U.S. Manufacturing Needs to Be Rebuilt - Ralph Gomory

Ralph Gomory explains comparative advantage once again and also calls cash on the latest nonsense in trade policy suggestions from the Financial Times claiming Japan should abandon manufacturing and is the cause of Japan's financial malaise.

Ignored in all these discussions is the obvious fact that when you don't make for yourself the things you need, you will have to trade for them. If you have to import cars and all sorts of manufactured goods, you will be importing on a large scale; to trade for them you will need to create additional goods or services that you can export on an equally large scale.

Some Action on China - US Launches WTO Complaint

Shocks of all shocks, the USTR is filing a complaint, along with the EU, against China for trying to hang onto the raw materials which make steel in order to boost their own production.

We are going to the WTO today to enforce our rights, so we can provide American manufacturers with a fair competitive environment and put more American workers back on the job," Ambassador Kirk said. "China is a leading global producer and exporter of the raw materials in question, and access to these materials is critical for U.S. industrial manufacturers. The United States is very concerned that China appears to be restricting the exports of these materials for the benefit of their domestic industries, despite strong WTO rules designed to discipline export restraints.

Obama "Fast Tracks" Offshore Outsourcing

Remember all of that rhetoric on the campaign trail about outsourcing and trade agreements?

Guess what the Obama administration is doing? Fast Tracking Trade with the most common landing place for your job, India.

The United States has announced a new programme to fast-track high-technology trade with India from which General Electric's India division will be the first Indian company to benefit.

"This is an important step in enabling a more rapid and efficient flow of sensitive technology between India and the United States," US Secretary of Commerce Gary Locke announced at the US-India Business Council's 34th Anniversary "Synergies Summit" Wednesday.

"This is an important step in enabling a more rapid and efficient flow of sensitive technology between India and the United States," Locke said.

Trade Deficit Increases for April 2009

The Bureau of Economic Analysis released the April 2009 Foreign Trade statistics. Here is the BEA Foreign Trade Press Release and the full report.

Census, BEA US Trade graph June, 2009

The Nation's international deficit in goods and services increased to $29.2 billion in April from $28.5 billion (revised) in March, as exports decreased more than imports.

The Alliance for American Manufacturing:

Our trade problem can be summarized in one word: China. Imbalanced trade with China is responsible for over half (57%) of the overall U.S. trade deficit in April.

VAT or Value Added Tax is Getting a Look in D.C.

The Washington Post is covering the VAT or value added tax and suggesting the concept is gaining support in Congress. Unfortunately WaPo characterizes this tax completely incorrectly as a national sales tax. It's not frankly, it is a legal method by which to address the trade deficit.

Fortunately Trade Reform has a better understanding of what a VAT really is:

Congressional Fair Traders

Fair Trade Democrats are piping up (hat tip Sirota) about the Obama administration pushing yet another labor arbitrage, badly written NAFTA style bad trade agreement:

an increasingly agitated faction of Democrats is warning party leaders of ugly economic and political consequences if they try to move the Panama agreement.

Not only will it hurt the economy, critics say, but action on a Bush-negotiated trade deal endangers freshman Democrats in 2010 since many ran on a trade reform agenda. In addition, critics say, it doesn’t bode well for Obama to anger a bloc of Democrats early on when he needs their support for his ambitious domestic agenda.

China's export collapse continues

Bloomberg reports that:

China’s exports fell for a fifth month in March....

Overseas sales declined 17.1 percent to $90.29 billion from a year earlier, the customs bureau said on its Web site. Imports dropped 25.1 percent, leaving a trade surplus of $18.56 billion.
The export decline was less than February’s record 25.7 percent drop.

Geithner Backs Off China currency manipulation

Surprise, surprise. Treasury Secretary Geithner backed off the well known and well documented currency manipulation by China. Anyone believe that's because China now owns the United States?

Treasury Secretary Timothy Geithner pushed Group of Seven officials to soften criticism of China last month after his accusation that the nation was “manipulating” the yuan strained ties with the U.S.’s second- biggest trading partner, said a person briefed on the matter.

G-7 finance ministers and central bankers on Feb. 14 welcomed “China’s fiscal measures and continued commitment to move to a more flexible exchange rate.” By contrast, the group in April 2008 pressed for “accelerated appreciation” of the yuan.

Public Citizen Live Blogged USTR Confirmation Hearing

Public citizen live blogged the USTR (United States Trade Representative) confirmation hearing of Ron Kirk.

Here's a classic quote:

Senator Ron Wyden: the middle class does not like these trade agreements. What do you plan to increase support of middle class?
Ron Kirk's Reply: We're going to utilize technology to tell the real story. Our website is "so" 1987.

America knows these trade agreements are glorified offshore outsourcing contracts and the response is to do better Internet PR?

Another Quote from Mr. Kirk:

Cheaper foreign products help hard pressed American families, and exports help create jobs. The overarching benefits of trade are diffuse, and the pain is concentrated.