Monday, October 29, 2012

Hot Air

Mitt Romney wants you to know that, before he finishes breakfast on January 21, 2013, he will declare mainland China a currency manipulator.

He told us so in the last presidential debate, when he maintained

They’re making some progress; they need to make more. That’s why on day one, i will label them a currency manipulator, which allows us to apply tariffs where they’re taking jobs. They’re stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods.

He had told us in the second presidential debate, when he contended

We lose sales. And manufacturers here in the U.S. making the same products can't compete. China has been a currency manipulator for years and years and years. And the president has a regular opportunity to label them as a currency manipulator, but refuses to do so.

On day one, I will label China a currency manipulator, which will allow me as president to be able to put in place, if necessary, tariffs where I believe that they are taking unfair advantage of our manufacturers.

And he did so way, way back in December, 2011, when he remarked during a CBS television interview (as part of a report obviously favorable to the ex-governor) "The actions a president can take are, No. 1, to declare China a currency manipulator. And under our law, that allows the president to apply tariffs in places where the president believes that China's practices are killing American jobs."

Few issues better demonstrate Romney's Dr. Jekyll and Mr. Hyde persona than his China rhetoric.   In a fair and balanced (no, really) manner.    Business Writer George Hohmann of The Charleston (W.Va.) Daily Mail describes the response of the President  to Chinese tires flooding the U.S.A. early in the Obama Administration, explaining  

Charleston native Charlotte Lane was serving on the U.S. International Trade Commission when the United Steelworkers brought the case against Chinese tires in 2009. Lane, who finished her eight-year term on the commission last year, now practices law in Charleston. She remembers the tire case well.

Most disputes like the China tire case are brought under the law that says tariffs can be imposed if products are being dumped at prices below cost. But the tire case was brought under a provision that says tariffs can be imposed if, for any reason, a product is coming into the country in such huge amounts it is disrupting industry.

Lane recalled that she voted in the majority when the U.S. International Trade Commission found, in a 4-2 decision, that Chinese tires were disrupting the U.S. market.

The commission's recommended remedy: impose a 55 percent tariff on Chinese-made passenger tires for the first year, a 45 percent tariff the second year and a 35 percent tariff the third year.

President Obama chose to impose a 35 percent tariff the first year, 30 percent the second year and 25 percent the third year.

Lane recalled that the tire case "was a really big deal" while she was on the commission. "Interestingly enough, the provision the tire case came under was added when China came into the World Trade Organization in 2001," she said.

"There have been several market-disruption cases," she said. "The others, (then-President) George Bush turned down. This is the only one where the President imposed tariffs.

"It was really interesting because most cases are brought by industry," she said. "This one was brought by the United Steelworkers." (The United Rubber Workers merged with the steelworkers union in 1995).

"It was interesting from a political standpoint because it was brought shortly after the President took office, brought by a huge labor union, and with the backdrop that a President had never put tariffs on a product under this provision.

"It was clear when we looked at it that market disruption was taking place, domestic workers were being injured." Under the law, six to nine months prior to the expiration of the tariffs, Obama could have asked the International Trade Commission to investigate whether the tariffs needed to continue. He did not do that. The tariffs expired Sept. 26.

In an article in the current issue of the United Steelworkers' magazine titled, "Tire Tariffs Worked," the union noted that it brought the case against Chinese tires.

The article reports that after the trade commission found that the tires were damaging the U.S. industry, "the Obama administration acted on its recommendation to impose a graduated tariff of 35 percent the first year, 30 percent the second year and 25 percent the third year."

Not mentioned in the article is the fact that the trade commission actually recommended higher tariffs.

The union reported that the tariffs Obama imposed worked.

The tariffs "allowed many American tire manufacturers to maintain stability and return to profitability in the aftermath of the global economic crisis and prolonged recession that followed," the article quotes Steelworkers International President Leo Gerard as saying.

The article goes on to quote Gerard as saying, "Because the tariffs were so effective, extending them to a fourth year could have resulted in compensation being paid to China, so we refused to pursue an option that could potentially reward China for its actions.

"There should be no doubt that President Obama's decisive action and leadership at a critical time saved the domestic tire sector," Gerard said.

But Alex MacGillis of The New Republic has the audio, video, and transcript to get a better idea of Mitt Romney's sentiment as recently as 2009, when Romney engaged in a luncheon discussion of the Foreign Policy Initiative, a neo-conservative organization founded by William Kristol.  It's safe to assume that few of the attendees were industrial workers whose jobs were endangered by cheap imports from Asia, including the behemoth the candidate now seems so exorcised with.     Answering a question "regarding China and our protection of the tire manufacturing industry." Romney commented, in part

To the 50 people who lose their jobs, it’s a very bad idea, and they will resist with great energy and passion the idea of allowing horses to draw plows because it will make their life far more uncertain, at best. Those of us who stand back a bit say, no no no, don’t you understand that by having these plows and releasing those 50 people that someone, one of them or someone else is going to come up with something else for them to do? Making chairs, making movies whatever that is going to make everyone better off. More productivity will make everybody wealthier and more successful...

(Employees, corporations) the shareholders and all the wealth owners, capitalists behind the tire industry are saying don’t let those foreign tires in here, it’s gonna hurt me. And it will -- as those tires come in it does hurt them directly, and therefore what their response is, their immediate response is, don’t let them in. But if that’s what their response is, my experience is over time, they will lose out slowly but surely...

So putting barriers up, trying to put walls up, in my opinion is a defeating strategy and will yield ultimate decline and collapse....

So, long story short, the wrong answer for America’s workers and for the wealth of every citizen of this nation is to try and put up barriers to stop competition, either domestic competition or competition from abroad.

Facing off with Obama in Boca Raton, Romney argued " They’re stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods."   But as MacGillis concludes, "there was one time Obama stood up to China.  And Mitt Romney, speaking behind closed doors to a 'sophisticated audience,' explained why he was wrong to do so.

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