A New Policy for China
For the first time, the National Association of Manufacturers (NAM) and a smaller group of its domestic members are in agreement on a comprehensive new trade policy that the association will pursue with the 109th Congress and second Bush administration.
The agreement, put together by NAM's internal China Working Group, was reached after weeks of discussions between NAM policy executives and members of the Domestic Manufacturing Group (DMG). NAM and the DMG have advocated a more confrontational approach to China on currency issues, enforcement of WTO agreements and trade barriers. The compromise policy, announced by NAM in February, is a blend of domestic manufacturing concerns with existing NAM trade positions.
“Every year we do an international trade agenda, but this year we specifically put together a China trade agenda because China is such an important factor in our trading relationship,” says Patricia Mears, NAM's director for international commercial affairs. “Much of the China trade agenda is what we have been working on in the past, but there are some new things we are calling for as well as some enhancements to our older initiatives.”
The trade agenda for China is intended to strengthen manufacturing in the United States, make North American products more competitive in global markets, and thus reduce the trade deficit with China, which soared to a record $162 billion in 2004, up more than 30% from 2003.
Elements of the agenda include:
- Continue to push for a revaluation of the yuan based on market pricing and economic fundamentals, replacing the peg of the yuan to the U.S. dollar
- Enforce and enhance intellectual property laws
- Refuse to grant market economy status to China until it is in full compliance with all of its trade agreements
- Eliminate Chinese administrative, regulatory and standards barriers to imports
- Expand exports to China through export promotion programs and expanded export financing
- Promote fair competition by applying countervailing duty laws to China to counteract Chinese subsidies.
“NAM has taken some major strides with a much stronger position on China,” says Jonathan Kalkwarf, Metals Service Center Institute vice president, finance and administration, and the Institute's leading public policy executive. “NAM's 2004 trade agenda strives to balance the needs of domestic and multi-national manufacturers. It also correctly uses the U.S. bilateral trade deficit as a benchmark to measure our competitiveness. This is an important change. It envisions the U.S. government and domestic manufacturers working together to reduce these huge deficits.”
Dave Frengel, director of public affairs at Penn United Technology Inc., Cabot, Pennsylvania, and DMG coordinator, says his group plans to take NAM's new 2005 China trade agenda and lobby Congress on the initiatives geared toward bolstering domestic manufacturing. These issues include not only the undervalued currency but also intellectual property theft and the countervailing duty trade bill. If passed, the bill would allow U.S. petitioners to file countervailing duty trade cases against nonmarket economies, which would enable the United States to get tougher on China's trade abuses.
“If we pass this countervailing duty bill against subsidies, the currency manipulation could be proven to be a subsidy,” Frengel says. In the past, he says, the U.S. government had no reason to get tough on international subsidies because the competition wasn't enough to affect the U.S. economy.
Times obviously have changed. “Now you have China coming along and subsidizing their industries in ways we can only guess, such as free land and free housing,” Frengel says.
FINDING COMMON GROUND
Frank Vargo, NAM's vice president for international economic affairs, says that there is far more common ground among NAM member companies—of all sizes—than there are differences on the need to level the international playing field. “The agendas we've released reflect that common ground, and we're optimistic that the Congress and the administration will work cooperatively with us to reach our shared trade goals,” Vargo says.
Arnold Allemang, chair of NAM's International Economic Policy Committee and a member of the Dow Chemical Co.'s board of directors, says the trade agenda reflects input from NAM members of all sizes and represents a balanced approach. “All NAM members share the common goal of strengthening manufacturing in America and improving the competitiveness of our manufacturing sector in the global economy,” Allemang says. “We call on the government to fully enforce trade agreement commitments and rules with the necessary resources and the authority of applicable domestic and international trade law with a focus on seeing that U.S. trade agreements work better for small companies.”
Mears, who also is the executive director of the Coalition for a Sound Dollar, says NAM believes that the United States can compete with any country when it comes to manufacturing. The problem doesn't stop with the currency imbalance: NAM also is committed to remedying the counterfeiting issue in Asia, which costs the United States billions of dollars every year.