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Trade that Hurts

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Just like with cars, auto parts, tires, solar panels, wind turbines and many other manufactured products, a trade case had to be filed to force China to honor its commitments regarding financial institutions. And just like so many other trade cases, China lost.

Over the past decade, while the American economy has limped along, China has surged. Economic growth in the United States was 1.7 percent in 2011. It was 9.2 percent in China.

And much of that is based on Chinese exports. America’s trade deficit with China in 2000 before the PNTR took effect was $83 billion. It was more than three times that last year -- $290 billion. No matter what the free traders say, that’s not good.

That trade deficit is not because America can’t compete. America could if China honored its trade commitments. But it doesn’t.

The upshot is uncertainty for American workers.

The researchers Pierce and Schott found that if America had never entered into the PNTR agreement with China, manufacturing employment would be 10 percent higher than in 2000. Because it did enter the agreement, manufacturing employment declined instead -- by 15 percent.

In addition, they write that the relationship between the imports and job losses is direct:

“U.S. imports surge in precisely the set of goods where domestic employment loss is concentrated.”

The researchers note that U.S. firms can profit from this situation by switching to Chinese suppliers of parts.

That may be great for corporate bottom lines, but it is bad for America as the nation loses both jobs and its capacity to manufacture.

If America can’t manufacture No. 2 pencils, how long will it be before it can’t manufacture ballistic missiles? Maybe that’s the pitchfork manufacturing workers need to prod politicians to deal with middle class job uncertainty.