Lobbyists Paid Off by China vs. 30,000 U.S. Workers: Which Side Will Obama Choose?
As the International Trade Commission considers comments on its recommendation to impose tariffs on Chinese tire imports, President Obama stands at a crossroads in the fight to rebuild the American economy.
President Obama has made a commitment in the past to uphold previously signed trade agreements. China, however, is violating these agreements by flooding the market with a massive 300 percent increase in tire imports in an attempt to wipe out American tire manufacturers. In 2004, China sent 14 million tires to the U.S. valued at $453 million. By last year, that had increased to 46 million tires valued at $1.7 billion.
The Chinese are shipping cheaply-made tires in an effort that isn't just killing American manufacturing, but also killing people. So far, two people have died as a result of the low quality of some of these Chinese import tires. The U.S. Government has launched a massive recall of the tire in question, but so far the Chinese manufacturer has refused to cooperate fully with the recall.
So far over 8,000 people have lost their jobs, and over 20,000 more jobs are at risk if the Chinese are allowed to continue with this strategy of not obeying trade laws.
Next month Obama will be challenged to uphold his campaign pledge to enforce current trade laws when a decision on illegal Chinese tire imports came to his desk. Last month, a majority of the U.S. International Trade Commission (ITC) found that tariff relief was needed to urgently reduce tire imports because of market disruption. According to the United Steelworkers, between 2004 and the end of this year, more than 8,100 workers in the tire industry have lost or will lose their jobs and another 20,000 jobs are threatened.
Speaking last week, USW President Leo Gerard said that this will "prove to be a test of enforcement of trade laws that China agreed to." A ruling to enforce current U.S. trade laws would mark a clear break with Bush era economic policy. During the Bush Administration the United States International Trade Commission ruled four separate times that China had violated trade law and recommended measures to stop the flow. However, each time Bush refused to obey these recommendations.
If President Obama follows the commission recommendations, it would send a stern message to China that the Obama administration, unlike the Bush administration, intends to enforce U.S. trade law. He is expected to decide on September 17, one week before the G-20 summit in Pittsburgh. If Obama chooses to enforce tariffs on illegal Chinese competition, that would send a message throughout the world that U.S. intends to enforce trade law.
Unfortunately, corporate lobbyists paid for by the Chinese Chamber of Commerce, like former Bush official and Ohio U.S. Senate candidate Robert Portman, are running an aggressive misinformation campaign in attempt to thwart U.S. trade law. These groups have been claiming that limiting tire imports would cost Americans jobs and raise the costs of tires for consumers. However, the United States Commission on Trade found that the total benefits exceed the costs by $884 million.
Chinese importers, in conjunction with the Chinese Chamber of Commerce, have formed a lobbying front group ironically named American Coalition for Free Trade in Tires. The coalition is run by Jochum, Shore & Trossevin, a Washington D.C. lobby firm run by former Bush trade officials who are cashing in on their years of U.S. government service to advise foreign competitors. The law firm has used its ties to power to advise Chinese manufacturers on how to get around loopholes in the law. As a result, eight members of Congress wrote a letter this past June calling on the Government Accountability Office to investigate.
Congressman Michael Michaud of Maine said, "Many of these individuals appear to be repaying the investment that the American taxpayers made in them with their hard-earned tax dollars by using the knowledge, expertise and contacts they gained while on the federal payroll in ways that are adverse to the interests of our workers and our producers."
Speaking last week at a factory in Indiana, President Obama said that rebuilding American manufacturing was the key to build a vibrant economy. As President Obama has said previously many times we can't go back to an economy, where 45 percent of our profits come from the financial sector. As Dave Johnson pointed out last week we in his piece "Manufacture or Borrow (Until We Can't)":
When it comes down to it you can't have a healthy service sector unless you are manufacturing items to sell and trade because you can't pay for the restaurant bill or insurance or hotel room or lawyer or even the doctor if you don't make something to sell and trade. And mostly you can't keep buying the things made elsewhere. You can only borrow for so long.
President Obama has announced bold new initiatives to invest billions of dollars into new green energy initiatives. However, if we don't have to even enforce the current trade laws that we have, American manufacturing will be wiped out by low-wage Chinese manufacturing. As I highlighted previously, companies such as GE have already begun to move so-called green jobs to China already.
The fight over whether to enforce trade laws against illegal Chinese tire imports will set a precedent that the U.S. will enforce previous trade agreements. President Obama has a choice of whether he will side with American workers or corporate lobbyists paid off by China.
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To hear GOP'ers scream about socialism only for them to embrace communists is quite amusing.
Nothing else about it is funny... but that sure is.
Obama will go with whatever side pays him the most money, even if that means selling out American workers.
I want to thank Mike Elk for blogging about Jobs and Job loss when the Media in general ignores the story. The cable and Print media will cover job loss only as a footnote. After all the multinational corporations are happy to see the labor market swell with desperate job seekers.
your thanks is greatly and appreciated. and thank you for reading
Saw this story on CCTV, lots of file footage of massive, shiny and new tire plants in China, and I think I heard they are building new ones all the time. The slant on the story was predictable but then again, I didn’t see anything on it anywhere else.
When will this country accept the fact that new manufactoring can succeed in this country if the country would want it to, choose between starving or working to survive would change this countries out look. Why is it so easy to dismiss the idea that the USA cannot provide for itself and compete on a global scale to role over and not do anything about it is a cop out!
Answer: When one third of the price of anything made in the USA does not go to worker Health Insurance! And I am not advocating workers not having health care coverage.
IMHO, US manufacturing costs are not playing on a level playing field with Chinese manufacturing costs.
The lack of comparable environmental laws and/or enforcement along with a lack of comparable worker protection laws and/or enforcement.
