Letter to the Editor
January 22, 2010
Fair Trade With China Means Jobs In LorainJanuary 22, 2010Akron Beacon Journal
By Thomas J. Gibson
WASHINGTON: As President Obama visits Lorain County today as part of a ''listening tour'' of some of the communities that have felt the pain of the global recession, it is no accident that he is stopping in Lorain, crossroads of Ohio manufacturing and where the steel industry generates 71,000 direct and indirect jobs.
While the U.S. economy may be showing signs of stabilizing, 85,000 jobs were lost last month, with 27,000 in the manufacturing sector alone. America is one of the best places to make things in the world, but unless we get our trade relationship right with China, sadly, it could become one of the last.
We lost 2.3 million valuable manufacturing jobs between 2001 and 2007 as our trade deficit with China exploded out of control, and unless things change, we'll see further hollowing of our manufacturing base.
As the U.S. dollar has weakened in the past year, you would expect U.S. exports to be rising, particularly to China, where infrastructure construction is booming and consumers' appetite for appliances, automobiles and household products is ramping up.
Wonder why we haven't seen American manufacturing following suit, and U.S. employment rising to meet such global demand? Simply put, China's predatory practices — including large tax rebates on the exports of its domestic manufacturers, massive loans through state-run banks, restrictive access to its raw materials and keeping its currency artificially low — are effectively shutting out imports while artificially bolstering Chinese exports.
As Nobel-prize economist Paul Krugman says: ''We know that China is pursuing a mercantilist policy: keeping the renminbi weak through a combination of capital controls and intervention, leading to trade surpluses and capital exports in a country that might well be a natural capital importer. We also know . . . that this amounts to a beggar-thy-neighbor policy — or, more accurately, a beggar-everyone but yourself policy.''
Krugman estimates China's mercantilist policy could cost 1.4 million more American jobs over the coming years. China is stealing American jobs. But the United States can enforce its international trade laws and keep jobs here.
As Leo Gerard, United Steelworkers International president, recently noted, shortly after President Obama provided relief against the surge in passenger tire imports from China last year, Cooper Tire & Rubber Co. announced plans to add capacity to its Findlay, Ohio, plant and hire up to 100 workers.
This was followed by other U.S. tire plants announcing they were recalling laid off workers. The administration also took a strong stance on enforcement of America's unfair trade laws, as seen in recent rulings against China for subsidizing and dumping Chinese steel pipe into the U.S. market at great harm to U.S. steelmakers and steelworkers.
Some of these products are those made in U.S. Steel's Lorain mills. This is not a case of protectionism, but of enforcing the rules of the international trading system, which China agreed to abide by when it became a member of the World Trade Organization.
The administration needs to press for China to float its currency, which is hurting not only the United States but Europe, Japan and Southeast Asia. Experts say China's government artificially undervalues its currency against the dollar by up to 40 percent, giving it a false competitive advantage.
America's steel industry is one of the most competitive industries in the world, having tripled productivity since the 1980s, increased its energy efficiency by about one-third since 1990 and reduced air and water emissions by 90 percent.
We want to export, and should be exporting, more of our high-quality, competitive steel products. We can compete with anyone in the world, but not with governments.
Not only will actions to enforce trade laws and combat currency manipulation keep jobs in America by revitalizing U.S. manufacturing, it will also contribute to a greener global environment. Because the best place to make things, both for workers and for the environment, is not in China, but here in the United States.
Gibson is president and CEO of the American Iron and Steel Institute(AISI), whose member companies make more than 75 percent of the steel produced in the United States.