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Saturday, April 19, 2008

McCAIN TALKS IN MILWAUKEE ABOUT TRADE AND ECONOMICS

Republican presidential hopeful John McCain was here in Milwaukee recently to talk about trade policy and announce his plans for economic reforms, should he become president, before a group of over 300 business people.

Trade will undoubtedly be a hot topic in the upcoming presidential debates between McCain and the democratic nominee, and each side will have to present their case well in order to capture the vote of a growing segment of displaced and unemployed American workers who firmly believe that their jobs were compromised as a result of trade agreements and cheap overseas labor. McCain may have to do more to convince America that his ideas regarding trade will have a positive impact on the economy, and infact provide jobs and improve opportunities for work, as he is a strong proponent of free trade.

The event was hosted by Bucyrus International, a South Milwaukee based mining equipment manufacturing company, during which Bucyrus CEO Tim Sullivan and McCain discussed economic development and Sullivan's belief that renegotiating trade agreements like NAFTA would be "absolutely crazy" for the United States to consider. Both democratic candidates have talked about having another look at NAFTA in particular. Sullivan went on to say that without the trade agreements Bucyrus would have little reason to consider continuing expansions in the Milwaukee area, partly because much of its business comes from abroad, and the agreements help it to be profitable.

Bucyrus has already spent tens of millions of dollars and doubled its workforce after announcing a $150 million expansion plan more than three years ago. "If we don't have free trade," Sullivan told McCain, "the decision that we made to stay here in South Milwaukee and triple the capacity of this plant is lost."

Trade is, by all accounts, a complicated issue, and not all aspects of trade agreements are bad. Bucyrus is one of its success stories. As well, Canada supplies nearly 50% of Wisconsin oil, and through NAFTA we have priority access to it. Through this action we get our oil at a lower price than if we didn't have the agreement in place. Without NAFTA, Canada could effectively sell its oil to the highest bidder and leave us to get our oil elsewhere, probably at a much higher cost. Still, NAFTA and our dealings with China, has clearly disadvantaged the United States. At least under the current terms. For all the good intentions of free trade agreements, it has really provided companies a convenient "out" when it comes to labor. Rather than pay American workers, companies simply shift operations to places like Mexico under the guise of globalization. When a company makes the statement that it can no longer afford to to pay people to work here, in the US, that's an example of what's wrong with the idea that free trade is good for America.

John McCain believes we need to retrain a displaced American workforce and make improvements to the accessibility of higher education. Still, more and more workers feel that they've had their livelihoods literally ripped out from under them. As for those who kept their jobs, many have had to accept lower wages and reduced benefits. Those who are otherwise ill-equipped to adapt to a service-oriented economy wonder how this can be the path to economic prosperity free traders alluded to from the start. And let us not forget that many of these so-called service-oriented jobs typically do not pay near the wages one could earn working in a large factory.

At the end of the day the issue is really more about fair trade than free trade. The playing field is far from level, and it is, in part, this imbalance, as opposed to NAFTA as a whole or trade agreements alone, that have been eating away at good paying American manufacturing jobs. On top of that, our government hasn't gotten nearly tough enough on China, who continues to devalue and manipulate its currency, giving it enourmous cost advantage over US manufacturing firms, and who also enforces stricter import guidelines for Made in the USA goods entering their country.

I agree we shouldn't necessarily scrap the agreements altogether. But it would be absolutely crazy, to borrow a phrase, to not atleast consider bringing the nations back to the negotiating table to try and come up with a better deal for America.

Naturally everyone wants to gain something out of it; Bucyrus wants to avoid steep tariffs on goods it ships to China, the big three automakers want to take advantage of cheaper Mexican labor, factory workers want to earn a liveable wage and produce goods to be sold abroad in their own factories, and the countries we do business with of course want to sell their goods and prosper as well.

But ultimately all sides need to come together and arrive at an agreement that comes somewhere down the middle, and in the process doesn't leave the American worker behind. For this to be successful, the next president has his, or her work cut out for them.

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