ShareThisAs if America's hands were not full already -- from Iran to Afghanistan to North Korea -- Washington Democrats have increased tensions with our next-door neighbors. Canada and Mexico, America's top two export markets, are embroiled in trade feuds with the U.S., both triggered by American protectionism. As global leader and decent hemispheric neighbor -- especially during these economic doldrums -- America immediately should rejoin Canada and Mexico on the road to free trade.
Canadians find February's $787 billion stimulus package as stimulating as a cold shower on a hot date. This law requires American-made construction materials in federally funded public-works projects. This "Buy American" provision would keep U.S. roads, bridges, and tunnels free of Canadian iron, steel, and other components, even though such Canadian inputs were allowed before the Democratic Congress passed and President Obama signed this measure.
Canada began fighting this provision at Halton Hills, Ontario, where a water-treatment-equipment manufacturer called Hayward Gordon fears Washington will block its southbound exports. Ironically, such limitations will impoverish American companies that supply parts for this Canadian firm's products. Halton Hills responded to February's regulations with its own don't-buy-American rules for government purchases.
Expanding this local boycott, the Federation of Canadian Municipalities voted June 6 to back localities that refuse to buy from nations that block Canadian goods and services -- namely America.
"This U.S. protectionist policy is hurting Canadian firms, costing Canadian jobs, and damaging Canadian efforts to grow our economy in the midst of a worldwide recession," Federation president and Sherbrooke, Quebec, Mayor Jean Perrault told Reuters.
The scene is equally grim south of the border.
Obama's $410 billion omnibus spending plan defunded a pilot program in which about 100 Mexican trucks were allowed to drive goods into the U.S. beyond a 25-mile frontier zone. American trucks were given equal access to Mexican destinations. Removing goods from one country's trucks and reloading them onto the other nation's vehicles for onward travel has boosted transit costs anew. These eventually increase price tags.
Mexico correctly argues that the North American Free Trade Agreement, which President Clinton signed, opened U.S. roads to Mexican trucks in 1995. Exasperated by Washington's 14 years of foot dragging, including 2002's imposition of 22 safety regulations on Mexican (but not Canadian) trucks, Mexico slapped tariffs on 90 American exports worth $2.4 billion, including grapes and toilet paper. This reportedly killed 40,000 American jobs. Mexico's backlash against U.S. protectionism interrupted its unilateral reduction of average industrial tariffs from 10.4 percent in 2008 to 4.2 percent in 2013.
Even worse, June 1 brought word that Canacar -- an association of 4,500 Mexican trucking companies -- filed a grievance seeking $6 billion in damages from Washington, due to the pilot program's termination and the resulting brick wall that arose between big rigs at the border.
"We want reciprocity," Canacar attorney Pedro Ojeda told the Wall Street Journal. "The U.S. has notoriously not kept its commitments."
Democrats claim Mexican trucks are dangerous. However, the Arizona Republic found that between 2003 and 2007, 1.2 percent of Mexican truckers in America were non-compliant with safety rules, versus 7 percent of U.S. drivers. Arturo Sarukhan, Mexico's ambassador to Washington, counts 45,000 border crossings by U.S. and Mexican trucks "without any significant incident or accident."
"Mexico has been the grown up in this dispute," says Dan Griswold of Cato Institute's Center for Trade Policy Studies. "Our truck-ban is just an exercise in raw power based on a stereotype of Mexicans."
Beyond anti-Mexican bias, the bigger issue here is that Democrats are the Teamsters' hit men. Since 1990, according to OpenSecrets.org, the truckers' union has donated $26,877,454 to federal candidates, 93 percent to Democrats. It also endorsed Obama early.
The Teamsters simply purchased protection from its Mexican competitors from the best parliament and president money can buy. If this hikes costs for U.S. consumers, shrinks markets for American exporters, and creates new pitfalls in U.S.-Mexican relations, who cares? No matter what, Washington's whores put out.
(Deroy Murdock is a columnist with Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. E-mail him at deroy.Murdock(at)gmail.com)
COLUMN
"Buy American" critical to U.S. economic recovery
American Manufacturing Trade Action Coalition
PRESS STATEMENT
“Buy American” Critical to U.S. Economic Recovery
CONTACT: Lloyd Wood, Dir. of Membership and Media Outreach
(202) 452-0866 or lwood@amtacdc.org
June 11, 2009
WASHINGTON, DC – Pointing out that the United States is mired in its worst economic recession since the Great Depression and that:
· the United States has lost 6 million non-farm jobs since December 2007 and U.S. non-farm employment is lower today than it was in November 2000;
· U.S. private sector employment is lower today than it was in November 1999;
· U.S. manufacturing employment is lower today than it was in June 1941;
· U.S. manufacturing has lost 5.35 million jobs in the last decade, including 1.57 million in the last year;
· in April, the United States suffered its first 10-year drop in industrial production since 1929-39 while the U.S. resident population increased by an estimated 36.5 million people (13.5 percent growth) during the same time period;
· the United States ran a $30 billion current account deficit with Canada in 2008 and has run a cumulative $331 billion current account deficit with Canada since 1998;
· the United States ran a $673 billion current account deficit in 2008 and has run a cumulative $5.85 trillion current account deficit since 1998;
· combined U.S. household and federal debt stood at $24.9 trillion at the end of 2008, doubling since the bursting of the dot.com financial bubble in 2000; and,
· the combined U.S. and federal household debt of $24.9 trillion was 175 percent of the $14.2 trillion U.S. Gross Domestic Product (GDP) at the end of 2008;
American Manufacturing Trade Action Coalition (AMTAC) Executive Director Auggie Tantillo said, “'Buy American' is critical to U.S. economic recovery. The only way for the U.S. economy to climb out of recession is for people to start buying more American-made goods and services, including the U.S. government.”
