The following article by Mike Hall appeared on the “afl-cio now” blog here.
The U.S. government, American businesses and consumers all can play a role in combating China’s unfair trade policies that are weakening the nation’s economy, stealing jobs and giving China unparalleled economic advantages.
But the first steps must be taken by the government to declare China a currency manipulator—either through legislation or executive action—and then follow through with sanctions if China fails to respond, said a panel of trade and economic experts this morning at a special China trade policy forum in Washington, D.C.
The forum, sponsored by the Coalition for a Prosperous America (CPA), used the recent book Death by China: Confronting the Dragon—A Global Call to Action as the jumping off point for the discussion.
Authors Peter Navarro, professor of economics and public policy at the University of California-Irvine, and Greg Autry, an entrepreneur and educator, explore China’s trade policies, near nonexistent workers’ rights laws, environmental standards, product safety rules and its military and espionage actions. Death by China shows how those policies threaten the U.S. economy and jobs.
Immediate action must be taken on currency manipulation, said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities (CBPP) and former chief economist to Vice President Joe Biden.
Part one is currency manipulation. While it’s not the whole story it’s a big part of it….I could show you a graph that is a textbook example of currency manipulation and it would look exactly like China’s currency manipulation today.
The Chinese government keeps its currency low, which artificially reduces the prices of its exports, creates a huge trade deficit for the United States and costs millions of American jobs. Last year, the U.S. House passed legislation (388-79) that would give the government broader powers to enforce currency manipulation rules and impose sanctions. But the Senate has failed to act because of pressure from multinational corporations, said some panelists.
The Obama administration could act on its own and declare China a currency manipulator. “We need our own government to do its job,” said AFL-CIO Deputy Chief of Staff Thea Lee. Whatever action is taken, she said, “must include a credible threat of sanctions.”
Lee also noted that while most U.S. companies that do business in China have “corporate codes of conduct,” workers there suffer serious abuses, work in dangerous conditions for low wages and have no rights to join real unions. Not only do China’s practices lower even further production costs but they violate most so-called codes of conduct because in a “wink-wink” arrangement, China factory owners:
hire monitors to inspect their faculties to see if corporate code of conduct is being followed. They call up and say “We’ll be here next month, make sure everything’s cleaned up, that you’re not dumping poison in the river. We’ll see you the morning of March 22.” The market economy cannot function unless we have business rules of conduct.
Rob Dumont, a CPA director and president of the Tooling, Manufacturing and Technologies Association, said that while on paper products from China must meet U.S. safety, environmental and other standards, they often don’t, giving firms in China another big economic advantage.
He used the experience of an Alabama steelmaker as an example. The manufacturer was losing orders to much cheaper steel from China that was certified as meeting U.S. standards. But they sent a fact-finding team to China and discovered that not only did the plant have no environmental controls,
the lab that was supposed to certify the steel grade didn’t even have the equipment to properly conduct the tests. Back in the U.S., we sent a sample to a U.S. lab that confirmed the suspicion that the steel was inferior in quality and strength. This steel goes into critical applications like nuclear plants, and bridges and buildings. This happens day in and day out and one day we’ll pay the price with a catastrophic failure.
Along with enforcing current trade laws and developing new trade standards, Novarro and Autry offer several ways for consumers and business to combat the flood of cheap made in China products that steal American jobs. In Death by China, they write: “Cheap isn’t always the cheapest—Change our attitude.”
Besides the price you pay in the tag, you also have to factor in the risks of injury or death, the increased chances that you or someone you know will lose their job because the unfair trade practices involved in delivering that Chinese product to the market and the various regulatory and taxpayer costs that Chinese product failure entails.
Further, write Novarro and Autry, businesses must recognize the real corporate risk of offshoring in China.
Obvious risks include the loss of the company’s intellectual property, either through outright theft or via China’s policy of forced technology transfers and forced relocation of research and development to Chinese soil….Other risks range from endemic corruption to severe pollution, to the need to scale China’s Great Wall of Protectionism.
American executives offshoring to China must remove their rose-colored glasses and do a far more comprehensive risk assessment….Such a sober look at the real risks associated with offshoring to China should in turn power a new “reshoring” that brings jobs back to America.”