worst President ever. What can I learn from him?” He tosses the 500 page binder into the round filing cabinet on the floor.

Stephanopoulos: “Well, when there was a disruption of military intelligence in the transition between Clinton and Bush, the 9/11 tragedy happened, which you blamed Bush for. History does repeat itself.”

Trump:”What do you mean?  We are not going be attacked by Saddam Hussein, he’s dead.”

Stephanopoulos: “Uh, Osama Bin Laden.”

Trump: “Dead, right?”

Stephanopolous: “Yes, dead.”

Trump: “See. You can’t be attacked by a dead man. George, I am giving you a warning. Anyway, back to business…Omarosa?”

Omarosa: “Next, a couple of countries have broken off diplomatic relations with us.”

Trump: “F*** them. They will be sorry.”

Omarosa: “We should set up a White House staff and the Cabinet, and maybe a Chief of Staff.”

Trump: “No other Chiefs, just me, we’ll delete that position permanently. Maybe, we should get a Secretary of Defense? Who was the last secretary of defense under the Republicans? Rumplemeyer? Rumsfeld?, Yes, Rumsfeld.”

Omarosa: “I’m connecting you to Secretary Rumsfeld…”

Apprentice #1: “He got us into Iraq.”

Omarosa points to the phone. Trump picks up phone (realizing what was just said): “Hello Rumsfeld, You’re fired!” He looks at the director. “How’s that for good TV?”

Trump: “How about Generals? I would like to get rid of any generals appointed by Obama. Are there any generals fired under Obama?  We’ll bring them back. Then we’ll attack ISIS, wherever that is.”

Apprentice #2 ” The biggest general names would be Petraeus, McKiernan and McChrystal. As for the others, there is usually good reason why they were fired – gambling, sexual misconduct, adultery, incompetence. I am not sure if the President can appoint Generals to the military, But, maybe you can fire them.”

Trump: “You know a lot about the military, play your cards right and you could be my new Secretary of Defense.”

Apprentice #2 “Yes, sir, Mr. President.”

Trump beams as he thinks about being called Mr. President. “Omarosa, get me Chancellor Merkel of Germany and Prime Minister Abe of Japan on a conference call right now.”

Omarosa starts making calls and then gives Trump a ready sign. Trump picks up the phone. “Angie and Abe-baby! Thanks for taking my call. As you know I am the new Big Cheese and you know why I am calling. I am asking for you to pay your fair share. We have been providing you our military forces on the cheap. And I think you aren’t paying at the current 2017 rate. Angie, how much do you think you paid for our servicemen to be there?…..What do you mean it is complicated? I’ll tell you, not enough! As of now, I am raising your rates to both of your countries by 400%, and if you don’t say yes within 48 hours, you will have to pay 800% more. So, call me back within 48 hours. Bye. Okay! Now we are on a roll” Trump starts rubbing his hands together. “What’s next?”

Omarosa: “Why don’t we meet your new Vice-President?”

Trump: “That is a great idea. Send him in.”

Trump turns to the new apprentices and says: “My first choice for Vice president was my wife, Melania, however, she wasn’t eligible because she wasn’t born here and her parents weren’t US citizens – maybe I can change that law? So, I did the next best thing. Everybody meet my son, Donald, Jr.”

Apprentice #3 (says quietly to the others): “Of course, that would be his son’s name.”

Trump: “I like to think of him as Vice President/Prince and I am the King of America. I was thinking of a great new ad campaign: What’s good for Donald Trump is good for America. No, it would be great for The President Of The United States of TrumpAmerica, POTUSOTA! How does that sound? We are going to make America white again!”

Donald, Jr: “It’s great, not white, we are going to make America great again.”

Trump: “Oh that’s right, I am glad I didn’t say that before I got elected. My poll numbers would have plumetted.”

Apprentice #3 (looking at her cellphone): “Oh my God, Germany and Japan have just dropped diplomatic relations with us.”

Trump: “F*** both of them. F*** those f***ing foreign f***s.”

Apprentice #3: “President Trump, I thought you weren’t going to cuss.”

Trump: “That was a campaign promise, it means it is only good when I am campaigning. It is like Lent, it is only good for 40 days.”

Apprentice #3: “You mean like the other promises aren’t any good either like bringing back jobs from China?”

Trump: “That’s right sweetie. My millionaire friends are making millions in China, just like I am doing with my Trump clothing line. Maybe I can buy a little part of China, maybe like one of the industrial cities like Shengzhou, and call it an American territory. The labels will read “Made in Shengzhou, America.”

Apprentice #3: “How about Obamacare? Are you going to repeal it like you promised?”

Trump (looking flustered, with his arms outstretched and his palms pointing upwards): “Replace it with what? You have the old system, then you have the health insurance exchanges (which is Obamacare) and then you have the single payer option, which our party doesn’t want. Wait a minute, I just had a stroke of genius. First, I repeal Obamacare and then replace with the exact same plan but with lots of advertising and press and we will call it TrumpCare! People will eat it up!”

Apprentice #3: “That’s awful. I was one of your biggest supporters, others said not to vote for you, because they said that you’d promise anything like a used car salesman to get your vote and once you did, you were out of luck.”

Trump: “Well that’s politics and that’s business.”

Apprentice #3: “No, it’s not, that is just lying”.

Trump (irritated): “You are so naive. Grow up! And you’re fired!”

Apprentice #3 runs off. Trump walks over to the director and says “You can dub in her name, can’t you?”

Jerry: “Sure, no problem, her name was Annette.”

Trump (turns towards the sound guys and carefully announces): “Annette, Annette.”

Jerry does a few keystrokes and says to Trump: “How does this sound?” Jerry hits another keystroke and voila, you can hear the replay of Trump talking: “You are so naive (Annette)! Grow up. And you’re fired (Annette)!”

Trump (to Jerry): “You are a genius. I had another great idea. How about for tomorrow’s show, Episode 2, we round up ten real judges and we do an Apprentice for Supreme Court Judges? Maybe make some inquiries to see if Judge Judy is around? I love her show.”

Jerry: “That is a great idea, will do.”

Trump (to everybody): “Okay that is a wrap. That was a good 30 minutes of work, I am bushed, no pun intended. I am going home.”

Apprentice #2: “Don’t you live here in the Oval Office?”

Trump: “I never stay where I work, besides this place is a dump. I will see everybody back here at 10 o’clock sharp tomorrow.”

“We are sorry for the interruption, but Celebrity President has been cancelled.”

Trump: “Who said that? I said who said that?!!”

Trump wakes up and realizes he had just been dreaming. He then states aloud:”Damn, I would make a great Celebrity President.”

END

 

 

 

06
Nov
15

Trans-Pacific Partnership Full Text

This is the moment we have been waiting for The complete text for the Trans-Pacific Partnership. This is the agreement between with the United States with: Chile, Japan, Malaysia, Vietnam, Brunei, Australia, Canada, Mexico, New Zealand, Peru and Singapore. The TPP will drop taxes on imports into this country from these other countries. The United States already has one of he lowest import tax rates of all countries averaging 2.5% (with many countries sending their imported products into the U.S. with 0% tax). This loss of tax on imports has been blamed as one of the major reasons why U.S. companies have out-sourced their jobs to these favored countries, in order to take advantage of the lower costs incurred in these countries.

TPP map

Source: TPP Full Text | United States Trade Representative

TPP Full Text

TPP Final Table of Contents

Chapters

Annexes

 

Related Instruments

 

US-Japan Bilateral Outcomes




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