“By holding a joint press conference today with the Canadian Manufacturers and Exporters to decry the ‘Buy American’ provisions in the stimulus, the U.S. Chamber of Commerce is effectively suggesting that America needs to buy more Canadian to dig out of our economic hole. That position doesn’t pass the U.S. economic interest laugh test,” Tantillo continued.
“The U.S. Chamber in Washington should change its name to the ‘Chamber for Offshoring U.S. Jobs’ to properly reflect its policy positions,” Tantillo added.
“Main Street thinks that buying American is a great idea. Outside of Washington, D.C. and Wall Street, the average American understands that the $787 billion stimulus package will not create jobs if it is used to buy foreign-made goods. They know that running up trade deficits causes more job losses,” Tantillo continued.
“Just because some of the Chamber’s multinational members are put in a spot of difficulty doesn’t mean that the United States should reverse its ‘Buy American’ policy. What is good for one company or even a handful of companies is not necessarily what is good for the rest of the U.S. economy,” Tantillo said.
Tantillo also noted that the stimulus package was written in a manner consistent with U.S. international trade obligations and that Canada’s trade agreements also explicitly allow them to exclude U.S.-produced goods and services from Canadian government procurement.
Commenting on America’s broader economic troubles, Tantillo said, "America’s economic disaster was the logical outcome of an economic policy doomed to fail."
"America is facing its greatest economic crisis since the Great Depression because it thought it could substitute debt to mask a shortfall in U.S. production. America will not be able to borrow its way out of this crisis; it will need to manufacture its way out to keep its standard of living,” Tantillo continued.
“The quickest way to boost U.S. manufacturing is to start producing here at home more of the cars, trucks, computers, software, electronics, pharmaceuticals, furniture, construction materials, and textiles that Americans and their government will consume. That's what will create the millions of middle-class jobs needed to get America out of this mess," Tantillo stressed.
"To boost production, America must reinvest in manufacturing and revive weakened supply chains. Far more research and development must be kept onshore and emerging high-tech and green-energy industries must be nurtured and encouraged to remain in the United States," Tantillo elaborated.
"The U.S. government is spending trillions of taxpayer dollars to bail out the very Wall Street interests responsible for driving U.S. manufacturing offshore. Meanwhile, the U.S. Chamber of Commerce seemingly is oblivious to the fact that America has run a cumulative $5 trillion trade deficit in the last eight years that has destroyed millions of middle-class jobs,” Tantillo concluded.
To stop the job losses and the bailouts, fixing America’s broken trade and manufacturing policies must be the top priority for President Obama and the Congress. Smart actions to boost production and dramatically reduce the trade deficit will create millions of new jobs, restore healthy growth, and strengthen national security. This will require investing in America, creating incentives for corporations to keep jobs here and to bring others home, and reducing reliance on foreign sources for energy, critical inputs, capital, and even food. To accomplish this, America must:
Eliminate tax disadvantages that undermine the competitiveness of U.S. producers at home and abroad, or that discourage investment in America. Specifically, America must negate the $474 billion disadvantage to U.S. producers of goods and services caused by foreign border-adjusted taxes, such as value-added (VAT) and Canada’s Goods and Services (GST) taxes.
Quickly combat the illegal, mercantilist practice of prolonged currency misalignment, including passing legislation to make it actionable under U.S. trade law.
Aggressively enforce U.S. laws to halt foreign illegal trade activities such as dumping, subsidization, and intellectual property theft. In addition, U.S. policy must ensure that all goods sold here meet U.S. food and product safety standards.
Implement a comprehensive strategy to reduce U.S. dependence on imported energy.
Ensure that the “Buy American” provisions in the recently passed stimulus are vigorously enforced.
Promote American interests by requiring full reciprocity, fairness, and transparency in all U.S. trade agreements, including in such areas as labor and environmental standards.
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Murdock
I don't necessarily agree with the stimulus package but if the U.S. is going to have one it should require American products and labor. This is not causing any kind of a trade war. The author is definitely a republican who wants to stir trouble. I would like to see where the government is required to buy American made products when it is within a reasonable price. We are Americans and should look out for ourselves sometimes and not give everything away. The author is an idiot.
Archie
I guess you don't know
I guess you don't know anything whatsoever about economics. We've already lost jobs as a result of protectionist nonsense. Take a quick peek at the steel industry. Protectionism has never, EVER worked at any time in history. Pretty sure I know who the idiot is in this posting thread...
Protectionism has never, EVER
Protectionism has never, EVER worked. If you don't think we're involved in a trade war - think again. Canada has already slapped tariffs on US steel - why don't you take a look at the steel industry and job loss over the last few months. I'm pretty sure I know who the idiot is on this thread...