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June 17, 2009
Industry Leaders Address Protectionism at National Summit
As the three-day National Summit winds down, business and industry leaders attending the economic forum claim that maintaining or increasing trade barriers will only further damage the U.S. economy.
At this week's National Summit in Detroit, Michigan, "a new riff on the old protectionist tune is getting a reprise," according to the Detroit News. "'Made in America' is politically correct again... ."
The three-day gathering, which concludes today, "heard several calls for a formalized United States 'industrial policy' to help compete with countries, notably in Asia, that offer direct aid to key firms," Agence France Presse reports. Among those calling for the creation of a national industrial policy is Andrew Liveris, chairman and CEO of Dow Chemical Co.
"But others warned about going too far down a protectionist track, saying this could backfire on the U.S.," AFP continues.
In the opinion of Charles "Chip" McClure, CEO of truck components maker ArvinMeritor, a "buy American" policy might "alienate [America's] allies in commerce."
"Innovation is a global process, not just because of costs," McClure said, but "the ability to tap into regional talent and to learn from customers in new markets."
Today's Trucking reports that McClure and Davis' comments "were echoed time and again by fellow panelists" at this week's gathering, including National Association of Manufacturers CEO John Engler.
"Free trade has created more jobs with foreign firms for Americans than those that were lost from outsourcing," IndustryWeek reports former Bush administration Assistant Economic Development Secretary Sandy Baruha as having said. "The No. 1 challenge [U.S. manufacturers face] is ensuring that we make something here that somebody else wants," Baruha said.
Talk of altering or repealing free-trade agreements in an effort to save jobs will only isolate the U.S. from other markets, IndustryWeek says of comments made by D. Scott Davis, United Parcel Service Inc. chairman and CEO. During a townhall meeting at the summit, Davis noted that the "buy American" provision originally proposed for President Barack Obama's stimulus plan sent "a horrible message" to the rest of the world even though the Senate later softened the language.
Earlier this year, the "buy American" clause in the proposed stimulus bill unleashed a whirlwind of protest from U.S. trading partners, including Canada and in Europe. The "buy American" stipulation requires the use of U.S. goods in public projects financed by the federal stimulus package, which contains specific language requiring the use of American-made iron and steel for any infrastructure projects. Although the legislation contains a clause that the rules should not be interpreted in a way that violates U.S. trade treaties, companies reportedly remain confused about what they can and cannot use in bidding for federal projects.
"The 'buy-American' policy [...] is 'particularly painful' in a place like Michigan, where the industries on either side of the river are completely enmeshed," Today's Trucking reports Engler as having said.
Sarah L. Hubbard, vice president for government relations for the Detroit Regional Chamber, noted that the rules were part of the buzz at the conference, and that there has been a tendency for them during this recession to be extended to state and even local procurement policies. (Source: The Detroit News)
"When times get tough, people and governments have a tendency to turn inward. One result is a trend toward protectionism and other efforts to limit economic competition," the Detroit News editorializes today. "The problems created by the 'Buy American' provisions of the federal stimulus package are worrying both American business executives and Canadian officials at the National Summit on the economy here in Detroit."
Although it is not uncommon for countries during an economic crisis to turn inward and to put up barriers to protect jobs, Davis argued this week that a "buy American" measure in the U.S. stimulus — even watered down — "gives a lot of other countries cover for their protectionist practices."
This may hurt the U.S. because "one out of every five manufacturing jobs is linked to the export of goods," according to Davis, who called increasing global trade "one of the greatest forces to get us out of this crisis."
Others at this week's National Summit focused less on the protectionist issue and instead emphasized the need for more investment in basic research and government enforcement of fair trade agreements.
"It's not about protectionism, but it is about making sure the rules are followed," the Detroit Free Press quoted Sen. Debbie Stabenow (D-Mich.) as having told a morning session.
"Globalization is not a good thing," the Detroit News quotes Ian Bremmer of consultancy Eurasia Group as having told the summit yesterday. "It's not a bad thing. It's a thing — a thing that we need to know is there."
Earlier/Related
U.S. Protectionist Clause Sparks Loud Protest
Resources
U.S. Letting Manufacturing Slip Away
by Daniel Howes
The Detroit News, June 17, 2009
Manufacturing Must Drive US Recovery, Summit Told
by Rob Lever
Agence France Presse, June 16, 2009
Protect Us from Protection, Industry Leaders Urge
Today's Trucking, June 17, 2009
Business Leaders Issue 'Protectionism' Warning
by Jonathan Katz
IndustryWeek, June 16, 2009
Editorial: Buying Trouble
The Detroit News, June 17, 2009
Government's Role Gets More Positive View at National Summit
by John Gallagher and Brent Snavely
The Detroit Free Press, June 16, 2009
Globalization Should be Embraced, Experts Say
by Brian J. O'Connor
The Detroit News, June 17, 2009
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Comment
2 CommentsInteresting article, but no where was there mention of any discussion of the impact of worldwide labor arbitrage. Until there is a global living wage that allows countries to make and export the things they do best without seeing those same strengths migrate endlessly to wherever labor is cheapest, the protectionism debate is moot. Remember Mr. Welch's comment (paraphrased), "The ideal vendor is on a boat so it can be sailed to where the taxes and labor are the lowest."
June 17, 2009 8:27 PMI am not against global trading in general, but an article I read has shown me how some greedy special interests are coming up with all the justifications to fight against what they call "protectionism". But, until the real facts are recognized, and responsible politicians realize that competing with cheap labor in countries like Mexico and China is unfair for American workers (and for America as a country), this economy will never, ever, recover!
Businesses should drive economies through a balanced SUPPLY and DEMAND. I would say to these business people: -You, Mr. Businessman, may be able to supply outsourced cheaper products, and anticipate BIG PROFITS. But if you crash the American consumer by sending them to unemployment, there will be not much DEMAND left for your products, not only in the U.S., but also in other countries, because the cheap labor people over there don’t have enough money to buy your staff. Your action will create a chain reaction that affects other businesses, banks, government, people, etc., and sooner or later it will backfire on your own business.
I know… your excuse is: -"The competition is doing it and therefore I have to do it too. Otherwise I loose my business…".
-Well, if proper laws were approved and put in place, that would fix the competition issue.
America used to be the "LAND OF OPPORTUNITY". But now, America is the land of opportunity FOR OTHER COUNTRIES ONLY! -See how India economy is blooming, thanks to our American business friends.
The American intellectual ingenuity will be freely accessed, copied and stolen by some of those countries, for their own benefit, as they use the global trading agreements as a sanctuary.
Let America be America again! – A land of opportunity for everyone living in America, with good will, creativity, honesty, persistence, and wisdom!
My prediction is: Unless NAFTA global rules are changed, and the exporting of American labor to cheap labor countries is stopped, the U.S. economy will never, ever, recover! ...Never!!!