I would suggest any trade agreement the US has with any country accounts for production cost differences due to these factors.
Interesting article on Chinese environmental protection laws:
http://www
Another interesting article, this one regarding Chinese labor laws:
http://www
The problem is not manufacturing cost. Successful businesses in China make buttons and back scratchers. Successful businesses in the US make precision analog chips. China builds ships on the cheap, we build enormously expensive deep offshore drilling platforms.
Now, environmental and worker protection in China is something we have to let the Chinese implement. We are not responsible for laws in other countries and we should not pretend that we have moral superiority. We do not. Our laws are very recent, historically speaking, they barely existed before the 1950s. And as incidents like Bhopal demonstrate, American companies will not care about either the environment or the lives of innocents, either, if profit is at risk.
Now, if we want to level cost on pollution in other countries, the only viable path is by leveraging carbon taxes. The world community is ready and willing to pay for carbon pollution. China happens to be OUR smelter and much of its carbon output is the consequence of our business with them. We can collect carbon taxes on imports from China and offer to convert some of those into US exports of energy efficient technologies, primarily power plants. If this is being offered in a fair way, the Chinese will be happy to take this offer. If, on the other hand, it is used merely as a threat, we will achieve absolutely nothing.
Thanks for the well thought out comment.
I do agree high precision manufacturing still occurs in the US, however, this is diminishing rapidly. For example, 71% of IBM’s workforce is foreign workers, up from 65% in 2006.
http://onl
I also agree we are not responsible for laws in other countries. My point is not that laws in China are unjust or just or better or worst than US laws. My point is the differences put US manufacturing at a cost disadvantage.
IMHO, to remedy this, either the US can change it's worker rights and environmental protection laws to the standards of China( for example) or it can tariff imports accordingly. I doubt the former is a realistic option in a democracy.
I think it is in the interest of the average American to have policies where US manufacturing costs competes with any trade partner. While I think one could argue why doesn't the US consumer just not buy Chinese goods, I think the flip side of that argument is the decline in US real wages over the last ten years makes it difficult for the consumer. I realize such tariffs will result in price increases, however, I think a robust manufacturing sector is essential to the long term US economic health
Trade laws have never been in favor of American working class in 30 years
Not as long as Obama is up for the highest bider.
That would have been me. I spent a monthly salary on the campaign. And so far I am getting my money's worth. Sorry that your investment in Sarah (and what's the name of the other dude.... senator...
Both parties are to blame
Obviously, the core issue here is much broader than "tires." You cannot operate, let alone sustain, a national economy of 307 million people by "borrowing from nowhere" over $1 million a minute 'round the clock and using it to "pay for" everything you need -- while you yourself produce nothing but, uhh, lots and lots and LOTS of nuclear bombs and war-toys.
Gen. Dwight D. Eisenhower saw it coming, and actually gave it the name "military industrial complex," but I don't think that he could have imagined that the industrial juggernaut that had just won a war on two fronts would promptly and completely emasculate itself ... which it promptly did.
We have all been "sold down the river" by people who have become utterly and completely blinded by "gold lust." And, ladies and gentlemen, if you're wondering if this "can destroy us," the answer is absolutely yes. Utterly and completely, and soon.
You want fries with that?
I prefer the onion rings, but otherwise I take what he is having.
:-)
Now that China is applying lethal economic force directly against the Western megaCorporations, it will be interesting to see the government torn between Geithner's love affair with China versus the Corporations that dominate our government.
Soon the government will be forced to choose it's master, the Corporations. I think they were planning n waiting until the conquest of the Midlle East oil was complete. This E ticket ride may be about to go off the tracks. Hold onto your A$$es and kiss your Hat goodbye.
Notce the tenor of this Forbes news article about Rio Tinto employees being arrested in China.
http://www
China Fires The Next Volley
China fired another round in its ongoing trade dispute with Australia when it formally arrested four Rio Tinto employees it had accused of bribery and spying.
The arrests came during contentious negotiations between China and the miner on iron ore prices.
Australia and China have had an increasingly tense relationship since June, when Rio Tinto enraged and surprised China by pulling out of a deal to tie up with Chinese company Chinalco. Chinalco had agreed to pay $19.5 billion to buy much of Rio's mining operations and convertible bonds.
Instead, Rio left Chinalco at the altar and embarked on a deal with archrival BHP Billiton
Nothing in that article suggests that the four employees are innocent. And since bribery is common in China and these employees were Chinese (which is a common strategy of companies to exploit the local business "culture"), one can't get the feeling that they might just have done what they are being accused off.
But I am sure you have proof otherwise.
:-)
Put the unemployed tire workers to INSPECTING THE IMPORTs and make the importers pay for the inspection
Nobody forces people to buy cheap tires. That they are doing it, anyway, tells us something. But I am afraid it's not that cheap Chinese tires are bad.
:-)
While at one level you are correct it is a choice. But many people need tires on their car (to go to work) and have only so much money to spend, since their own job no matter what it is, pays the least amount possible so they can maximize profits and pay the owners, CEO or share holders big dividends.
We have been in a race to the bottom for the last 30 or 40 years, looks like we are nearing the finish line.
"We have been in a race to the bottom for the last 30 or 40 years, looks like we are nearing the finish line."
I couldn't have said it better. Thanks.
the probvlem is choices
you either have cheepo (and dangerous) asian tires or mega expesnisve high end european ones
what is going going gone are the middle of the road US ones - that are buiklt under strict safety stds - this is precisely the industry chinese tire dumping is trying to put out of business
I believe the Firestone tires that caused numerous accidents were made in US facilities
Nobody is perfect. And I believe there were a lot more casualties there than the two the article cites... maybe this problem is home made and not just one of price?
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