In a speech at the second Conference on the Renaissance of American Manufacturing March 27 in Washington, Gordon Brinser, the president of SolarWorld Industries America, posed this question:
"How can the United States continue to benefit from an open global marketplace as the vastly different system of state-sponsored capitalism in China emerges as an economic power and increasingly targets our strategic industries?"
For SolarWorld, the question is not academic. The company is embroiled in a major trade dispute with China. SolarWorld is pitted not only against Chinese competitors but an array of U.S.-based interests that benefit from cheap Chinese products and accuse SolarWorld of standing in the way of increased adoption of solar products.
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| SolarWorld's Gordon Brinser says U.S. government should bring trade cases for companies that are "too small or injured to afford them." |
Brinser said it was time for the United States to adopt a "new game plan" for trade in the face of China's economic model "designed to gut and own our key industries."
Brinser did not paint a picture of U.S. defeat in the global trade wars, echoing Clint Eastwood's Super Bowl ad line that it was "half time," but he is clearly worried by what he sees. And he is not alone.
The last time the United States had a positive trade balance in goods was in 1975. In 2011, the deficit grew to $726 billion. And for the first quarter of 2012, the trade imbalance was ahead of last year, at $193 billion compared to $179 billion in 2011.
The trade deficit in goods is rising despite the positive news that exports are growing. That is in line with President Obama's 2010 National Export Initiative, which seeks to double U.S. exports over five years. A recent White House statement boasted that "U.S. exports over the past 12 months are higher than any previous 12-month period in history, reaching $2.15 trillion, over 36% above the level of exports in 2009. This record-breaking level of exports supported 9.7 million exports-related jobs in 2011, an increase of 1.2 million exports-related jobs since 2009."
But critics of U.S. trade policy say increases in exports do little good if imports are rising even faster. Michael Stumo, CEO of the Coalition for a Prosperous America, points out that exports almost doubled from 2002 to 2007 during the George W. Bush ?administration.
"At the end of the five-year period of nearly doubling exports, we had the biggest trade deficit in the history of the United States and the history of the world. So net exports is the issue, not gross exports," Stumo asserts.
When manufacturers express concerns about international trade, it usually takes little time before fingers are pointed at China. In 2011, the United States suffered a $295.5 billion trade deficit with China. Oil imports and Chinese goods make up the vast majority of the United States' overall trade deficit, which reached $558 billion last year.
"China's economic policies -- subsidies, state-owned enterprises, intellectual property theft, forced technology transfer, currency manipulation -- are now the single largest impediment to job growth in America," complains Scott Paul, president of the Alliance for American Manufacturing.
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| The principal reason we have a trade deficit, says NAM's Frank Vargo, is that the U.S. dollar "has been overvalued too often. It is appropriately valued against most currencies right now." |
Trade experts estimate that each billion dollars of the trade deficit costs the United States thousands of jobs. In a study released last September, the Economic Policy Institute charged that the U.S. had lost 2.8 million jobs, mostly in manufacturing, as a result of the trade deficit with China since that country entered the World Trade Organization in 2001. The study found that the computer and electronic parts industry was hit hardest, losing 909,400 jobs.
While U.S. exports are growing, the types of products being exported worry observers such as Paul.
"We have been exporting some very high-tech things like aerospace, but five of the top 11 fastest-growing exports to China are commodities -- scrap metal, scrap paper, unprocessed oil seeds like soybeans," he points out. "There is not a lot of job creation in that for the United States."
