A Trade and Economic Policy for
America
A Trade and Economic Policy for
America
Michael Stumo, CEOCoalition for a Prosperous
America
Michael Stumo, CEOCoalition for a Prosperous
America
CPA: Representing American Producers
CPA: Representing American Producers
Brian O’ShaughnessyRevere Copper Products
John HansenNFU
Joe LoganOhio Fmrs Union
Pam PotthoffWomen Involved in
Farm Economics
Bob BaughAFL-CIO
Rob DumontTooling, Manufacturing& Technologies Assn
About CPAAbout CPAA 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
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?What is economic growth?
GDP = C + I + G + NEGDP = C + I + G + NE
Consumption
Investment
Government Procurement
Net Exports:Total Exports minus
Total Imports
Biggest Most VolatileNet Imports/Trade Deficits
subtract from GDP
“Recession” = Contraction of GDP
National Trade StrategyNational Trade Strategy
Goals
Net exports
Net job creation (full employment)
Wealth creation
Grow full supply chain
Auto, computer, food, robotics, etc.
Goals
Net exports
Net job creation (full employment)
Wealth creation
Grow full supply chain
Auto, computer, food, robotics, etc.
Why trade agreements fail?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
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
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?
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”Obama: “Double Exports”Bush already doubled exports. Exports increases under Clinton. Our exports have grown almost every year, including to China.
Asymmetrical WarfareAsymmetrical Warfare
America: Free trade
Unilateral disarmament
“Faith based” trade
Successful Exporters: State Managed Capitalism
China, Japan, South Korea, Germany, etc.
America: Free trade
Unilateral disarmament
“Faith based” trade
Successful Exporters: State Managed Capitalism
China, Japan, South Korea, Germany, etc.
Currency Cheating: Tariff & Subsidy
Currency Cheating: Tariff & Subsidy
Border Adjustable Taxes/Value Added Taxes
Value Added Taxes are tariffs
Value Added Taxes are tariffs
$356 Billion trade distortion
How they use VATsHow 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
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
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
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 CredibilityKorea FTA: ITC Credibility
Projected $1B added deficit - China PNTR
Actual was $185B added deficit
Projected $1B added deficit - China PNTR
Actual was $185B added deficit
Korea FTA: ProblemsKorea FTA: ProblemsState-managed economy
Currency manipulator: No restriction.
VAT of 10%. No restriction on increases.
Rule of origin: 35%
China trans-shipment. No. Korea trans-shipment
Beef rule of origin: Last place of substantial transformation
State-managed economy
Currency manipulator: No restriction.
VAT of 10%. No restriction on increases.
Rule of origin: 35%
China trans-shipment. No. Korea trans-shipment
Beef rule of origin: Last place of substantial transformation
Sector Specific ArgumentsSector 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.
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 StrategyNational 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
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
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