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OPINION

Kearns: Remember U.S. manufacturing when you vote

Kevin L. Kearns

Voters are going to the polls with economic worries uppermost in their minds. Although the “headline” unemployment rate has fallen to 4.9 percent, labor force participation rate remains near historic lows, indicating many people who might work are not doing so. Discouraged workers have given up looking for work, and middle-class jobs with benefits are scarce. One issue ties these troubles together — manufacturing.

America’s factories are struggling. In spite of economic growth, U.S. manufacturing is in a recession. The sector has contracted for four straight months, with exports lower because of a weak global economy and a strong dollar. But competition from illegally subsidized foreign producers is the main culprit.

Federal data show the U.S. has lost roughly 5 million manufacturing jobs since 2000, some 300,000 in Michigan alone. The loss of so many skilled, high-paying jobs has profoundly hurt America’s middle class, with formerly well-paid workers forced into unemployment, early retirement or lower-paying service jobs. No wonder voters are angry. To restore the viability of domestic manufacturing, voters need to choose from candidates who will tackle the big problem facing the nation’s factories: namely, bad U.S. trade policies.

When Americans are asked why U.S factories are moving overseas, they usually think “cheap labor.” But what really hurts America’s factories is the massive subsidies that foreign governments provide to their industrial sectors. China, Japan, Malaysia, Singapore, South Korea and some EU countries deliberately intervene in markets to weaken their currencies, making their goods artificially cheap against American-made products. That’s why the annual U.S. trade deficit with China has exploded over the past 15 years.

Voters should be asking, “Who will stop this hemorrhaging of our manufacturing base?”

In 2013, bipartisan majorities in both chambers of Congress urged President Barack Obama to include strong, enforceable currency measures in the Trans-Pacific Partnership. Congress did so again in 2015 when it passed negotiating objectives for the TPP. Inexplicably, the Obama administration ignored Congress, and there are no penalties for currency manipulation in the TPP. That means the deal, if passed, will allow even more artificially cheap goods to enter the U.S. market, further weakening domestic industry.

America’s manufacturers are beset by a host of other unfair trade practices. China massively subsidizes its energy sectors and props up key industries like autos, steel, glass, paper, rubber and electronics. These subsidies are actionable under world trade law, and could be countered if only a U.S. president enforced existing trade agreements.

Most countries have cohesive industrial strategies to grow their manufacturing sectors — but not the United States. That’s why Germany, and not America, enjoys a trade surplus with China and the world, successfully exporting its products while restraining imports.

A strong manufacturing base is critical to America’s economic future. Manufacturing jobs pay better than service jobs, and provide better benefits. They support related jobs throughout the economy. And manufacturing undertakes 70 percent of private sector R&D, spawning future industries.

When voters listen closely to candidates on trade issues, they’ll quickly find out who wants a robust future for America’s factories, jobs and middle class.

Kevin L Kearns is president of the U.S. Business & Industry Council.