POLITICAL ISSUE #401: DIMINISHING HIGH VALUE JOB BASE

1) The imports from any individual country in a calendar quarter shall not exceed the average quarterly U.S. exports to that country over the prior year designated as IQmax for that country.

2) Once imports from any country in any quarter exceed IQmax for that country, imports shall cease until the beginning of the next quarter except for the following remedies:

a) Any quarterly trade surplus from the prior 3 quarters may be applied to increase the value of IQmax for the current quarter. This provision accounts for seasonal variations in trade. The amount applied reduces the surplus for that prior quarter.

b) Any nation about to exceed their IQmax may negotiate with another country running a trade surplus with the United States to purchase some of that surplus and apply it to their IQmax. This is totally a paper transaction; the goods do not have to be shipped through the third country. This exchange of trade credits rewards countries who are in trade surplus with the United States while allowing trade deficit countries to exceed their normal IQmax as long as the total US world trade is in balance.

3) In recognition of the substantial trade imbalance that currently exists, this import limited balanced trade plan shall be phased in over a period of three years. Using the current year as a reference, in the first year each trade deficit country shall be allowed to have a trade deficit equal to 75% of their deficit for the reference year. This shall drop to 50% in the second year, 25% in the third year and to 0% in the fourth and all subsequent years. These trade deficit countries may further mitigate this transition by purchase of trade credits from trade surplus countries, but a US/world trade balance would be achieved starting in the fourth year.

4) Once US world trade has been brought into balance, the Commerce Department my apply a multiplier not to exceed 110% to the past year's US exports to that country as the limit for the current year's imports to account for anticipated annual growth in trade.

JUSTIFICATION: The U.S. trade imbalance has been a problem for many years. When foreign countries sell American citizens goods in exchange for U.S. currency, they obtain a claim on American assets (including real estate and American capital) that they may redeem whenever they choose. This "selling of America" to feed current consumption has been reprehensible.

American company investment in productive capacity "off shore' to supply goods to the U.S. domestic economy has been one of the major causes of the devestation of the U.S. domestic "High Value" job base over the last generation.

In a recent speech, the CEO of UTC explained why his corporation needed to employ 8,000 Chinese workers to make air conditioners and elevators in China. Naturally we would prefer that UTC made the capital investment for this production in the U.S. and employed US workers. However if the competitive nature of world markets including restrictions that other countries place on trade require U.S. businesses to invest overseas to supply world markets, then we must be open minded and allow US corporations to compete on world markets.

However a "Balanced Trade Import Limit" policy sends the message loud and clear that American companies should not invest their productive capacity in China and expect to ship their air conditioners and elevators to the United States unless China also imports an equivalent amount of US goods or purchases import credits from countries with which the US has a trade surplus.

For years through our trade deficits we have been selling our assets to the citizens of foreign nations so that as a nation we could live beyond our means. Continuation of this practice threatens the social fabric of American society by exporting middle class jobs abroad. The UTC speech referenced above cited government statistics that predict a continued loss of manufacturing jobs and further predict that occupations like "prison guards" will be the high demand careers of the future. We must not let this trend continue.

Author: John M. Humphrey Email: Humphrey@aimnet.com