President Bush had some less than kind words yesterday for presidential contenders Hillary Clinton and Barack Obama.  Noting their recent criticism of NAFTA, and of Clinton’s call for a NAFTA “timeout,” he said, “In the 21st century, a timeout from trade would be a timeout from growth, a timeout from jobs and a timeout from good results.”

  Clinton responded with a strong indictment of the Bush administration’s trade policies which have “allowed our trade deficit to skyrocket and stood idly by while countries like China unfairly manipulate their currency and dump products like steel on the U.S. market.”

ManufactureThis has been uniformly critical of the current candidates for their failure to address China’s predatory trade practices.  So when we see Senator Clinton actual use words like “China,” “manipulate currency,” and “dumped” in the same sentence, we can’t help but perk up our ears.

There may be some small measure of progress in this.  But the bigger point is that Clinton doesn’t say what she would do to stop China’s dumping, for example.  What she might consider is that the U.S. has a number of trade laws on the books.  Strong enforcement of them should be an immediate first step for anyone serious about strengthening U.S. manufacturing and addressing China’s cheating.

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All right, it’s time to take John McCain to task again.  He’s gone and done it once more—said some things that just don’t add up.

  In a Town Hall meeting yesterday morning in St. Louis, the good Senator made a very revealing remark: “The moral of the story is…we’re not going back to the old manufacturing base of the economy.”

But what exactly does that mean?

In the past 150 years, the United States amassed the greatest concentration of manufacturing capability in the history of the world.  In 1860, our economy was half that of Great Britain’s.  By 1913, it was more than double. 

In World War II, the United States became the “Arsenal of Democracy,” building more than 300,000 airplanes in five years.  In the years since 1945, the United States has generated much of the world’s wealth and served as protector and benefactor for many struggling countries.

Does anyone believe this would have been possible without a massive industrial base?

Consider some statistics:
-Manufacturing creates wealth: it generates $1.6 trillion for the U.S. economy—12% of GDP. 
-Manufacturing supports millions of good-paying jobs: it employs 14 million directly, with another 6-8 million related jobs throughout the rest of the economy.
-Manufacturing accounts for nearly three quarters of the nation’s industrial research and development. 
-Manufacturing provides the military hardware necessary to maintain our national defense. 

  But if we’ve lost 40,000 factories in the past 10 years, shed 3.5 million middle class manufacturing jobs since 2000, and are “not going back to the old manufacturing base,” just exactly where are we headed?  Is there some greater, even more prosperous route to be found in a nation of burger flippers and cash register attendants?

But it doesn’t end there.  In the same St. Louis speech, McCain also said, “I do not believe in isolationism and protectionism.” 

Fine, if true.  But it contradicts everything Senator McCain has wrought in his elected career.  Inexplicably, he has blocked every U.S. effort to tackle China’s protectionist trade practices, including illegal currency manipulation.

  And so, his comments about “old manufacturing,” like his inconsistency on China, reveal troubling hypocrisy in a would-be president.  They also demonstrate a simplistic disregard for history at a time when the United States is financially and militarily overextended throughout the world. 

To suggest that manufacturing is an antiquated part of the economy defies both common sense and the irresistible laws of commerce.  Like gravity, job losses tend to weigh us down, not build us up.  It’s doubtful, though, that Senator McCain gets the point.
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  According to Commerce Department figures released this morning, the monthly U.S. trade deficit in goods and services reached $58.2 billion in January 2008, up from $57.9 billion in December 2007.

AAM’s Scott Paul said, “The January trade numbers offer fresh evidence that our trade deficit is contributing to layoffs and plant closings across the nation.  China’s imports are the leading trade-related culprit.  Until Congress and the Administration stand up to China’s cheating and reform America’s trade policy, things will only grow worse for American workers and businesses.”

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In his usual, blunt fashion, the Buffalo News’ Doug Turner offered an excellent assessment today of the recent Ohio primary.  Obviously not a fan of either Senator Clinton or Senator Obama, Turner questioned the sincerity of both in their recent anti-NAFTA rhetoric. 

In particular, Turner homed in on what he perceives as Obama’s lack of sincerity on the issue of trade policy and lost jobs: “If [Obama] were going to link Hillary to job flight, and the policies of her husband’s administration, he should have targeted President Clinton’s globalist ambitions in the Asian basin… That’s where the jobs, and entire factories, were shipped in the last eight years.”

The U.S. has lost more than 1.8 million jobs to China since Beijing’s late-2001 entrance to the WTO.  As Turner sees it, the Clinton administration “advanced arrangements that got China into the World Trade Organization, and then provided the needed Democratic votes in a Republican Congress to give Communist China permanent normalized trade relations with the United States.” 

If Obama wanted to hector Clinton, rather than trade jabs on NAFTA he might have chosen a better route to do so by lamenting the ever growing U.S. trade deficit with China, which is one unhappy legacy of the Clinton years.  Unfortunately, he did not, and Turner ascribes it to Obama’s closet “globalist” status.

