A key sentence in the State of the Union

Posted by scapozzola on 01/26/2012

In Tuesday night's 'State of the Union,' President Obama made a very specific point on the subject of trade policy:

It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.

The president is absolutely right that U.S. manufacturers face "subsidized" competition.  And those subsidies violate world trade law.

Two examples:

1. China provides massive energy subsidies for its steel industry, amounting to roughly $27 billion in the last decade alone;

2. China and several other countries preferentially undervalue their currency so as to artificially cheapen the cost of their exports.

These predatory trade practices present a huge (and illegal) hurdle for U.S. manufacturers to surmount.  What's needed is for the administration to bring trade cases against such subsidies. And furthermore, the White House is long overdue to officially cite China as a currency manipulator, thus initiating recourse for U.S. manufacturers who have been adversely affected by such subsidized competition.

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