Baltimore, Maryland US - Prominent policy analyst Alan Tonelson of the USBIC (US Business and Industry Council) issued a warning to flexible polyurethane foam producers during the PFA (Polyurethane Foam Association) Spring General Meeting recently, advising that measures are needed to prevent further deterioration in the US domestic market.
In the warning, Tonelson said that without an overhaul of US trade policy, including trade with China, domestic manufacturing in the US would continue its current decline. He commented, "Our growth engines like manufacturing are faltering."
Tonelson's argument is particularly relevant to the PFA who have suffered a 30-percent loss in production in the past two years as a result of increased imports of Chinese-manufactured upholstered furniture and bedding.
Tonelson argued that Washington is not taking enough action against foreign policies that manipulate currency and form trade deals that lead to export of US production and jobs to economically developing countries.
As such a country, Tonelson emphasised that China poses particular dangers of its own. He said that as China is too poor to raise living standards and contain unemployment through reliance on its own markets, Beijing subsidises overproduction, then exports the surplus at artificially low prices through manipulating its currency and a range of government handouts.
Tonelson concluded that trade challenges faced by polyurethane producers require a comprehensive response that must go beyond trade lawsuits or seeking trade protection and subsidies industry-by-industry. He added, "Domestic industries today are so interconnected that if they don't hang together on trade policy today, they'll eventually hang separately."
Measures recommended by the USBIC included
• A law to make foreign currency manipulation an actionable subsidy under US trade law
• A moratorium on new trade deals with low-income countries and a greater emphasis on market opening in high-income countries
• An emergency tariff on all imported manufactured goods, to bring the trade deficit to sustainable portions
• A border adjustment tax on imports from countries utilising Value-Added Tax (VAT) systems unless VAT-created inequities can be negotiated away in two years
• Higher-mandated US content requirements for military procurement, and high US content requirements for products generated by government-supported "green manufacturing" programmes