A Trade and Economic Policy for America Michael Stumo, CEOCoalition for a Prosperous America
CPA: Representing American Producers Brian O’Shaughnessy Joe Logan Bob BaughRevere Copper Products Ohio Fmrs Union AFL-CIO Pam Potthoff Rob Dumont John Hansen Women Involved in Tooling, Manufacturing NFU Farm Economics & Technologies Assn
About CPAA national non-profit group representing theinterests of 2.7 million households throughour farm, ranch, manufacturing and workermembersWorking to balance trade - eliminate thetrade deficit - as the biggest source of jobsand growth for AmericaEducating voters on trade issues and thevoting records of elected officials on theseissues
What is economic growth? “Recession” = Contraction of GDP Net Imports/Trade Deficits Biggest Most Volatile subtract from GDPGDP = C + I + G + NE Investment Net Exports: Consumption Total Exports minus Government Total Imports Procurement
National Trade StrategyGoals Net exports Net job creation (full employment) Wealth creation Grow full supply chain Auto, computer, food, robotics, etc.
Why trade agreements fail?Tariff-based focus results in unilateral U.S.disarmament. Trade rivals replace tariff cuts. Currency manipulation Value added taxes: 18% avg VAT tariff/subsidy State-owned, state-controlled entities Indigenous innovation Many other state-capitalism tactics
Net Imports Harm U.S. EconomyJob loss: 10,000 jobs per $1B trade deficitWealth loss: Offshoring transfers profitselsewhereInnovation loss: New innovation offshoredFuture loss: What will our kids do?
Value Added Taxes are tariffs $356 Billion trade distortion
How they use VATsTariff and a subsidy Offset other costs like health careOffset tariff reduction Canada/Mexico: 15% VAT after NAFTA Central America: 12% VAT after CAFTA Korea: 10% VAT now. Later increase? China: 19% VAT
Korea FTA - ITC Net Numbers International Trade Commission Net trade with world: No change Net trade with Korea: $3.5B improve (current is $13B deficit) Net job creation: None THUS, no government argument for net benefit. Economic Policy Institute (EPI) Net trade with Korea: Negative $13.5 Net jobs: Negative 159,000
Korea FTA: ITC Credibility Projected $1B added deficit - China PNTR Actual was $185B added deficit
Korea FTA: ProblemsState-managed economyCurrency manipulator: No restriction.VAT of 10%. No restriction on increases.Rule of origin: 35% China trans-shipment. No. Korea trans- shipment Beef rule of origin: Last place of substantial transformation
Sector Specific ArgumentsTactical opposition on sector specific netexport grounds is a failed strategy. Cannot support Korea agreement, then oppose Trans Pacific Partnership or ColombiaNational Trade Strategy based uponAmerican economic interests is a successfulstrategy.
National Trade StrategyNeutralize state capitalismMaximize domestic market shareNet exports... or at least balanced tradeNet job creation - full employmentCapture whole supply chainCapture innovation: Invent it here, make ithere