Trade
CAFTA: Neither Free Trade Nor Fair Trade
Trade with other countries is integral to America's economic strength. American dairy producers, sugar producers, citrus farmers and cattle ranchers count on overseas trade for over a quarter of their sales. And millions of people support their families with their jobs making and exporting goods to other countries. But this area of economic strength is in jeopardy. American farmers and textile workers are facing hundreds of millions of dollars in trade sanctions.
The U.S. tax code allows U.S. companies to exempt some of the money they make on exports from taxes to level the playing field for domestic exporters against their foreign competitors. The European Union (EU) said this encourages U.S. companies to export their goods and was against the rules of the World Trade Organization (WTO).
The WTO, which governs global trade issues for the U.S. and over 100 other member countries, ruled in favor of the EU. As a result, the EU plans to place more and more tariffs on U.S. imports. American farmers, wool and cotton producers and a wide range of other U.S. businesses will face penalties that raise the price of their goods as high as 17 percent in overseas markets. This will hurt sales and cost American jobs.
Republicans can't agree on a solution to fix this trade problem. Their only suggestion has been another big tax giveaway that won't help manufacturers and will reward big companies that export jobs overseas. But Democrats want a new tax credit that supports American farmers and domestic textile and manufacturing companies while following the agreement we entered into as part of the WTO. This credit will keep workers and factories here in this country without the heavy sanctions that will make it hard to sell American goods overseas.
Textile workers and their families are also being hit hard by imports from China and Vietnam. Right now we restrict less expensive imports from these countries to keep them from flooding the market and drowning our industries. But WTO plans to lift these restrictions on January 1, 2005, will make things even more difficult for domestic textile companies to compete against unfairly priced imports.
Imports from these countries have a 40 percent price advantage because their governments cut costs by ignoring workers' rights and basic health and safety standards. They hoard U.S. dollars in their banks to lower the value of their own currency, which lowers the prices of their goods even more. This practice undercuts American products and puts American companies at a disadvantage in the marketplace. With these less expensive imports on the shelves, sales for American-made goods will drop.
Democrats want to be sure that our workers and businesses compete on a level playing field. We will work to find trade laws that make sense for American workers and end unfair practices by foreign manufacturers.
We want fair trade policies that keep jobs here and provide opportunities for American farmers and textile workers. Our tax incentives should encourage domestic production and domestic job creation. Trade should be our strength, not our weakness.
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