Industry Leaders Address Protectionism at National Summit

June 17, 2009

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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

Defining "American-Made"

NAFTA: Threat or Theater?

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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