BREAKING

Editorial

Buy American Or Die

Protectionism Or Fair Trade?

Article By: Paul Wideman And Nichole Grodski www.bareknucklechoppers.com

Originally Published In The January 2011 Issue Of Cycle Source Magazine

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It would seem that any American that still holds dear the tenants of the U.S. Constitution would believe in free trade. Free trade means that any American company or individual is free to buy, sell or trade with any country so desired. Such principles promote competitiveness and higher quality for the consumer, while offering the businessman many options for cost savings. Without delving into a political editorial, it seems most Americans want less government involvement in their lives, both business and personal. A recent Gallup poll shows that 57% of Americans believe the government is too involved in issues that should be left to individuals or private business. So trade should be no different, right? Ideally, yes, but unfortunately all parties involved must take the same approach to trade, or an uneven balance is established. Such an imbalance is shaping the economic world we live in today, and it is affecting the motorcycle world greatly, not to mention manufacturing as a whole. While it may seem that this column picks on China from time to time, that is not completely true. China is discussed often, and that is due greatly to the fact that China is a huge problem for American jobs, and our government does little about it. One of the biggest inequalities of USChina trade is the tariff gap. Of the top ten US imported goods from China, only one product group, LCD televisions, is subject to duties. This duty is a mere 5%. Conversely, China’s top ten imported products are all subject to either duty, a value added tax (VAT), or both. To compare apples and apples, the US taxes running shoes imported from China at a rate of 10.5%, while China taxes American shoes at a rate of 41%, including the VAT. The US rate is roughly 25% that of China’s. Of the top ten imports for each respective country, the US imposes an average 3% to the declared value, while China tacks on an average of 27%. This obviously creates a different climate for manufacturers eyeing new markets in China, and it proves our government has done little to help the American manufacturer realize competitive price points.

In 2009, all US products were left off the Chinese list of suitable items that could be purchased with consumer subsidies. Subsidies are monies from the government distributed as incentives for meeting certain trade criteria. This contributed to American exports to China falling by 2.6%, while China’s economy grew by a reported 8.8%. In the last 12 months, China has increased tariffs on numerous US exports, including Nylon, chicken, and steel. In the meantime, we have done little, if anything. This is where the ugly term “protectionism” comes into play. Protectionism is a policy of imposing various trade barriers to protect domestic industry. Protectionism has always been viewed as detrimental to fair trade, and opposes the very principles of liberty our country was founded upon. But where can the line between fair trade and protectionism be drawn? Simply put, our lawmakers must demand the same regulations be imposed for goods coming and going from each respective country. This does not constitute protectionism as we are not seeking to protect our industries from foreign competition, but we are demanding our businesses are afforded the same duty and tax incentives our global counterparts are offered. Until China and other exporting countries lower the excise and duties on goods coming from the US, we should meet every one of their products with a similar tariff when it hits our shores. This will either make the thought of importing goods less appealing to American retailers, or it will promote additional exports from our country. Either way, the American manufacturer benefits. There is a World Trade Organization rule that allows a member nation to impose an across the board duty on all Chinese imports. This duty would be proportionate to the trade deficit we have with China. As the deficit falls, so does the duty amount. This will eventually create a trade balance.

In addition to import tariffs, anti-dumping laws can be implemented. Dumping is the practice of flooding a region with cheaper, foreign goods at prices below market value to crush a particular sector or industry and effectively kill the competition. This frees the market of domestic goods, leaving only the imported product. This is obviously not fair trade, and should be disallowed. There are similar practices being used by domestic companies to weed out the smaller, independent retail stores when large chain outlets move into an area. While this type of market manipulation is unethical, it may not be up to the government to watchdog this, but instead for the people to identify such practices and avoid suppliers that hurt our economy and jobs with such unscrupulous activity. Another topic that must be discussed is the need for environmental and labor standards to be similar, if not the same, from one country to the next. We will have a future installment that delves deeply into this subject, but for argument’s sake, we cannot expect our domestic manufacturers to compete on a global stage against foreign producers that have either loose standards or no standards relative to the environment and labor. These two expenditures are the greatest for American manufacturers and are arguably the foremost reasons jobs and manufacturing are outsourced.

It is scary to ever ask our government to get involved in anything other than delivering the mail, paving the streets, or protecting our borders. But this is a topic that must be addressed and you have the power to make a difference. Aside from the normal write your congressman spiel, you can investigate further, and choose to avoid retailers that promote the type of practices discussed here by offering Chinese made products. Regardless of what our government does, if we refuse to buy inferior imported goods, the problem will slowly recede, and many of our countrymen can go back to work. Besides, when was the last time your mail was on time, the street well paved, and well, we know the problem at the border. So, let’s not rely too much on Uncle Sam; let’s do it ourselves. For anyone who would say that this column is either been unfair or uneducated we have set up a public forum for just that purpose. Everyone is invited to express themselves on it. Hell, if your point of view is expressed in a human manner we may even print a rebuttal column in an issue of the magazine. www.cyclesource.com/ madeinusa.htm

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