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New trade deals that could cripple Ohio

Opinion pieces and speeches by EPI staff and associates.


New trade deals that could cripple Ohio

By  Ross Eisenbrey

The writer is vice president and policy director of the Economic Policy Institute, which describes itself as a nonprofit, nonpartisan organization that researches how the economy affects workers.

Before year’s end, it is likely that every member of Ohio’s congressional delegation will have the opportunity to vote on whether to jeopardize more than 15,000 of the best manufacturing jobs in Ohio.

Two different trade deals the Bush administration is negotiating — one with Thailand, the other with South Korea — include a goal of eliminating or significantly reducing the tariff on imported pickup trucks that has prevented the kind of import onslaught that has destroyed so many auto industry jobs in the past 25 years. Congress should exercise its power to kill any such deal.

In 1963, the Johnson administration imposed a 25 percent tariff on imported pickup trucks that has never been reduced. As a result, Japanese manufacturers that have made Thailand the world’s second largest producer of pickup trucks have been unable to make a dent in the American market. Japanese automakers and import dealers are lobbying hard for a new trade deal with Thailand. South Korea, which uses a variety of tariff and nontariff barriers to exclude foreign cars from its market, is anxious to add pickups to the vehicles it exports to the United States.

What would such a deal mean for Ohio? The Buckeye State is already in a world of employment trouble. Total employment has not recovered from the 2001 recession; there are nearly 200,000 fewer jobs today than in January 2001. Most of the jobs that have been lost were high-paying manufacturing jobs. There were 998,000 manufacturing jobs in Ohio in January 2001; today, there are 175,000 fewer.

Because the auto industry is at the heart of Ohio’s manufacturing base, the woes of GM and Ford weigh heavily on Ohio’s future. Those woes are the result of mismanagement, changing consumer tastes, the spike in gas prices caused by the Iraq war, and relentless import competition, made worse by unfair trade practices. The crushing weight of those problems falls most directly — in terms of job loss, loss of health benefits and wage cuts — on the autoworkers and those who produce the steel, glass, electrical components, tires, and other parts that make up every car.

The public safety net programs have big holes, and a very small percentage of job losers ever get retraining for an equivalent job. The citizens of every city and town where those jobs are lost get hurt, too, both because the tax base declines and because fewer dollars go into the local economy in the form of paychecks and health benefits. The loss of the state’s 15,000 jobs producing the engines, stampings, and transmissions for the Big 3’s pickups would have ripple effects far beyond the factories in Lima, Cleveland, Toledo, Defiance, Sharonville, Parma, Twinsburg and Maumee.

The state’s congressional delegation should have few economic priorities higher than preserving and strengthening the middle-class jobs base the auto industry provides. Yet, few of them seem aware of the challenges their constituents are facing, and fewer still have offered any solutions. Most of those solutions require creativity and boldness, qualities mostly lacking in Congress.

But every member of Congress can at least resolve not to make matters worse by, for example, voting to open the gates to a flood of imported pickups. One thing is certain, any senator or congressman from Ohio who votes to cut the pickup truck tariff is voting to destroy his own constituents’ economic future.

There are many who consider the pickup truck tariff protectionism, including U.S. Trade Representative Rob Portman, formerly a congressman from Cincinnati, who espouses the Bush administration’s view that our goal should be zero tariffs. But even the most zealous free-trader ought to see that now is not the time to add to the Big 3’s troubles.

The announcement of 60,000 job cuts at Ford and GM, on top of Delphi’s looming bankruptcy, should persuade anyone who cares about workers and their families to put off this gift to foreign automakers and those who share in their profits. Ohio does not need another pickup truck option nearly as much as it needs a revitalized auto industry and the jobs it provides.

Ross Eisenbrey is vice president and policy director of the Economic Policy Institute in Washington, D.C.


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