ManufactureThis doen’t just critique Obama and Clinton on trade policy, however.  As frequently noted, we’re an equal opportunity detractor.  And so it’s worthwhile to note another recent news item—and one that isn’t friendly to John McCain… 

The Seattle Post Intelligencer reported on Friday that Boeing’s failure to win a new $35 billion Air Force contract is viewed as the fault of Senator McCain.  The contract was awarded in part to Airbus’ parent company EADS, which detractors say “ignored American national security interests and would cost U.S. jobs.”

Free Trading McCain has come in for particular scorn on the subject because he “was a major force behind the Air Force decision to ignore the issue of government subsidies to Airbus when the tanker contract was put up for competitive bidding last year.”

Essentially, the tanker contract was given to a low bidder, albeit a foreign firm that is amply subsidized by the EU.

Is this the meaning of fair competition?  McCain seems to think so.  Unfortunately, his rhetoric is inconsistent.  A state-subsidized manufacturer is an inherently protected entity, something that violates the tenets of “Free Trade.”  Voters may want to ask ‘Why does John McCain favor state-subsidized European firms over U.S. jobs?’

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Robert Lighthizer, a deputy trade representative in the Reagan administration, has written an excellent critique of Senator John McCain’s “unbridled” support for free trade.

  According to the latest Labor Department report, U.S. jobs declined by 63,000 in February, almost three times the number of job losses in January and the biggest drop in five years.  The U.S. manufacturing sector alone lost 52,000 jobs, bringing factory job losses over the past 12 months to 299,000. 

In a statement, AAM’s Scott Paul said: “Congress and the administration need to respond to this.  Every day that we don’t reform our trade policy and enforce our trade laws is another day that we’ll lose jobs.  Instead of trading charges on NAFTA, the presidential candidates need to offer real solutions on how they will grow American jobs and hold cheating countries like China accountable.” 

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As the bitter Ohio primary contest demonstrated, trade issues have begun to play a large role in the ongoing presidential discourse.  And while the Democratic candidates are talking about revisions to U.S. trade policy, ManufactureThis suggets that they need to offer specifics as to how they’ll address illegal subsidies, dumping, and currency manipulation on the part of China and other trading partners.

In a post-Ohio statement, AAM’s Scott Paul noted: “People are demanding answers.  The candidates need to provide something more than just ‘Let’s renegotiate NAFTA.’  What about China cheating on our trade agreements?  What about enforcing our trade laws?”

 Pennsylvania has lost more than 200,000 manufacturing jobs since 2000.  As CBS Marketwatch’s Rob Schroeder noted, that means roughly one-fourth of all Pennsylvania manufacturing jobs have disappeared. 

There’s little doubt that trade and manufacturing will continue to be major voter concerns in the upcoming primaries.  The candidates would be wise to offer clear and specific answers as to what action they would take if elected.

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It’s no surprise that Ohio voters oppose NAFTA.  The state has lost more than 240,000 manufacturing jobs since 2000 and, according to exit polls Tuesday, “eight in 10 Democratic primary voters feel international trade agreements take more jobs away than they create.”

 The prevailing wisdom has been that Texas is different, however.  Because it’s a border state, many analysts presumed that the Lone Star state has a more favorable view of NAFTA than some of its northern compatriots.  Actually, it turns out that Texans holds NAFTA in low regard, too.  In the same poll, a full six out of ten Texas voters said that NAFTA “hurts jobs.”

The people get it.  The know that unbalanced trade agreements are dismantling U.S. manufacturing.  And so ManufactureThis expects a lot more talk on trade policy as the primary season continues to drag along. 

And it’s not just NAFTA.  Action on China is needed, too, to address illegal foreign dumping, subsidies, and currency manipulation.  Vague promises that NAFTA needs to be “renegotiated” just won’t cut it.

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  Well, Hillary Clinton beat Barack Obama in the Ohio primary yesterday.  But while both candidates had stumped for votes by bashing NAFTA, neither one seemed willing to tackle China. 

The U.S. racked up a $500 billion manufacturing trade deficit in 2007, half of it with China alone.  China cheats on trade agreements in order to further its own interests.  There’s little doubt that laid-off Ohio factory workers want to hear that someone is going to stand up to China, and fight for their jobs.

But they didn’t hear that from either candidate.  Which leaves us wondering if the Ohio primary told us anything of use.

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  The latest monthly study from The Institute for Supply Management reported yesterday that its February manufacturing index registered at 48.3, the weakest reading in nearly five years.  That’s slightly worse than the 48.4 reported in December, and a sure sign that the U.S. manufacturing sector is contracting.

In the Washington Post today, EPI’s Susan Helper notes that the U.S. “manufacturing sector has been hammered” by job losses, but remains “vital to our nation’s economy” because it accounts for “12 percent of gross domestic product and over half of our national spending on research and development.”

Helper suggests greater innovation and more education and training for workers as key components of any plan to revitalize U.S. manufacturing.

While these are important points, ManufactureThis would argue that enforcement of existing U.S. trade law, especially against countries like China (that cheat on trade agreements), should also be an important first step.

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