The panels on the third day (March 25th) of the virtual CPA conference highlighted how the technology industry contributes to national security and the economy as well as how a currency policy would contribute to President Biden’s “Build Back Better” industrial strategy.Read more
The second day of the CPA virtual conference held March 23-27th featured two panels:
- the first on the topic of “Reforming Corporate Taxation to Help Reshore Our Industries,” and
- the second on ”Buy American.”
In the first panel, the focus was on whether or not additional tax reform is needed by Congress to make sure that tax loopholes that currently favor multinational corporations over domestic companies will be closed.Read more
The Coalition for a Prosperous America held its annual trade conference virtually for the first time on March 23 – 26, 2021. I had the pleasure of attending the annual trade conference in person six years in a row when it was held in Washington, D. C., but last year’s conference had to be canceled on short notice because of COVID shutdowns. This year’s virtual conference was free to all CPA members and the program ran from 11 AM – 4 PM ET each day. The conference was a huge success because of the valuable content of the sessions, lack of technical glitches, and Melissa Tallman’s hard work.Read more
One definition of the “American Dream” is “The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society in which upward mobility is possible for everyone. The American dream is believed to be achieved through sacrifice, risk-taking, and hard work, rather than by chance.” Wikipedia states, “The American Dream is rooted in the Declaration of Independence, which proclaims that “all men are created equal” with the right to “life, liberty and the pursuit of happiness.” The question is: Are we losing the “American Dream.?”Read more
It’s exciting to have a new Maker Space in Southern California. Maketory is an industrial coworking facility that provides flexible fabrication and manufacturing in a 26,000 sq. ft. building in the Miramar/Mira Mesa area of San Diego, California. Since opening in December 2019, Maketory has become a hub of creativity and innovation for inventors, innovators, and entrepreneurs as the only Maker Space south of Carlsbad in North San Diego County.Read more
On Sunday evening, February 14th, Curtis Ellis passed away from a long struggle with bladder cancer at the age of 67. Curtis was a true patriot and defender of liberty, who believed in all of the greatness our country and devoted much of his life to putting American first in economic policies to benefit American workers and not just Wall Street. Curtis’ career included work as a campaign manager for state and federal elections, working for Congress as a media liaison for the New York State Senate Central Staff and held a senior staff position in the U.S. House of Representatives. He had decades of experience as a journalist, producer, writer and reporter for the New York Times, San Francisco Chronicle, Chicago Tribune, Time magazine and other outlets, such as HuffPost and World Net Daily. He appeared on 60 Minutes, HBO, NBC, CNN, NPR, MSNBC, Fox Business and Fox News, as well as national and regional radio shows.Read more
On his very first day in office, President Biden signed an Executive Order canceling the permit for the Keystone XL pipeline. Halting work on the “pipeline in South Dakota immediately eliminated 1,000 union jobs. TC Energy, the company that was developing the project, predicts that more than 10,000 jobs will be lost in 2021 due to the order.” Only a week later, he signed an Executive Order freezing new oil or natural gas leases and drilling permits on federal land. These orders put American energy independence at risk, which will hurt American manufacturers.Read more
During his campaign, Biden laid out his economic agenda for the country: “Build Back Better, which includes a $700 billion investment in procurement and research and development for new technologies such as biotech, clean energy, and artificial intelligence.” The goal is that “the new plan will help create 5 million new jobs.” As Vice President under President Obama, Biden advocated engagement with China but changed his tune during the campaign, “calling Chinese President Xi Jinping a “thug. ” While he repeatedly criticized “Trump’s trade and tariff war with China as being ineffective and failing to protect the US economy,” the Biden Administration must maintain the steel and aluminum tariffs to have any hope of achieving his goal.Read more
Reshoring of Manufacturing Increases in 2020
The United States gradually lost manufacturing jobs from the peak of 19.5 million in 1979 to 17.3 million by early 2000. However, after China was granted Most Favored Nation status that year, the loss of manufacturing jobs in the U.S. accelerated dramatically as American manufacturers moved manufacturing offshore and cheaper Chinese goods drove U.S. manufacturers out of business.Read more
China was granted Most Favored Nation status through presidential proclamation on an annual basis from 1980 – 1998. This was because the Trade Act of 1974 stated that “MFN status may not be conferred on a country with a nonmarket economy if that country maintains restrictive emigration policies” China was, and still is, a nonmarket economy and restricted emigration, but the Act allowed the president to “waive this prohibition on an annual basis if he certifies that granting MFN status would promote freedom of emigration in that country.”
According to CRS Report 98-603 for Congress, “China’s Most-Favored-Nation (MFN) Status: Congressional Consideration, 1989-1998:” After the Tiananmen Square protests in 1989, there was enough opposition to granting MFN status to China that the “House passed joint resolutions disapproving MFN for China in both 1991 and 1992,” but the Senate didn’t pass the joint resolution. However, the real focus of the debate was not whether to deny MFN status for China altogether, but whether or not to “place new human rights conditions on China’s MFN eligibility.” Congress passed legislation in 1991 and 1992 that would have placed further conditions on China’s MFN status, but President Bush vetoed the legislation.
In 1993, President Clinton announced he would link China’s MFN status to human rights progress beginning in 1994. However, President Clinton reneged on his campaign promise and reversed himself: “On June 2, 1995, President Clinton transmitted to Congress his intention to waive the emigration prohibition and extend MFN status to the People’s Republic of China for an additional year, beginning July 3, 1995.”
