Manufacture This

The blog of the Alliance for American Manufacturing

Schumer also criticizes Trump: "He backed off on steel and aluminum."

August is typically a slow month for policy matters, what with Members of Congress heading home for their annual summer recess. The House is already on break, but the Senate remains in session — and Senate Democrats are taking advantage by rolling out more from their "A Better Deal” economic plan.

As Matt wrote last week, the party’s Better Deal is aimed at winning back working class voters that Democrats lost in the 2016 elections. The 2018 midterms are only 15 months away, after all!

On Wednesday, Senate Democratic Leader Chuck Schumer (D-N.Y.) and several of his colleagues unveiled the trade portion of the Better Deal. It’s a seven-point plan, and we'll give the Democrats credit — it contains some solid ideas:

  1. Establish a new independent, nonpartisan trade prosecutor to combat trade cheating from countries like China. You might remember this from the 2016 presidential campaign, as it was an idea floated by Democratic presidential candidate Hillary Clinton. The new prosecutor, Democrats say, would be able to address trade cheating more quickly than the current U.S. Trade Representative.
  2. Create a new American Jobs Security Council. Consisting of “independent economic experts,” the council would review potential purchases of an American company by a foreign company and could potentially block potential deals. It’s designed to address instances in which countries like China and Russia use state-owned enterprises to buy U.S. companies and gain an unfair advantage, which has been alleged in instances like the potential sale of the Chicago Stock Exchange.
  3. Make NAFTA “Work for Working People.” Democrats say a new NAFTA must achieve goals like more U.S. jobs and higher wages, stronger Buy America policies, and enforceable rules to deter market-distorting behavior like state-owned enterprises and currency manipulation.
  4. Penalties for Companies that Offshore Jobs. Unfortunately, federal contracts are sometimes awarded to companies that outsource jobs. The proposal would penalize contractors who outsource, including via a public shame list managed by the Labor Department.
  5. Strengthen Buy America. If you come to this blog often, you know we’re on board with Buy America, which ensures taxpayer dollars are spent on U.S. companies and jobs for federal public works and infrastructure projects. Under the proposal, Buy America would be strengthened and loopholes also would be closed.
  6. Crack Down on Currency Manipulation. As Roll Call noted, this is a favorite topic for Schumer, who has urged both Democratic and Republican administrations to take action against Chinese currency manipulation. That’s something President Trump pledged to do during the campaign but later flip-flopped on.
  7. Tax Companies that Outsource Operations. Right now, U.S. companies can deduct expenses for moving production outside the country, and many corporations use “accounting gimmicks and tax loopholes” to make a foreign nation their home for tax reasons. The Democrats aim to stop this by getting rid of the deduction and creating a 20 percent tax credit for companies that bring jobs home.

We’re a nonpartisan bunch here at the Alliance for American Manufacturing, but like we said, there are a lot of things in this trade agenda that make a lot of sense. Frankly, there’s also a lot of room for bipartisanship here, too — could Democrats and Republicans come together here to get something done?

Maybe!

“There are going to be all kinds of bills in September that need to pass, and we’re going to offer these, and we hope our Republican colleagues will join us,” Schumer said at a press conference. “Some of our Republican colleagues have understood these issues. We want this to be bipartisan, because our job is to protect American workers.”

But... then about a minute later Schumer criticized Trump.

“We look at things on the merits, and the problem is President Trump has talked a good game and done virtually nothing on trade but study it. He even backed off on steel and aluminum, something very important to her state, his state, her state, his state, and my state,” Schumer said, pointing to his fellow Senators. “So, we need action. And if President Trump wants to work with us to get things done, good.”

Speaking of Trump, the Wall Street Journal on Tuesday broke the news that the Trump administration is considering new trade measures to “crack down on intellectual-property theft and ease requirements that American companies share advanced technologies to gain entry to the Chinese market.”

Team Trump is aiming to invoke Section 301 of the Trade Act of 1974, which would allow the government to investigate trade cheating and decide on the relevant penalty. Section 301 was used often in the 1970s and ‘80s, but hasn’t been used much since the World Trade Organization (WTO) was created in 1995.  

But the Trump administration has said the WTO isn’t sufficient for dealing with unfair Chinese trade and is willing to take independent action.

And although the White House declined to comment on the latest WSJ report, Commerce Secretary Wilbur Ross penned an op-ed for the paper on Monday that went after the WTO. Ross argued China, the European Union and others criticize the U.S. for “a protectionist stance” while they “engaged in unfair trading practices, erect barriers to American exports, and maintain significant trade surpluses with us.”

Here’s more from Ross:

“Consistent with WTO rules, the U.S. has since Jan. 20 brought 54 trade-remedy actions — antidumping and countervailing duty investigations — compared with 40 brought during the same period last year. The U.S. currently has 403 outstanding orders against 42 countries.

But unfortunately, in its annual reports, the WTO consistently casts the increase of trade enforcement cases as evidence of protectionism by the countries lodging the complaints. Apparently, the possibility never occurs to the WTO that there are more trade cases because there are more trade abuses.”

In fact, recent research by Terence Stewart and Elizabeth Drake found that the WTO regularly oversteps its mandate and disproportionally targets U.S. trade remedy laws. Although the United States is one of 164 WTO members, it has been the target of 38 decisions in trade remedy disputes — five times more than any other member.

So, like we said, there’s a lot going on when it comes to trade. But whether your slogan is A Better Deal or Make America Great Again, we think enacting policies to strengthen American manufacturing and create more good-paying, middle class jobs is something all of us can get behind — and we hope policymakers come together to get something done for American workers.