Presidential hopefuls Donald Trump and Bernie Sanders are about as ideologically opposite on the political spectrum as any two candidates in recent memory. Both of them, however, are in agreement on one issue: free trade. Continue reading “Made in USA is Less of an Option”
Because manufacturers (and others) don’t always do what they say, surveys of their intentions on hiring and investment and the like should always be taken with a big boulder of salt – the more so since the questions are often asked and the answers given in a political and policy context.
As the media tells it, American-made goods are having a “moment.” But the numbers tell a different story. Continue reading “Is Made In America More Than Just Hype?”
Posted on 01 October 2013 by Michael Stumo on CPA – Trade Reform
Prime Minister Abe economic planners in Japan have figured out how to do fiscal devaluation just like he does currency devaluation. With fiscal devaluation, you raise consumption taxes and keep the benefits inside the economy. The consumption taxes are charged on imports and domestic goods. But you concentrate the benefits internally through (1) lowering other employer/domestic taxes; (2) avoiding a domestic tax increase that otherwise would have occurred and/or (3) spend the money domestically for increased competitiveness.
“Mr. Abe told leaders of the governing coalition that he would raise the tax rate to 8 percent from 5 percent in April 2014. … [B]y returning most of the revenue to businesses and individuals he will show that his government is still focused on triggering sustainable growth.”
This is a fiscal devaluation because it raises the prices of imports in relation to domestically produced goods. The key is in the differential impact on imports vs. domestic goods… just like in all trade rules or issues. If you raise money from imports and domestic goods, then concentrate the benefits locally, you get your competitive differential (which can be weaker or stronger depending upon how you do it).
Its a really good idea for Abe to raise a consumption tax in Japan. But the zombie export only crowd (those that don’t think net trade is important) in the U.S. think consumption taxes are trade neutral and refuse to take them into account during trade negotiations. And the Congressional tax geniuses debate high vs. low taxes without talking about the tax mix… i.e. we need a U.S. consumption tax of about 12% to massively lower reliance on non-border adjustable taxes like income taxes (while maintaining progressivity) and substantially increase trade competitiveness.
We’ve seen this movie before. Mexico and Canada had no border adjustable consumption tax prior to NAFTA. But they enacted one during negotiations. NAFTA was passed, tariffs across the board went down, and Mexico’s border taxes rose by 15%. CAFTA countries had not consumption tax until CAFTA was negotiated, when they implemented a shiny new 12% consumption tax that we pay when sending goods there. The zombie export only crowd is really surprised to hear these facts because their blinders have obscured that information.
What good are trade agreements? Really. On the numbers. Our trade deficits have become the worst ever. They refuse to deal with currency devaluation, fiscal devaluation (consumption taxes), state owned enterprises so other countries do a bait and switch. The import penetration to Japan’s market is the same percentage in 2013 as it was in the 1980′s.
The U.S. needs a national strategy to balance trade. And a national production strategy. The trade negotiators and trade related committees in Congress are simply screwing up.
To learn more about Made in USA Certification please visit our website: www.USA-C.com
Canada uses supply controls to help poultry, dairy farmers
* US producers see 2nd chance in Trans-Pacific Partnership
By Doug Palmer
WASHINGTON, Sept 24 (Reuters) – The United States must fix mistakes it made in the North American Free Trade Agreement by insisting in new trade talks with Canada on unrestricted access to that country’s poultry and dairy market, U.S. agricultural groups said on Monday.
“All we’re asking is that we have an open and free fair trade shot at the border,” Bill Roenigk, senior vice president at the National Chicken Council, said at a hearing conducted by the U.S. Trade Representative’s office on the proposed Trans-Pacific Partnership (TPP) pact.
Canada’s Conservative government, sensitive to sentiment in vote-rich Eastern Canada, has long said it will maintain supply-management measures for dairy, poultry and egg farmers. These measures largely entail matching production to domestic demand and levying high tariffs to discourage imports.
However, the government has also said all goods are subject to negotiation, both in talks on the Trans-Pacific Partnership among 11 countries in the Asia-Pacific region and in free-trade discussions with the European Union.
Four-fifths of Canada’s 13,200 dairy farmers live in Ontario and Quebec, populous provinces that are generally critical to election success.
Roenigk said U.S. producers thought NAFTA, which went into force in January 1994, would eliminate tariffs on U.S. poultry exports to Canada and were shocked when Ottawa, as well as a NAFTA dispute settlement panel, took the opposite view.
Now that the United States has a second chance to address Canada’s poultry tariffs, the U.S. industry’s “view on this is the old Irish proverb: Fool me once, shame on you; fool me twice, shame on me,” Roenigk said in his prepared remarks.
“The U.S. poultry industry strongly opposes Canada’s participation in the TPP unless Canada expressly commits to removing all border restrictions on poultry imports from the United States,” he said.
Jaime Castaneda, senior vice president at the National Milk Producers Federation, said U.S. dairy producers were also disappointed NAFTA did not open up Canada’s market and were determined not to let that happen again.