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USBIC
Analyst Warns
Flexible Polyurethane Foam Producers That U.S. Trade Policy Is Gutting
Domestic Manufacturing
June 3,
2008
BALTIMORE, June 2
–Without an overhaul of Washington’s approach to trade – including trade
with China – U.S. domestic manufacturing will continue to decline, a
prominent policy analyst warned at the Polyurethane Foam Association’s (PFA)
Spring General Business meeting last week. Any further deterioration
jeopardizes the United States’ global industrial and technological
leadership and the economic and national security benefits it brings.
“Our growth engines
like manufacturing are faltering,” said Alan Tonelson of the U.S.
Business and Industry Council, which represents more than 1,500 domestic
manufacturers. Tonelson, author of The Race to the Bottom:
Why A Global Worker Surplus and Uncontrolled
Free Trade are Sinking American Living Standards, pointed out
that the impact of a weakened U.S. manufacturing sector has been partly
masked by federal efforts to simulate the economy since 9-11.
Tonelson’s remarks
and his ideas for change were pertinent to members of the Polyurethane
Foam Association, who experienced a nearly 30% loss in production over
the past two years as imports of Chinese-manufactured upholstered
furniture and bedding surged. More than 1.2 billion pounds of foam are
produced and used every year in the United States. The product is used
primarily in upholstered furniture and mattresses, carpet cushion and
automotive seating applications.
The problem, Tonelson
argued, stems from Washington’s bipartisan neglect of predatory foreign
trade policies that include subsidies, dumping and currency
manipulation, and from trade deals that encourage the export of U.S.
production and jobs to economically developing countries such as China
Tonelson, a
consultant to CNN anchor Lou Dobbs. emphasized that China poses special
dangers all its own. Too poor to raise living standards and contain
unemployment through reliance on its own markets, Beijing subsidizes
overproduction, then exports the surplus at artificially low prices
through manipulating its currency and a range of government handouts, he
said.
The trade challenges
faced by polyurethane producers require a comprehensive response that
must go beyond trade lawsuits or seeking trade protection and subsidies
industry-by-industry. “Domestic industries today are so interconnected
that if they don’t hang together on trade policy today, they’ll
eventually hang separately,” Tonelson advised.
Among the measures
recommended by the U.S. Business and Industry Council are:
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A law to make
foreign currency manipulation an actionable subsidy under U.S. trade
law.
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A moratorium on new
trade deals with low-income countries and a greater emphasis on market
opening in high-income countries
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An emergency tariff
on all imported manufactured goods, to bring the trade deficit to
sustainable proportions.
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A border adjustment
tax on imports from countries utilizing Value-Added Tax (VAT) systems
unless VAT-created inequities can be negotiated away in two years.
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Higher-mandated
U.S. content requirements for military procurement, and high U.S,
content requirements for products generated by government-supported
“green manufacturing” programs.
The Polyurethane Foam
Association was founded in 1980 to educate customers and other groups
about flexible polyurethane foam (FPF). This includes providing facts on
environmental, health and safety issues and technical information on the
performance of FPF in consumer and industrial products. The PFA
membership includes U.S. FPF manufacturers and their suppliers of raw
materials, processing and fabrication equipment and various industry
services. For more information, visit
www.pfa.org
The U.S. Business and
Industry Council represents America's small and medium-sized business
community, mostly in the manufacturing sector. These companies are often
major employers in their home communities and mainstays of the local
economy, giving the organization an outlook that is rooted in Main
Street America. For more information, visit
www.americaneconomicalert.org.
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