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The National Association of Manufacturers (NAM) is one of the
biggest defenders of current trade policy. The group is led by
former Michigan governor John Engler. NAM fights efforts to rein
in currency manipulation, ignores foreign taxes on goods we sell to them, and disputes every sensible proposal to change
course.
The "course", of course, is an $800 billion trade deficit. NAM has no
word on outsourcing, nothing on losing our innovation, and zero on
the fact we have deficits in virtually every trade category.
Domestic manufacturers, who are members of NAM, have tried to change
the policy of the organization (if they are still in business). But the Caterpillars, Cargills
and other multinationals feeding off the China outsourcing craze block
the domestic guys at every turn.
The
national interest is irrelevant to them. The U.S. can go down the
tubes economically, but Cargill makes money. A whole bunch of
it. (Read more).
In
a four page ad in today's Wall Street Journal - yes, a FOUR page ad -
NAM has the temerity to call the regional agreements "fair trade
agreements." No definition is supplied. Their messaging folks
have decided to muddy up the "fair trade" label. Expect to see
more mud.
A recent paper issued by NAM (PDF file, page 4) promotes the Peru Free Trade Agreement:
Once the agreement is in effect, both Peruvian and U.S. producers
will face zero duties in each other’s markets. That’s what the NAM
calls “leveling the playing field.”
As my son says... "not."
Peru will maintain a 19% value added tax (VAT).
U.S. goods will continue to be assessed the 19% VAT, which is a tariff
in all but name. The Peruvian government is free to rebate the
VAT when its companies ship to the United States - which is an export
subsidy in all but name.
The
Peru Free Trade Agreement is about Caterpillar selling mining equipment
to Peru. What are U.S. farmers going to sell to Peru? You
know... Peru. The country with a per capita income of $1,820.
Very, very little. Peruvians are not going to buy our
steaks. One U.S. steer today sells for $1,200 live, before
processing in a packing plant. And before packing in a
refrigerated container to transport from a midwestern plant, to the
coast, to a ship, to a Peruvian port, and then to a Peruvian store or
restaurant.
Oh... and that $1,200 pound USA born and raised steer will have a
tax assessed at the Peruvian port of $228 (19% x $1,200). (Yes, I know
I ignored the processing and shipping costs plus profit margin).
This is not rocket science. This is 7th grade math.
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