Last week, I participated in the “Fly-in” for the Coalition for a Prosperous America (CPA) in Washington, D. C. I was part of several teams that held 105 meetings with legislative assistants for Congressional Representatives and Senators.
We presented informational flyers on the following topics that would help fix America’s economy:
Trade Deficits – In 2012, the U. S. trade deficit was $735 billion, and our trade deficit with China hit an all time high of over $300 billion. This means that we currently consume more than we produce, and we need to reverse this dynamic and produce more of what we consume. The goal for successful trade is balanced trade, not more trade. We aren’t going to solve this problem with just doubling exports while we continue to increase our imports at a faster rate. Trade deficits are our biggest jobs, growth and fiscal problem. Congress should establish a national goal for balancing trade by the year 2020. Persistent trade deficits are not “free trade, but are “dumb trade.”
Foreign Currency Cheating – currency manipulation is trade cheating because it is both an illegal tariff and a subsidy. China, South Korea, Japan, Taiwan, and Singapore have manipulated their currency values. However, China’s currency is estimated to be at least 35% undervalued so our exports to China cost 35% more than they should to the Chinese. In the past two Congresses, one bill addressing the problem passed the House, and one bill passed the Senate, but we need a similar bill to pass both Houses and be signed into law. Senator Levin is introducing a new bill this week.
The ENFORCE Act – we need to stop the evasion of countervailing and antidumping duty orders by such means as “transshipment” where goods covered by an Order are shipped to a third country before import to the U.S., with falsified U.S. customs documentation claiming the product to be origin of that third country. Other goods covered by an Order are shipped directly with fraudulent paperwork claiming that they were produced in a country that is not covered by the Order or have incorrect import classification codes or inaccurate descriptions that falsely identify the imports as goods that are not subject to an Order.
The ENFORCE Act would establish a formal process and reasonable deadlines for action when the Customs and Border Protection is presented with an allegation of evasion, require CBP to report on its enforcement activities, and order the retroactive collection of duties on entries that illegally evaded duties.
Country of Origin Labeling (COOL) – On March 8, 2013, te USDA announced it is proposing a new COOL rule that will comply with the WTO request to provide more information to consumers and/or reduce the burden on imported product. The proposed rule would require labels for muscle cuts of meat to identify the country where each of the three production steps – birthing, raising, and slaughtering – occurred.
Foreign Border Taxes (aka Value Added Tax – VAT) Over 150 countries have at VAT, but the U. S. is one of the few countries that doesn’t. VATs are “border adjustable” and range from 13% to 24% (average is 17%). This means that our exports are taxed with a VAT when our goods cross that country’s border. Thus, when we negotiate a trade agreement that lowers or eliminates tariffs, a VAT can be added by our trading partners that is a “tariff by another name.” Trade agreements do not address VATs when tariffs are lowered, and the WTO allows VATs. Other countries use the VATs to reduce their corporate taxes to help their manufacturers be more competitive in the global marketplace. VATs are rebated to manufacturers in foreign countries for products that are exported, and the result is a $500 billion hole in U. S. Trade. We need reject trade agreements that do not neutralize the VAT tariff and subsidy and consider implementing a U. S. consumption tax system to erase this foreign advantage and reduce domestic taxes on income and jobs.
Trans-Pacific Partnership – We need “Smart Trade” not “Dumb Trade” so a summary of CPA’s “Principles for a 21st Century Trade Agreement” was presented that would fix past mistakes in trade agreements. CPA recommends that new trade agreements must include the following principles to benefit America:
- Balanced Trade
- National Trade, Economic and Security Strategy
- Reciprocity
- Address State Owned Commercial Enterprises
- Currency Manipulation
- Rules of Origin
- Enforcement
- Border Adjustable Taxes
- Perishable and Cyclical Products
- Food and Product Safety and Quality
- Domestic Procurement
- Temporary vs. Permanent via renewal or sunset clauses
In the past, Congress has used Trade Promotion Authority to give the executive Branch directives on which countries to negotiate with and what terms to seek in the negotiations. “Fast Track” provisions that prevent Congress from amending any agreement and requiring an accelerated timeline for the vote have also been included. However, the Executive Branch ignored most of the provisions of the 2002 TPA and Congress had no role in the negotiations. Thus, CPA recommends that “Fast Track” provisions not be included because Congress should retain its trade power.
I also took the opportunity to provide copies of my blog article on the dangers to our national sovereignty that the current draft of the Trans-Pacific Partnership Agreement includes. I enjoyed meeting other businessmen and women from other parts of the country that have similar concerns about the direction of our country and are working to fix our country’s economy.
It was a pleasure to take advantage of my rights as a citizen to express my opinions and those of an organization of which I am a member to our elected representatives in government. If more American businessmen and women would take the time to do the same, we would be more successful in our efforts to fix our trade and national deficit problems and create jobs for more Americans.
Tags: currency manipulation, national debt, Trade deficits, VATs