A Trade and Economic Policy for

America

A Trade and Economic Policy for

America

Michael Stumo, CEOCoalition for a Prosperous

America

Michael Stumo, CEOCoalition for a Prosperous

America

CPA: Representing American Producers

CPA: Representing American Producers

Brian O’ShaughnessyRevere Copper Products

John HansenNFU

Joe LoganOhio Fmrs Union

Pam PotthoffWomen Involved in

Farm Economics

Bob BaughAFL-CIO

Rob DumontTooling, Manufacturing& Technologies Assn

About CPAAbout CPAA national non-profit group representing the interests of 2.7 million households through our farm, ranch, manufacturing and worker members

Working to balance trade - eliminate the trade deficit - as the biggest source of jobs and growth for America

Educating voters on trade issues and the voting records of elected officials on these issues

A national non-profit group representing the interests of 2.7 million households through our farm, ranch, manufacturing and worker members

Working to balance trade - eliminate the trade deficit - as the biggest source of jobs and growth for America

Educating voters on trade issues and the voting records of elected officials on these issues

What is economic growth?What is economic growth?

GDP = C + I + G + NEGDP = C + I + G + NE

Consumption

Investment

Government Procurement

Net Exports:Total Exports minus

Total Imports

Biggest Most VolatileNet Imports/Trade Deficits

subtract from GDP

“Recession” = Contraction of GDP

National Trade StrategyNational Trade Strategy

Goals

Net exports

Net job creation (full employment)

Wealth creation

Grow full supply chain

Auto, computer, food, robotics, etc.

Goals

Net exports

Net job creation (full employment)

Wealth creation

Grow full supply chain

Auto, computer, food, robotics, etc.

Why trade agreements fail?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

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. Economy

Net Imports Harm U.S. Economy

Job loss: 10,000 jobs per $1B trade deficit

Wealth loss: Offshoring transfers profits elsewhere

Innovation loss: New innovation offshored

Future loss: What will our kids do?

Job loss: 10,000 jobs per $1B trade deficit

Wealth loss: Offshoring transfers profits elsewhere

Innovation loss: New innovation offshored

Future loss: What will our kids do?

Obama: “Double Exports”Obama: “Double Exports”Bush already doubled exports. Exports increases under Clinton. Our exports have grown almost every year, including to China.

Asymmetrical WarfareAsymmetrical Warfare

America: Free trade

Unilateral disarmament

“Faith based” trade

Successful Exporters: State Managed Capitalism

China, Japan, South Korea, Germany, etc.

America: Free trade

Unilateral disarmament

“Faith based” trade

Successful Exporters: State Managed Capitalism

China, Japan, South Korea, Germany, etc.

Currency Cheating: Tariff & Subsidy

Currency Cheating: Tariff & Subsidy

Border Adjustable Taxes/Value Added Taxes

Value Added Taxes are tariffs

Value Added Taxes are tariffs

$356 Billion trade distortion

How they use VATsHow they use VATs

Tariff and a subsidy

Offset other costs like health care

Offset tariff reduction

Canada/Mexico: 15% VAT after NAFTA

Central America: 12% VAT after CAFTA

Korea: 10% VAT now. Later increase?

China: 19% VAT

Tariff and a subsidy

Offset other costs like health care

Offset 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

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

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 CredibilityKorea FTA: ITC Credibility

Projected $1B added deficit - China PNTR

Actual was $185B added deficit

Projected $1B added deficit - China PNTR

Actual was $185B added deficit

Korea FTA: ProblemsKorea FTA: ProblemsState-managed economy

Currency 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

State-managed economy

Currency 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 ArgumentsSector Specific Arguments

Tactical opposition on sector specific net export grounds is a failed strategy.

Cannot support Korea agreement, then oppose Trans Pacific Partnership or Colombia

National Trade Strategy based upon American economic interests is a successful strategy.

Tactical opposition on sector specific net export grounds is a failed strategy.

Cannot support Korea agreement, then oppose Trans Pacific Partnership or Colombia

National Trade Strategy based upon American economic interests is a successful strategy.

National Trade StrategyNational Trade Strategy

Neutralize state capitalism

Maximize domestic market share

Net exports... or at least balanced trade

Net job creation - full employment

Capture whole supply chain

Capture innovation: Invent it here, make it here

Neutralize state capitalism

Maximize domestic market share

Net exports... or at least balanced trade

Net job creation - full employment

Capture whole supply chain

Capture innovation: Invent it here, make it here