the Joke is on the American Public

Date: Friday, May 02, 2003 9:42 AM

JOB DESTRUCTION NEWSLETTER

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http://www.tradealert.org/view_art.asp?Prod_ID=802

In China Trade, the Joke is on the American Public, in particular on US
Workers

By Alan Tonelson
Friday, April 18, 2003

The next time anyone tells you that Washington, D.C.s political
classes dont produce anything, dont believe them. The nations
capital must be the worlds leading generator of chortling.

Washington chortling usually results when a speaker at a conference or
a guest on a talk show acknowledges that, contrary to the public
position of some major politician or interest group on a given issue,
the American public is actually getting shafted. Thats the cue for
everyone present to let out a smug little huh, huh, huh usually
accompanied by a shake of the head intended to feign sympathy for the
riff-raff beyond the Beltway not in on the joke.

The latest example of Washington chortling Ive witnessed came early
this morning fittingly at a breakfast conclave held at the posh St.
Regis hotel by the Asia Society on Chinas information technology
industries.

Nicholas Lardy, a China specialist at the globalization-happy Institute
for International Economics, had just given a fascinating presentation
detailing, among other things, the outsourcing of Taiwans high-tech
industries to the Peoples Republic. Big numbers are involved, and
the trends have sparked an anguished debate on Taiwan over the wisdom
of sending increasingly high-wage, high-value jobs to the goliath next
door a goliath that has not foresworn the use of military force to
achieve reunification.

Lardy had been preceded by William T. Archey, President and CEO of the
American Electronics Association (AeA), the big high tech trade
association, who told the audience that China trade will pose one of
the biggest public relations problems that the industry will face, in
the sense of the export of jobs. As long as the U.S. economy stays
weak, Archey, predicted, Congress and others will be looking at,
Where did the jobs go? Archeys reference to public relations
clearly indicated that the technology giants comprising his trade
association are largely responsible for this job loss, through their
massive and growing export-oriented investments in China.

The U.S. tech sectors guilt became even clearer during the
question-and-answer period. Referring to the detailed information we
had just heard on Taiwans high tech outsourcing, I added that I had
seen similar data from the Japanese government. Since Archey was
anticipating a big debate on Americas China trade policy, I asked,
wouldnt it be great if the American people and their government
could see the same kind of information for the U.S. high tech industry?

Chortled Archey, where you stand on the usefulness of that information
depends on where you sit on U.S.-China trade issues. A wave of
chortling then spread through the crowd, which was made up of lobbyists
for job-exporting multinationals, think tank types, government
bureaucrats, and reporters. I hope we could agree that more information
is always useful, I countered. More chortling followed.

Well, the U.S. companies just arent going to provide it, Archey
replied. And the chortling resumed, louder than ever.

In fact, in his earlier remarks, Archey had provided some important
insights on multinational business views of China. As high tech
companies see it, he explained, the reason for investing in China has
changed recently. The focus on selling to Chinas potential 1.3
billion consumers is now secondary in importance. The reason to go to
China is as a manufacturing platform for the rest of the world.

In other words, Archey was saying, Americas high tech China trade is
rapidly becoming like Americas Mexico trade (assuming that China
trade ever was mainly consumer-oriented). The main priority for U.S.
multinational companies is not supplying Chinese customers with
U.S.-made products, thus enhancing Americas competitiveness and
boosting jobs and incomes in the United States. Rather, the top
priority is supplying the U.S. market with Chinese workers in Chinese
factories that have replaced U.S. workers. (At least 40 percent of
Chinas exports currently are sent to the United States.)

Archeys disclosure belies the arguments made by the AeA and the rest
of the multinational lobby in pushing for Most Favored Nation trade and
World Trade Organization membership for China throughout the 1990s.
Indeed, in May, 2000, the AeA and the rest of the high tech lobby was
flooding Capitol Hill with claims such as U.S. high- tech industries
are poised to expand exports to this rapidly growing market, increase
high-wage American jobs, and continue our technological leadership and
competitiveness in international markets.

Now the American tech sector is hemorrhaging output and market share as
well as jobs to China and other foreign competitors, indicating that
its problems greatly exceed the bursting of the tech-led stock market
bubble. By the calculations of Archeys own organization, electronics
and IT manufacturing companies have shed a total of 500,000 jobs over
the last two years (10 percent of their workforce) and 415,300
manufacturing jobs (20.4 percent of that workforce).

As Archey made clear at the Asia Society event, U.S. high tech
companies know exactly how many factories and jobs they have sent to
China and other low-wage countries. But given the campaign
contributions they lavish on Democratic and Republican politicians
alike, they must be pretty confident that neither Congress nor the
administration will press them to release this information.

Moreover, whether the American electronics industry is located mainly
in China or in the United States, you can be sure it will still need
Washington lobbyists. No wonder Archey and the crowd at the St. Regis
were chortling.

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