Friday, September 11, 2009

The Washington Post waves the free trade flag:

From their editorial: (emp add)
Slashing Tires
Why President Obama should tread lightly on Chinese imports

(...) By Sept. 17, Mr. Obama must decide whether to crack down on tire imports from China, and if so, how.

At issue is a recent increase in U.S. imports of cheap Chinese tires: from $453 million in 2004 to $1.7 billion in 2008. That boosted China's share of the U.S. market from 5 percent to 17 percent. U.S. trade law allows curbs on imports from China when they threaten "market disruption" and "material injury" to U.S. producers. China agreed to this rule as part of the deal under which it acceded to the World Trade Organization. (It is similar to the kind of import protection in agricultural goods that China has been demanding in global trade talks.)

The United Steelworkers of America (USW), which represents many tire workers, alleged a violation of the law; by a vote of 4 to 2, the U.S. International Trade Commission (ITC) agreed. It recommended that Mr. Obama slap a 55 percent tariff on Chinese tires next year, a 45 percent tariff in 2011 and a 35 percent tariff in 2012 -- before the China "safeguard" provision expires in 2013.

There's no dispute that the U.S.-based tire industry has closed plants, shed 5,000 jobs and lost market share since 2004. (...)

Unfortunately, the president's freedom of action is clouded by American dependence on Chinese purchase of U.S. government debt. (...)

All the more reason for him to focus on the one thing he can be sure of if he imposes tariffs or an import quota: Prices will go up for American consumers, and choices will go down. The pain would be concentrated where Chinese imports are concentrated: in the low-cost segment of the market. In short, consumers who can least afford it would pay the most.

Some benefits of this regressive tax would indeed flow to U.S. tire workers in the form of jobs saved, but some might accrue to low-wage tire producers in other countries. And all this for what would be at most a three-year respite from the alleged Chinese onslaught. This case gives Mr. Obama a chance to show that he defines American economic interests broadly, not in response to the demands of particular interests.
If you wonder why median wages have stagnated for a decade, this is one reason. The "broad interests" of consumers can always be used to deny the "particular interests" of labor. That argument was used in the 19th century when unions were being formed. It's popular today with businesses. However, the aggregate of all those "particular interests" can be more important when it comes to figuring the distribution of economic power and wealth in this country.


I appreciate that you keep posting on this issue. I keep beating the same drum but after 30 years of consulting in factories all over the US, I am sickened by what I have seen done to the American factory worker. It's a national tragedy.

A lot of these outsourced folks are the tea partiers and birthers. They are hurting bad and can easily get in line behind Beck, Limbaugh, Hannity, Savage who tell them who the real culprits are behind their decline.

By Anonymous Mart, at 9/11/2009 3:36 PM  

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