What is “trade cheating”?: An examination of China and illegal dumping.
by Ohio Freedom
on December 14, 2016[ Crista Huff| December 13, 2016 |Goodfellow]
Promptly upon the December 11, 2016 expiration of certain World Trade Organization (WTO) Accession Protocols, China requested that the U.S. participate in WTO consultations. China is protesting being labeled a “non-market economy” (NME) by the U.S. The U.S. Commerce Department countered that expiration of the Accession Protocol does not automatically grant China market-economy status. If the consultations do not yield satisfactory results within 60 days, China can then formally proceed with a WTO dispute resolution process.
An NME usually operates with substantial government control of industry, and price-fixing. A government can afford to sell products at a loss, because it has vast financial resources to draw from. In a free market economy, a company is required to sink or swim on its own, without infusions of capital from the government.
When companies within free market economies compete against companies within NME’s that sell their products at below-market prices (a.k.a. illegal dumping), they are put at a serious disadvantage; not unlike when Olympic athletes are forced to compete against athletes who ingest illegal performance-enhancing drugs. In both cases, the playing field is not fair, and the legal practitioner has the odds stacked against them.
When Americans hear vague stories about “trade cheating” harming the economy, illegal dumping is just one of many such practices that directly result in American job loss and lower GDP.
When an American company loses market share due to dumping, there is no easy work-around without WTO intervention; no acceptable way to solve the problem that leads to continued profitable product sales. If the American company lowers its product prices to the level of the Chinese product prices, then the American company loses money. There is no benefit in selling products that deliver a net loss for a company. If the American company therefore stops selling the money-losing product, or continues to sell the product at a loss, there is less revenue and less profit at the company. When a company’s budget is cut, it therefore has to cut expenses, which invariably leads to worker layoffs, because salaries are a big expense. In more extreme situations, pricing on the American company’s entire product line can be undercut by foreign competition, driving the American company into bankruptcy. This situation is playing out right now within the American steel industry, where production fell 27% in 2015.
China is currently being investigated for its dumping practices; selling products in the U.S. at prices below fair market value. During the dispute resolution process, it makes a big difference if the defendant country is labeled a market economy or a non-market economy. NME’s are more likely to be involved in unfair trade practices, and therefore are treated less favorably during dispute resolution than are market economies. Specifically, the calculations used to determine fair pricing are more liberally applied to the benefit of the market-economy country than to the NME country. China is therefore protesting its NME label, with the goal of being labeled a market economy, and thereafter receiving lesser penalties over its dumping practices.
This week marks the 15th anniversary of China’s membership in the WTO.
August 23, 2016, 06:59 am
Former USTR official shows how trade negotiators are out of touch
By Michael Stumo
Former Deputy US Trade Representative Wendy Cutler recently published a Forbes commentary criticizing the national backlash against trade agreements and supporting the Trans-Pacific Partnership (TPP) trade and global governance deal. The article troublingly displays how the Office of the US Trade Representative (USTR) has failed to adjust trade strategy to correct for past mistakes. Snarky straw man arguments are crafted and knocked down to give the impression of rebutting them.
Cutler first joined the USTR in 1988 when our trade balance was improving due to President Reagan forcing Japan and Germany to revalue their currency. Since 1988, the trade deficit has deepened to achieve world record levels of size and persistence. This happened on Cutler’s watch but she has never expressed concern or remorse.
Trade deficits destroy jobs, on net, and slow the economy. Trade surpluses create jobs, on net, and grow the economy. China, South Korea, and Germany know this. Their net export oriented growth strategy - funded by consumers in the US and elsewhere - is a primary fuel for their rise.Cutler was the Chief U.S. Negotiator for the disastrous U.S.-Korea (KORUS) Free Trade Agreement which President Obama and Republican leadership pushed through Congress in 2011. Instead of creating jobs and growth, the South Korea deal was a debacle for the American economy causing a doubling of our prior US-Korea trade deficit in just four years, from approximately $14 billion to $28 billion annually. She has never admitted she messed up.
Instead, Cutler is doubling down to support the unpopular - and probably dead - Trans-Pacific Partnership agreement.
“[T]he TPP will boost economic growth and support high-paying U.S. jobs.”
We not only heard that same argument in favor of the US-Korea trade deal, but also in favor of Congress approving legislation to allow China to join the World Trade Organization (WTO) in 2000. The US-China trade deficit exploded by 390% annually during that time, but USTR and Cutler have never said “sorry”.
The article fails to acknowledge that government reports have concluded that the TPP will result in an increased trade deficit, statistically zero growth, and virtually no net job creation over the next fifteen years. It also fails to address the reason: trade rival countries use new mercantilistic tactics to nullify the impact of tariff cuts by manipulating currency, subsidizing state-influenced companies and increasing border taxes.
Instead, Cutler disingenuously characterizes smart trade proponents arguments as holding the view that “ if we scrap our existing trade deals and click our heels together, manufacturing jobs will return, the middle class will grow, and income inequality will disappear.”
