Under Secretary of Commerce for International Trade Frank Lavin asked a great question when he was in China earlier this week:  “Why not open up?”  But he shouldn’t have stopped there.  Not only do American manufacturers face enormous trade barriers when trying to export to China, they must also compete with illegally dumped and subsidized Chinese goods flooding the U.S. market.

Currency manipulation gives Chinese manufacturers up to a 40 percent advantage.  Ignoring labor laws, a disregard for the environmental controls, and state subsidies for industry only add to that unfair edge.

The good news for American manufacturers is that these illegal Chinese trade practices can be aggressively challenged under U.S. and international trade laws to ensure a truly free marketplace, and Congress is looking at ways to hold our trade partners who violate trade laws even more accountable.  Opening up China’s market should be a priority—but we also need to ensure that China isn’t illegally subsidizing its industries and dumping its products into our market at the expense of American manufacturers and American workers.

David Wessel comments in today’s WSJ on the growing skepticism of the benefits of globalization. His comments are particularly interesting in light of yesterday’s hearing on trade and the American worker. He points out that selling Americans on free trade has always been tough and it’s easy to lay the blame at the feet of partisan politics. But, today that’s not necessarily the case.

Members on both sides of the aisle at yesterday’s hearing said trade policies need to be re-examined and that those who “cheat” – a popular word in the hearing room – must be held accountable. They are taking to heart, no doubt, what they’re hearing from their constituents:

“A recent Wall Street Journal/NBC News poll found only 35% of those with at least a four-year college degree believe ‘that the U.S. is benefiting from the global economy.’ And these people are more likely to be winners.”

Wessel does points to some of the benefits of globalization, but says…

“The issue…isn’t whether trade makes the world as a whole richer. It does. The issue is the distribution of those gains. If American workers sense they are at risk of being losers…the political consensus for encouraging further globalization will evaporate.”

Former U.S. Trade Representative Carla Hills in yesterday’s hearing said that these issues are “complicated.” Yes they are, but that’s not an acceptable answer for many Americans, and that’s certainly being reflected in the current conversations in Congress.

How much support is there in Congress for overhauling U.S. trade policy to better protect American jobs and strengthen our economy? Lou Dobbs said yesterday that he hoped with this Congress, America had reached a turning point. If yesterday’s hearing is any indication, maybe we have…I’m not sure it’s time to start holding our breath, though.

An increasing number of Americans are alarmed at the decline of America’s manufacturing capacity. Particularly troublesome is the growing awareness that arresting this trend will be difficult because the policies that contribute to this problem come in so many shapes and forms. For example, this past weekend, the NY Times highlighted an example in which President Bush’s 2003 tax cut provides a huge advantage to foreign companies doing business in the U.S. over American ones. 
 
As the article reveals:

“The advantage under the 2003 law can be significant. It can cost an American company as much as $540 million more than a foreign company to pay $1 billion to United States investors.” 

Naturally of course now that this provision has been identified, its author is no where to be found.

“…it was still a mystery as to how the provisions got into the 2003 tax cut bill.”

Today’s hearing in the Subcommittee on Terrorism, Non-proliferation and Trade of the House Foreign Affairs Committee reflected the bipartisan unease with our nation’s trade policy. We at AAM were honored to have the opportunity to testify on that topic, joining CNN’s Lou Dobbs, former Trade Ambassador Carla Hills, Thea Lee of the AFL-CIO and Yvette Pena Lopes of the Teamsters.

Too often, these hearings can end up looking a lot like parallel universes, with one side talking past the other side. I didn’t find that to be the case with this hearing—at least among the lawmakers on the subcommittee.

It’s no wonder that Rep. Brad Sherman, the Chairman, and Rep. Ed Royce, the Ranking Member, would be so concerned about trade: they both represent districts in California, a state that has lost more than 376,300 manufacturing jobs since 2000—ranking it number one in manufacturing jobs lost.

You should be able to find a link to the webcast of the hearing on the committee’s website within the next 24 hours. A copy of my testimony is posted here.

AAM’s Executive Director Scott N. Paul testifies tomorrow morning on trade and the American worker before the House Foreign Affairs Committee’s Subcommittee on Terrorism, Nonproliferation and Trade. The subcommittee will also hear from CNN’s Lou Dobbs and Carla A. Hills, former U.S. Trade Representative.

Manufacture this. It sounds a bit in your face? It should. American workers are fighting for the chance to compete on a level playing field. American companies are facing off with foreign competitors who don’t play by the rules. Rising health care costs jeopardize the economic security of companies and families across the country.