World Trade

World Trade Organization

Our current approach to international trade has been a failure. The World Trade Organization (WTO) is a deeply flawed institution. America has more complaints filed against it in the WTO and loses a higher percentage of those cases than any other country in the world. Cases there are decided by a secret court with no right to appeal. When a case is decided against us, we either have to change our laws or face fines. All cases are decided by their impact on trade with no consideration of our environmental, worker safety, or consumer protection laws. The US only has the same voting power in the WTO as Antigua, a Caribbean nation of 68,000 people even though America represents 22% of the world economy. The WTO needs to be reformed.

But, at the same time we have to begin taking action and use the tools provided us under WTO rules and file WTO complaints against nations that violate trade laws. The rest of the world is using the WTO to improve their ability to compete; we have to do the same. If the WTO proves not to be a satisfactory forum for our complaints, and reform of the WTO doesn’t happen we need to pull out of the WTO while promising to honor current trade commitments. We have to take the steps needed to compete as a nation.

American-based Multinationals

Yet when President Obama used WTO authority to place tariffs on Chinese tires dumped in America, it was met with howls of protest from American-based multi-national firms and free trading republicans. Why would these American based multi-national firms not support fair trade for America? Because their interests aren’t necessarily aligned with America’s. In the 1980’s corporations dropped community and worker stakeholders from their mission statements. After that American corporations had one priority---the shareholders of stock. That means the corporate executives have one concern: boost stock prices with short-term profits. They aren’t concerned with workers or the community. What better way to boost short-term profits than to move production to China and pay workers $2 a day with no benefits or protections? Another change since the 1980’s aggravating the situation is corporate executives now hold larger amounts of their corporations stock. So they have a personal stake in short-term profits.

Empty Factories

You can see all the empty factories in our district and realize something is wrong. No other country approaches international trade the way we do. The rest of the world sees trade as an economic battle, while we see it as principled, free-market competition. Their corporations consider themselves a vital part of their nations fabric, ours don’t. America needs to get tough in the WTO and develop a formal industrial policy. We currently have no policy as Republicans would rather demonize government and continue down the free market, free trade path we’re on.

Competing as a Nation

Is the situation hopeless? No. But we need leaders that recognize there is a problem and offer solutions. Below are just a few possible solutions. Bottom line, we have to develop an industrial policy and attempt to level the playing field by competing as a nation the way the rest of the world competes. We need to realign the American-based multinationals interests back to America. We can do this by requiring American based corporations to take into account all stakeholders in their charter. We could adopt an 8% Value Added Tax (VAT) and drop the loophole ridden corporate income tax so these corporations can’t benefit from moving overseas. The rest of the world uses a VAT tax but rebates it for exports. So American corporations making products in Asia pay no taxes on those products and then they defer the income tax liability owed the United States. We could stop using political appointees to negotiate our trade deals and use professional, government negotiators. These appointees often go to work for companies based in nations they’re negotiating with after leaving the federal government. For instance, a US trade negotiator that deals with US-Japanese trade goes to work for Toyota after leaving government. Again, these are but a few suggestions.

Facts

More than 96% of our textiles are imported, and over 80% of our furniture is imported. We think we are the leader in high technology, but yet we are net technology importers. All laptops sold in this country for instance are imported. We import more food now, than we export. We the home of Coke and Pepsi import more soft drinks than we export. We import 80% of our seafood. A Boeing 787 is two-thirds imported parts. The number one seller under “Cash for Clunkers” the Ford Focus is 50% imported parts. The list is endless.

Corporate Quotes

Cisco CEO John Chambers in 2006 "What we are trying to do is outline a strategy of becoming a Chinese company" Ford CEO Alex Trotman in 1995 “Ford isn’t even an American company, strictly speaking. We’re global” Colgate Palmolive CFO Cyrill Stewart "there is no mindset here that puts this country (the US) first. Our goals could be at odds with those of the nation".

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