The phrases “magically bring US jobs back” in the title and “click our heels together” show the sneering disgust underneath. Credibility is not achieved.
The USTR’s prime objective has been more trade agreements. That has been the metric. Net trade performance has not been the metric. Quantity of trade deals is king, quality does not matter. The facts and performance of past deals are irrelevant.
The playbook is clear, but economically unwise. Concede what you need to concede, but get the newest trade deal. Then mischaracterize the resulting 5,500 page mishmash as “export opportunities”, “job creation”, and “American leadership”. Label any opponent as a “protectionist”.
American voters used to buy the globalist view of the world and thought that America was leading. But now we feel like suckers. The jobs did not materialize. Transnational corporations get more power than ever and more treats in the TPP goody-bag.
The US needs a national goal to balance trade, including a medium term goal of achieving trade surpluses to start balancing that deficits of the past. Changing the focus of national policy from “more trade deals” to “balanced trade” will force the executive branch to start addressing the biggest ticket foreign trade cheating tactics that cause otherwise competitive US companies and workers to be starved out of the market.
Michael Stumo is CEO of Coalition for a Prosperous America.
Ridiculing the White Working Class Voter, and Other Trade News from
Crista Huff — November 30, 2016
Posted by Crista Huff on Nov 30, 2016
I’ve been shocked to see liberals on Twitter aggressively ridiculing the “white working class voter”. Is this about the Twitter libs being bigoted against white people, or about them expressing class superiority, or about them hating Republicans and/or people who voted for President-elect Trump? Were the libs previously embracing white working class voters because they needed their votes, and now they’re revealing their true colors? No matter how you slice and dice it, it’s extremely bigoted behavior. Would these people go into a supermarket and ridicule the cashier? Would they stop by a roadside work area and ridicule the guy who’s holding the “STOP” sign? Would they drive up to a toll booth and ridicule the tolltaker? How about warehouse managers and assembly line workers and janitors?What takes place in the mind of an American when they feel emboldened to express public disdain for vast segments of the population? Why is there no “gut check” telling them that such bigotry is wrong, and that vocalizing bigotry simply doubles down on their shameful impulses?Are we, as a society, just a couple years away from more overt and individualized persecution?
A SURGE IN CORPORATE EMPLOYMENT PLANS WITHIN THE U.S.President-elect Trump will travel to Indiana on December 1 for Carrier’sannouncement that it will not move its Indiana operations to Mexico. Carrier is a division of United Technologies. (Bloomberg, November 29, 2016)After a discussion with President-elect Trump, Ford Motor Companyannounced that it will not move its Lincoln automobile manufacturing plant from Kentucky to Mexico. (Breitbart, November 18, 2016)Taiwan-based Quanta Computer has announced that it expects its U.S.-based manufacturing business to expand under a Trump presidency. Quanta makes data center servers, in Tennessee and California, for big-name tech companies. (Nikkei Asian Review, November 29, 2016)Foxconn Technology Group, an assembler of iPhones for Apple Inc., is considering shifting some production from Taiwan to the U.S., after a June request to do so by Apple. (Nikkei Asian Review, November 18, 2016) “He tweets every day. We don’t know what’s going to happen, but things are going to happen and traders like that.”— Chew Sutat, a senior executive at Singapore Exchange Ltd., re: President-elect Trump,(Bloomberg, November 29, 2016)
COMMERCE SECRETARY CANDIDATE
President-elect Trump has chosen Wilbur Ross as his candidate for Commerce Secretary. Ross has a background as a banker, and as a private investor who restructures failing companies. In a November 30 CNBC interview, Ross discussed the need to negotiate better trade deals for the U.S. in order to increase our exports. “There’s sensible trade. And there’s dumb trade. We’ve been doing a lot of dumb trade, and that’s the part that’s going to get fixed.”
KORUS South Korea’s Minister of Trade, Industry and Energy Joo Hyung-hwansaid that South Korea “is willing to be more ‘flexible and complementary’ by further hearing out the U.S.’ suggestions” on the U.S.-Korea Free Trade Agreement (KORUS). (The Korea Times, November 29, 2016) NAFTA“Officials from both Mexico and Canada have said they are open to discussing renegotiating the agreement with the Trump administration.” — Inside U.S. Trade, November 29, 2016“Mexico’s new ambassador to the U.S. says the country is prepared to ‘modernize’ the North American Free Trade Agreement and wants to restart a guest-worker system that could address concerns about illegal immigration.” -- Arizona Daily Star/Tucson.com, November 29, 2016
TPP The Japanese Diet (its governing body) has extended its legislative session by two weeks, through December 14, in order to address the Trans-Pacific Partnership (TPP) trade agreement and pension reform. The ruling party wants to pass the TPP. Opponents have a variety of economic concerns, and also express the seeming-fruitlessness of ratifying the TPP, from which the U.S. apparently plans to withdraw in January 2017. (Nikkei Asian Review, November 28, 2016) Senate Finance Committee Chairman Orrin Hatch (R-UT) told reporters, “I supported NAFTA. I don’t think there’s any of these particular national or international agreements that are perfect, and we’ll have to see what [Trump] says. … we need to reassess our whole free trade area … if you can’t do full TPP let’s at least enter into an agreement with Japan.” --Inside U.S. Trade, November 29, 2016
TTIP Jeppe Kofod, a Danish Member of the European Parliament “said that low growth and investment in Europe underline the need for the U.S. and EU to continue to deepen their economic relations. ‘Europe has too low growth, too low rate of investment in the economy and of course too high unemployment.’ ” -- Inside U.S. Trade, November 29, 2016Does the EU sound like it’s planning to seek balanced trade with the U.S.? Or does TTIP portend trade deficits with new partner countries?
