Monday, May 24, 2010

PC4D: Lee Fisher Blames Rob Portman (and US Trade Policies) for Ohio Job Losses, DMV Lines and Cancer

According to the Cleveland Plain Dealer, the Democrat Party and its Ohio Senate candidate Lee Fisher are going after his competition, Republican Rob Portman, for being a good United States Trade Representative and applying US law correctly:
Ohio Democrats who say that free trade has cost good-paying factory jobs are about to get personal, and their target is a clean-cut Cincinnati attorney named Rob Portman.

He's the Republican U.S. Senate candidate in the race to succeed George Voinovich, and he represents a rare opportunity for Democrats who blame factory closings on GOP trade practices. Portman, 54, has a record -- not just of votes from his days in Congress, but also of decisions made when he was trade ambassador in President George W. Bush's White House in 2005 and 2006.

There's no need for a faceless bogeyman or amorphous "they" in this year's Senate race when opponents say that "they" took our jobs.

"Congressman Portman supported Chinese government-backed steel companies over Ohio workers," says John Collins, spokesman for Democratic U.S. Senate candidate Lee Fisher. Fisher is currently Ohio's lieutenant governor. "Simply put," Collins says, "if you want to see the jobs Congressman Portman created after spending 20 years in Washington, you'd have to go to China."

Yet a Plain Dealer examination of trade cases and practices, including key cases that Democrats have also pored over, shows the rap against Portman is as political as it is substantive. Still, Portman faces a challenge making his case, because the issue of trade and lost jobs is nuanced and emotional, especially in a state where everyone knows someone who's out of work.
The Plain Dealer goes on to do a very good job explaining how the Dems' specific claim - about Chinese pipe imports - against Portman is complete and utter garbage.  Basically, Fisher's team and other Democrats are utilizing a classic protectionist myth that all imports are unfairly traded (on behalf of dirty rotten cheaters and the horrible tycoons who love them, of course).  In this case, the protectionists conflate two separate Chinese pipe cases:
  • A 2005 case on circular welded non-alloy steel pipe under Section 421 of US Trade Law, which has nothing to do with "unfair trade" or "predatory pricing" and requires Presidential consideration of the overall "national economic interest"; and
  • A series of 2008-2009 cases on other types of pipe under the US Antidumping and Countervailing Duty (CVD) Laws, which (at least theoretically) do.  
(For background on Section 421 and how it differs from "unfair trade" cases, go here.)  Portman, of course, was only USTR in 2005 and 2006, so to claim, as the Dems do, that "Bush's refusal to stop China's predatory and protectionist trade practices, based on the advice of his trade representative, helped China at the expense of jobs here in the U.S." is total rubbish.  And when called on their bluff by the Plain Dealer, the Dems' response is unsurprisingly inane:  "Is it a different pipe? Yes, it's a different pipe....  But the market fundamentals are the same."

This response, of course, is jibberish.  USTR Portman allegedly advised the President that it was not in the national economic interest to impose special, never-before-used safeguards on fairly-traded imports of Chinese pipe that were found to cause "market disruption" in the United States.  Then, three years later and after Portman was long gone, the independent International Trade Commission and Department of Commerce (unrelated to Portman's USTR) determined that imports of different kinds of steel pipe were unfairly priced/subsidized and materially injuring the domestic pipe industry.  So Portman's decision re: Section 421 had nothing to do with enabling "predatory protectionists" or "unfair trade" and everything to do with making a legally-bound determination about the impact of unprecedented pipe protectionism on the overall economic interest of the United States.  Indeed, for Portman to have decided in favor of the domestic pipe producers (one of whom is French owned, natch) and their unions just because he was from Ohio would have shown him to be a disingenuous political panderer.

And speaking of biased political pandering, that brings us to another one of the Fisher team's panderiffic statements from the Plain Dealer article:
"Ohio voters will be troubled to learn that Congressman Portman spent 20 years in Washington supporting trade policies that shipped Ohio jobs overseas and allowed cheap Chinese goods to undermine our manufacturers.," Collins, Fisher's spokesman, says.
Ahh, yes, the protectionist myth about American manufacturing decline.  Let's see, Portman was USTR from 2005 and 2006, and as I've mentioned repeatedly, the US manufacturing sector actually thrived during those years (and in 2007):
[T]all tales about the demise of US manufacturing are probably the most prevalent, and misguided protectionist myth out there.  First, until the onset of the latest recession, the US manufacturing sector was setting all kinds of performance records.  As noted in my Cato Institute paper last year: "According to nearly every financial statistic that is relevant to evaluating the health of the manufacturing sector, it was unequivocally thriving until the onset of the recent US financial crisis and recession.  In 2006, US manufacturing achieved record highs for output, revenues, profits, investment returns, exports, and imports.... [I]n 2007 new records were set for output, revenues, value added, and exports in the manufacturing sector." (See paper for footnotes, but don't bother: it's all government data.)  During this same period ('06-'07), do you know what else was setting records?  Yep: imports.  Of course, the strong, positive relationship between imports and US manufacturing success makes total sense when you consider that almost 60% of all imports into the United States are capital goods and equipment - things that American manufacturers rely on to produce their globally competitive products (in record amounts).

Oh, and just so we're totally clear, the US manufacturing sector was, and remains, the world's largest: according to the United Nations Industrial Development Organization, US factories are the world’s most productive, accounting for 25 percent of global manufacturing value-added.  By comparison, Chinese factories account for only 10.6 percent. (But don't just take my, or the UN's, word for it: the White House's 2009 "Manufacturing Framework" also made America's manufacturing dominance crystal clear.)
So when Rob Portman was USTR, US manufacturing was absolutely killing it, and we're doing pretty well today too.  Nice work, Ambassador!

But hey, maybe it's just Ohio's jobs that were destroyed by Portman's pernicious trade policies.  Well as the handy chart below makes clear, Ohio's unemployment rate was around 5.5% throughout Portman's tenure and only took a nosedive after Portman left his USTR post and the Great Recession took hold:

I've also shown you Texas' unemployment over the same period because I think it's quite amazing that Ohio and Texas had very similar unemployment rates until just before the recession began.  It was only in 2007 and beyond - particularly after the Fall 2008 crash - that Ohio's unemployment rate goes off the rails and Texas' rate remains relatively low.  What's also interesting about that period, of course, is that global trade dramatically contracted, as did the US trade deficit.  So Ohio's unemployment cratered at the very same time that the US trade deficit was dramatically shrinking, and yet the Ohio Democrats want to blame "free trade" and imports for their problems?

Umm, no.

But let's go back to Texas for a second.  As the employment data above make clear, Texas has absolutely dominated Ohio (and other rust belt states) during the recession.  And as the table below demonstrates, Texas was trading like crazy over the same period.

Texas crushes Ohio in exports and imports in 2008 and 2009, and it's not just a population advantage.  The per capita numbers are almost as stark.  Texas also is running a trade deficit in both 2008 and 2009, so it's not like a massive trade surplus is the reason for Texas' success.  Pretty interesting, huh?

Now, because I'm not a political hack, I'm not going to sit here and claim that it's only because of free trade that Texas has so thoroughly thrashed Ohio over the last 2-3 years.  There are lots of reasons, including tax, labor and trade policies, that have caused Texas' economy to weather the storm better than Ohio's (and that of pretty much every other state in the union).  But at the same time, the trade and employment data above should end, once and for all, the disingenuous political claims that Rob Portman's "free trade" advocacy somehow led to Ohio's demise.  It's just not true, and to allege as much is to shamefully mislead a scared Ohio citizenry that just doesn't know any better.

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