Transcript 110314 NFU Slideshow.. - Free Trade Doesn`t Work

A Trade and Economic
Policy for America
Michael Stumo, CEO
Coalition for a Prosperous America
CPA: Representing American Producers
Brian O’Shaughnessy
Revere Copper Products
Pam Potthoff
Women Involved in
Farm Economics
Joe Logan
Ohio Fmrs Union
Bob Baugh
AFL-CIO
John Hansen
NFU
Rob Dumont
Tooling, Manufacturing
& Technologies Assn
About CPA
A national non-profit group representing the
interests of 2.7 million households through
our farm, ranch, manufacturing and worker
members
Working to balance trade - eliminate the
trade deficit - as the biggest source of jobs
and growth for America
Educating voters on trade issues and the
voting records of elected officials on these
issues
What is economic growth?
“Recession” = Contraction of GDP
Biggest
Most Volatile
Net Imports/Trade Deficits
subtract from GDP
GDP = C + I + G + NE
Investment
Consumption
Government
Procurement
Net Exports:
Total Exports minus
Total Imports
National Trade Strategy
Goals
Net exports
Net job creation (full employment)
Wealth creation
Grow full supply chain
Auto, computer, food, robotics, etc.
Why trade agreements fail?
Tariff-based focus results in unilateral U.S.
disarmament. Trade rivals replace tariff cuts.
Currency manipulation
Value added taxes: 18% avg VAT tariff/subsidy
State-owned, state-controlled entities
Indigenous innovation
Many other state-capitalism tactics
Net Imports Harm U.S.
Economy
Job loss: 10,000 jobs per $1B trade deficit
Wealth loss: Offshoring transfers profits
elsewhere
Innovation loss: New innovation offshored
Future loss: What will our kids do?
Obama: “Double Exports”
Bush already
doubled
exports.
Exports
increases
under Clinton.
Our exports
have grown
almost every
year, including
to China.
Asymmetrical Warfare
America: Free trade
Unilateral disarmament
“Faith based” trade
Successful Exporters: State Managed
Capitalism
China, Japan, South Korea, Germany,
etc.
Currency Cheating:
Tariff & Subsidy
Border Adjustable Taxes/Value Added Taxes
Value Added Taxes are tariffs
$356 Billion trade distortion
How they use VATs
Tariff and a subsidy
Offset other costs like health care
Offset tariff reduction
Canada/Mexico: 15% VAT after NAFTA
Central America: 12% VAT after CAFTA
Korea: 10% VAT now. Later increase?
China: 19% VAT
Korea FTA - ITC Net Numbers
International Trade Commission
Net trade with world: No change
Net trade with Korea: $3.5B improve (current is $13B
deficit)
Net job creation: None
THUS, no government argument for net benefit.
Economic Policy Institute (EPI)
Net trade with Korea: Negative $13.5
Net jobs: Negative 159,000
Korea FTA: ITC Credibility
Projected $1B added deficit - China PNTR
Actual was $185B added deficit
Korea FTA: Problems
State-managed economy
Currency manipulator: No restriction.
VAT of 10%. No restriction on increases.
Rule of origin: 35%
China trans-shipment. No. Korea transshipment
Beef rule of origin: Last place of substantial
transformation
Sector Specific Arguments
Tactical opposition on sector specific net
export grounds is a failed strategy.
Cannot support Korea agreement, then
oppose Trans Pacific Partnership or
Colombia
National Trade Strategy based upon
American economic interests is a successful
strategy.
National Trade Strategy
Neutralize state capitalism
Maximize domestic market share
Net exports... or at least balanced trade
Net job creation - full employment
Capture whole supply chain
Capture innovation: Invent it here, make it
here