WTORoberto Azevedo, Director-General of the World Trade Organization(WTO) gave a speech on November 28, 2016, making the following comments:“[R]ecent political developments will also have an effect on the trading landscape — from the Brexit referendum in the UK to elections in many major economies … all of this is taking place amid a rise in anti-globalisation discourse in many countries and communities. [W]e must ensure that the gains of trade are better shared across society.” * * * * *
Crista Huff is a stock market expert and a conservative political activist. She works with End Global Governance and economic issues groups to defeat the Trans-Pacific Partnership trade agreement. She is also Chief Analyst at Cabot Undervalued Stocks Advisor. Send questions and comments to firstname.lastname@example.org.
IT'S OFFICIAL: OBAMA TO SEND TPP TO CONGRESS
Jeff Sessions: 'He arrogantly thinks he knows best'
Published: 2 hours ago Aug 2016
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NEW YORK – The White House has put Congress on official notice that it will be sending lawmakers a bill to implement President Barack Obama’s Trans-Pacific Partnership agreement later this year.
The White House submitted what’s known as a Statement of Administrative Action giving Congress a 30-day notification that the administration plans to present legislation implementing the TPP.
Obama has previously said that he intends to push the TPP in the lame-duck session of Congress after the election.
Congressional leaders have said they would not consider the so-called “free trade” deal before the election because it is extremely unpopular with voters.
Donald Trump and Hillary Clinton have spoken out against the TPP, though Clinton helped negotiate it and once called it the “gold standard.”
The administration’s latest move makes it official it will push the controversial agreement in the lame duck.
Senator Jeff Sessions, a vocal opponent of the TPP and top adviser to Donald Trump blasted Obama for disregarding the will of the American people.
“Americans know these agreements have allowed trade practices that unfairly close manufacturing plants, costing millions of high paying jobs,” Sessions said.
“President Obama knows that the only chance he has of passing the TPP is during this short window [of the lame duck]. His determination flies in the face of the clear will of the American people, as demonstrated in the primaries,” he added.
Sessions said the lame-duck session is tailored-made for special interests to sneak unpopular legislation through.
“Our nation is about to see once again how powerful forces work overtime to advance a globalist agenda that the people oppose,” the Republican senator from Alabama said.
The Statement of Administrative Action that the White House submitted is required under trade promotion authority legislation Congress passed last year.
The White House submitted its notice on Friday, a day the administration typically puts out news it hopes will be ignored. It came on a day the media was preoccupied with an economic address Hillary Clinton delivered on Thursday.
The notice confirms that Obama will push the TPP, the biggest agreement of its kind in U.S. history, before the end of the year. Obama sees it as a way to cement his agenda in place after he leaves the White House, and to fulfill his stated ambition to fundamentally transform America.
The Trans-Pacific Partnership is a global regulatory pact that involves 12 countries on four continents. Obama says it will “write the rules for the global economy.
While the TPP is being presented as a trade agreement, it is far more comprehensive and undermines U.S. national sovereignty.
“The 5,554-page accord, disguised as a simple trade agreement, commits the American people to an international commission with the power to act around Congress. It allows 12 nations, some with less than 1 percent of the GDP of the United States, an equal vote in the TPP Commission. Actions by this commission separate the American people from the policy decisions that affect their lives. The TPP Commission is a direct threat to representative democracy and accountability,” said Sen. Sessions.
The TPP sets up a TransPacific Partnership Commission that would have sweeping regulatory powers over immigration, food, energy, medicine, Internet, intellectual property and businesses within our borders as well as across borders.
Under the terms of the agreement, Congress would have no role in creating or approving the rules this commission writes.
“President Obama does not care what the good people of this nation want. He arrogantly thinks he knows best. If he could pass it with his ‘pen and phone,’ he surely would,” said Sessions.
While Hillary Clinton claims she will oppose the TPP when she is president, her campaign says she will not mount any opposition to it when it comes up in a lame-duck session later this year.
Her campaign did not comment on the latest move by the White House to jam the agreement through Congress before Obama leaves office.
Donald Trump has made opposition to TPP a centerpiece of his campaign and has said he will withdraw from the agreement on day one of his presidency should it be approved.
Read more at
The Trans-Pacific Partnership, explainedEdited by Timothy B. Lee
The Trans-Pacific Partnership is a pending trade agreement among countries bordering the Pacific Ocean, including the United States, Japan, Vietnam, Australia, and Chile.