An L.A. Times article of May 27, 1994, reported: “President Clinton, abandoning a central foreign policy principle of his Administration, announced Thursday that he has decided to “de-link” China’s privileged trading status from its human rights record. While acknowledging that China “continues to commit very serious human rights abuses,” Clinton said that he has come to believe that broader American strategic interests justify the policy reversal.”
The annual granting of MFN status to China by a presidential waiver continued through 1998. Note that “On July 22, 1998, legislation was enacted which replaced the term “most-favored-nation” in certain U.S. statutes with the term “normal trade relations.” This made it easier for Congress to make the fateful decision to extend “permanent normal trade relations,” or PNTR, to China when the Senate voted to give China permanent most-favored-nation status on September 19, 2000. This vote paved the way for China’s accession to the World Trade Organization.
As Reihan Salam, President of the Manhattan Institute wrote in an article titled
“Normalizing Trade Relations With China Was a Mistake,” in the June 8, 2018 issue of The Atlantic, “PNTR was a euphemism designed to get around the fact that the traditional term for “normal trade relations” was “most-favored-nation” (MFN) tariff status…MFN status meant imports would be treated as favorably as those arriving from “the most favored nation.” Absurd as it might sound, this linguistic convention had meaningful political consequences. To argue that we ought to have normal trade relations with China was one thing. Sure, why not? To make the case that China ought to be treated as our most favored nation was a more vexing PR challenge, not least in the wake of the brutal crackdown that followed the Tienanmen Square protests in 1989.”
An article in the American Economic Review, “The Surprisingly Swift Decline of US Manufacturing Employment,” by Justin R. Pierce and Peter K. Schott, July 7, 2016, states:
“The permanence of PNTR status made an enormous difference: Without PNTR, there was always a danger that China’s favorable access to the U.S. market would be revoked, which in turn deterred U.S. firms from increasing their reliance on Chinese suppliers. With PNTR in hand, the floodgates of investment were opened, and U.S. multinationals worked hand-in-glove with Beijing to create new China-centric supply chains.” https://www.aeaweb.org/articles?id=10.1257/aer.20131578
This change in U.S. trade policy that eliminated potential tariff increases on Chinese imports resulted in industries that were more vulnerable to the change experiencing greater employment loss, increased imports from China, and higher entry into the U.S. market by U.S. importers and foreign-owned Chinese exporters. My three books and the hundreds of articles I’ve written since 2009 have described what has happened to U.S. manufacturing since 2001. Besides the loss of 5.8 million manufacturing jobs and the closure of an estimated 67,000 American manufacturers, American manufacturing shifted toward more high-tech, less labor-intensive production. However, as China upgraded their technology in the past few years, we started losing our high-tech manufacturing also.
In addition to the annual reports to Congress by the U.S.-China Economic and Security Review Commission documenting China’s violation of World Trade Organization rules along with human rights violations, the U.S. Department of State submits an annual report on International Religious Freedom in accordance with the International Religious Freedom Act of 1998. According to the 2018 International Religious Freedom Report :
“Multiple media and NGOs estimated the government detained at least 800,000 and up to possibly more than 2 million Uighurs, ethnic Kazakhs, and members of other Muslim groups, mostly Chinese citizens, in specially built or converted detention facilities in Xinjiang and subjected them to forced disappearance, torture, physical abuse, and prolonged detention without trial because of their religion and ethnicity since April 2017. There were reports of deaths among detainees. Authorities maintained extensive and invasive security and surveillance, in part to gain information regarding individuals’ religious adherence and practices.”
Therefore, it gave me great pleasure when I read that on September 17, 2020, Senator Tom Cotton (R-Arkansas) introduced a bill (S.4609) that “would strip China of its permanent most-favored-nation status—also known as Permanent Normal Trade Relations—a designation it has held for the last twenty years. If passed, the legislation would make extending most-favored-nation status to China an annual decision for Congress and the president.”
Cotton said, “Twenty years ago this week, the Senate gave a gift to the Chinese Communist Party by granting it permanent most-favored-nation status. That disastrous decision made the Party richer, but cost millions of American jobs. It’s time to protect American workers and take back our leverage over Beijing by withdrawing China’s permanent trade status.”
Senator Cotton’s press release states:
“The China Trade Relations Act would revoke China’s permanent most-favored-nation status and return to the pre-2001 status quo, whereby China’s MFN status must be renewed each year by presidential decision. Congress could override the president’s extension of MFN by passing a joint resolution of disapproval.
The bill also would expand the list of human-rights and trade abuses under the Jackson-Vanik Amendment that would disqualify China for MFN status, absent a presidential waiver. The abuses that would make China ineligible for MFN status, absent a presidential waiver, are as follows:
- Uses or provides for the use of slave labor;
- Operates ‘vocational training and education centers’ or other concentration camps where people are held against their will;
- Performs or otherwise orders forced abortion or sterilization procedures;
- Harvests the organs of prisoners without their consent;
- Hinders the free exercise of religion;
- Intimidates or harasses nationals of the People’s Republic of China living outside the People’s Republic of China; or
- Engages in systematic economic espionage against the United States, including theft of the intellectual property of United States persons”
China’s strategic goal is to dominate the sectors of economic growth that historically have held the key to world power: transportation energy, information, and manufacturing. Their “Made in China 2025” plan is designed to dominate key technology sectors such as artificial intelligence, quantum computing, hypersonic missiles, and 5G. They also plan to become the dominant power in space by 2049.
If this bill isn’t passed in the Lame Duck session, I strongly urge that it be reintroduced into the next Congress and passed unanimously next year. It’s time China for us to stop treating China as a friend and recognize China as the enemy to our national sovereignty it is.
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