By Joel D. Joseph, Chairman, Made in the USA Foundation
Tom Friedman, New York Times columnist and apologist for the global economy, said on the Bill Maher show recently that Trump can’t bring back jobs. Wrong. President Trump, with Congressional help, cannot only bring back jobs, he can create new ones.
During the lame duck Congress, the President-elect can start the jobs-creation process. First, he can meet with the CEOs of General Motors, Chrysler, Ford, Carrier and Nabisco, all companies planning to move jobs to Mexico. He can warn them to stop the relocation process because he, and Congress, will change NAFTA and impose tariffs on Mexican imports making the move unprofitable.
What To Do on Day One
On day one, January 20, 2017, President Trump can ban Mexican trucks and drivers from U.S. roads. Currently, Mexican trucks are free to make deliveries in the United States because of a 2011 regulation of the U.S. Department of Transportation. With a stroke of the pen, the new Secretary of Transportation can rollback this dangerous and costly regulation.
The United States government owns two of the largest department stores chains in the world, the Army Air Force Exchange Service (AAFES) and the Naval Exchange Command (NEXCOM). Together these are known as military PXs. At present, these PXs sell mostly imported products even though hundreds of domestic suppliers produce competitive U.S.-made products. By executive order, President Trump can create 100,000 jobs by eliminating imported products from AAFES and NEXCOM. Similarly, the President can require the National Park Service stores, Smithsonian Museum shops and all other government-owned retail stores to stock only American-made products.
Federal law already requires labeling of all imported products with their country of origin. This law is not being enforced at all. Even though 80% of prescription drugs sold in the United States are now imported from India and China, U.S. consumers are not informed about this on their prescription drug labels. President Trump can enforce this law. There are also criminal penalties for not labeling products with their country of origin (19 USC 1304(I)), so the President can instruct his new attorney general to send a letter to CVS, Walgreens and all other drug stores to label their prescription drugs with country of origin information or face criminal prosecution.
Section 2205 of NAFTA, the North American Free Trade Agreement, provides that the President can send a letter to his counterparts in Canada and Mexico and withdraw from the agreement six months later. President Trump should give Canada and Mexico notice on January 20th that the United States is withdrawing from NAFTA. He can then negotiate with Mexico and Canada on the terms of a new agreement, or he can recommend to Congress that it impose a 10% across the board tariff on Mexican goods imported into the United States. He can earmark these funds to pay for the border wall, so that, in effect Mexico will pay for the wall.
I have proposed the Manufacturing Tax of Zero to bring manufacturers back to the United States. In the same law, Congress can reduce taxes on companies who repatriate trillions of dollars that they have sitting in offshore accounts.
Most U.S. drug companies have fled the United States for the greener shores of Ireland because Ireland charges a 12.5% income tax. The Manufacturing Tax of Zero addresses this problem. This proposed law includes a 28% corporate tax rate, with a zero percent tax rate for manufacturing companies and a onetime amnesty rate to repatriate earnings held offshore at a 14% rate.
Companies making 100% of a product in the U.S. would pay no federal corporate income taxes. The tax would be pro-rated so that if a company makes a product with 75% U.S. content, the tax rate would be one-quarter of the standard corporate tax, or 7%. The Manufacturing Tax of Zero would motivate drug companies, auto companies and other manufacturers who have fled the United States, to come back home. It would also incentivize current manufacturers from leaving the country to pursue lower taxes
We should impose countervailing tariffs on China, Japan and other countries for currency manipulation. Currency manipulation, where a country lowers the value of its currency to gain an unfair advantage, is rampant, particularly in Asia. Sen. Sherrod Brown (D-Ohio) is the primary sponsor of the Currency Undervaluation Investigation Act S 433. The bill, cosponsored by U.S. Sens. Jeff Sessions (R-AL), Charles Schumer (D-NY), Lindsey Graham (R-SC), Debbie Stabenow (D-MI), and Richard Burr (R-NC), would require the Commerce Department to treat currency manipulation as an illegal subsidy and impose applicable duties.
The Manufacturing Community Bill of Rights
In Europe it is very difficult for a manufacturer to close and plant and relocate it overseas. The current American law on plant closings is weak. It is called the WARN act, the Worker Adjustment and Retraining Notification Act. This act requires manufactures to give 60 days notice before closing a plant, but does not require anything more than notification. I am proposing that the WARN act be amended by a new law with substantive rights for workers and the community where the factory is located.
Motorola recently built a state-of-the-art cell phone factory in Ft. Worth, Texas. In 2014, Motorola was sold to China’s Lenovo and announced that this flagship plant would be closed. A new amendment to the WARN statute would have kept this plant in operation either as a Lenovo factory, or, as a factory making cell phones for another brand. Similarly, this law could prevent Carrier from moving from Indiana to Mexico, and Nabisco from relocating south of the border.
A Manufacturing Community Bill of Rights (MCBR) law would create a right of a community to keep a manufacturing plant intact. The law would provide that a manufacturer planning to move overseas would first have to give notice to its community, its state and its workers of its plants. The local and state government and workers of the faactory would then have the right to purchase the facility within six months.
Current law requires this notification, but only provides for 60 days notice. The Worker Adjustment and Retraining Notification Act (WARN) became law in 1989. The Manufacturing Communities Bill of Rights is a proposed amendment to the WARN law. In addition to expanding the notice period to six months, the MCBR would provide for loan guarantees so that the community would have a realistic chance of acquiring manufacturing facilities.
The MCBR would keep factories humming in the USA. First, this law would make it more expensive and risky to relocate. The law would also discourage factories from moving overseas because most companies do not want to turn their factories over to their domestic workers because their products would compete with the company’s imported products.
Canada and Mexico filed a complaint against the United States challenging the Country of Origin Labeling (COOL) Act. Our north and south “neighbors” complained that if they had to label meat as product of Canada or Mexico, Americans would probably not buy it. Although it has an official sounding title, the World Trade Organization is a rigged, unfair, and unjust organization favoring small nations. Recently, the WTO ruled that COOL was a barrier to free trade. Congress and President Obama caved in and amended the COOL Act to exclude the requirement of meat labeling with regards to its country of origin. In 2016, American cattlemen have lost $20 billion during due to the fact that U.S. consumers are unaware that they are buying Canadian and Mexican meat. Congress should reinstate the COOL Act for meat.
For many years, China has been dumping steel and aluminum into the United States illegally. The Commerce Department has already taken some action concerning certain steel and aluminum products, but more action needs to be taken to keep our aluminum and steel industries alive and well.