Major Issues in International Major Issues in International TradeTrade

Currency manipulationCurrency manipulation China and other Asian countries keep the value of their China and other Asian countries keep the value of their

currencies artificially low to make their exports cheaper and currencies artificially low to make their exports cheaper and imports more expensiveimports more expensive

SubsidiesSubsidies China has provided billions of dollars in subsidies, directly and China has provided billions of dollars in subsidies, directly and

indirectly, to its steel industryindirectly, to its steel industry

Attempts to weaken the trade lawsAttempts to weaken the trade laws Multinational corporations that want to be able to rely on Multinational corporations that want to be able to rely on

dumped and subsidized merchandisedumped and subsidized merchandise

Climate changeClimate change Some solutions would encourage U.S. manufacturing to move Some solutions would encourage U.S. manufacturing to move

to China and elsewhere, leading to greater greenhouse gas to China and elsewhere, leading to greater greenhouse gas emissionsemissions

U.S. Dollars per Chinese U.S. Dollars per Chinese YuanYuan

Exchange Rate (1993-2008)Exchange Rate (1993-2008)

0.10

0.11

0.12

0.13

0.14

0.15

0.16

0.17

0.18

Mar-93

Jun-93Sep-93Dec-93M

ar-94Jun-94Sep-94Dec-94M

ar-95Jun-95Sep-95Dec-95M

ar-96Jun-96Sep-96Dec-96M

ar-97Jun-97Sep-97Dec-97M

ar-98Jun-98Sep-98Dec-98M

ar-99Jun-99Sep-99Dec-99M

ar-00Jun-00Sep-00Dec-00M

ar-01Jun-01Sep-01Dec-01M

ar-02Jun-02Sep-02Dec-02M

ar-03Jun-03Sep-03Dec-03M

ar-04Jun-04Sep-04Dec-04M

ar-05Jun-05Sep-05Dec-05M

ar-06Jun-06Sep-06Dec-06M

ar-07Jun-07Sep-07Dec-07M

ar-08Jun-08Sep-08

U.S. Dollars per YuanSource: Pacific Exchange Rate Service

Illegal and Abusive SubsidiesIllegal and Abusive Subsidies Discounted Land CostsDiscounted Land Costs

Discounted Energy CostsDiscounted Energy Costs

Low Cost LoansLow Cost Loans

Debt ForgivenessDebt Forgiveness

Lack of Environmental ComplianceLack of Environmental Compliance

0

100

200

300

400

500

600

700

Millio

ns of

Met

ric T

ons

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010Chinese Steel ProductionChinese Steel Production

1996-20101996-2010

Total Production of Crude Steel – International Iron & Steel Institute (IISI), Steel Statistical Yearbook 2007 and Crude Steel Statistics 2007

Estimated Estimated 647 mmt by 2010647 mmt by 2010

0100200300400500600700800900

Billi

ons

of D

olla

rs

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

U.S. Trade DeficitU.S. Trade Deficit1997-20081997-2008

U.S. Trade in Goods with World (Seasonally Adjusted) in Billions of Dollars through June 2008 (projected through Dec. 2008); U.S. Census Bureau

China willChina willaccountaccount

for over 28%for over 28%of the U.S.of the U.S.

Trade DeficitTrade Deficitin 2008!in 2008!

U.S. Manufacturing Jobs vs. Trade Deficit (2000-2008)

13000

14000

15000

16000

17000

18000

Mar-00

Jun-00

Sep-00

Dec-00

Mar-01

Jun-01

Sep-01

Dec-01

Mar-02

Jun-02

Sep-02

Dec-02

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

U.S

. Em

ploy

ees

in M

anuf

actu

ring

(in T

hous

ands

)

0

100

200

300

400

500

600

700

800

900

U.S

. Tra

de in

Goo

ds D

efic

it in

Bill

ions

of D

olla

rs(O

ver P

revi

ous

4 Q

uarte

rs)

Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics

Trade DeficitTrade Deficit

Manufacturing JobsManufacturing Jobs

U.S. Manufacturing JobsU.S. Manufacturing Jobs(in thousands)(in thousands)

10,000

12,500

15,000

17,500

20,000

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Over 4 million manufacturing jobs have been lost since Over 4 million manufacturing jobs have been lost since manufacturing peaked in 1998manufacturing peaked in 1998

March 199817.6 Million Jobs

August 200813.4 Million Jobs

North Carolina North Carolina Manufacturing JobsManufacturing Jobs

400,000

500,000

600,000

700,000

800,000

900,000

199719981999200020012002200320042005200620072008

Nearly One of Every Three North Carolina Nearly One of Every Three North Carolina Manufacturing Jobs Has Been Lost in the Last Manufacturing Jobs Has Been Lost in the Last

Decade.Decade.

Endangered Manufacturing Endangered Manufacturing IndustriesIndustries

0

10,000

20,000

30,000

40,000

50,000

60,000

Man

ufac

turin

g Jo

bs

Glass Containers

Plumbing Fixtures

Small Electrical

Appliances

Rolled, Drawn,

Extruded Copper

Pottery Ceramics

Hardware

Hand & Edge Tools

Office Supplies

19942008

50% 44%

59%

41%

46%

45%

38%

52%

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics Survey, Not Seasonally Adjusted

The State Crisis: Manufacturing Jobs The State Crisis: Manufacturing Jobs LostLost

June 1998 to December 2007June 1998 to December 2007

The Multinationals’ ViewThe Multinationals’ View Large multinational manufacturers and Large multinational manufacturers and

trading companies (“MNCs”) generally trading companies (“MNCs”) generally oppose any strengthening of the trade lawsoppose any strengthening of the trade laws

Their chief focus is maximizing worldwide Their chief focus is maximizing worldwide profits, not achieving maximum production profits, not achieving maximum production and employment in the United Statesand employment in the United States

These companies have a vested interest in These companies have a vested interest in bringing dumped and subsidized imports bringing dumped and subsidized imports into the United Statesinto the United States

Because of their size, they have substantial Because of their size, they have substantial political cloutpolitical clout

U.S. - China Direct U.S. - China Direct InvestmentInvestment

(2000 – 2007)(2000 – 2007)

Source: The U.S. Bureau of Economic Analysis, Direct Investment, Direct Investment Position on a Historical-Cost Basis

0

5

10

15

20

25

30

Billi

ons o

f U.S

. Dol

lars

2000

2001

2002

2003

2004

2005

2006

2007China DirectInvestment in U.S.U.S. DirectInvestment in China

$28.32 Billion

$28.32 Billion

$1.1 billion$1.1 billion

Major Issues in International Major Issues in International TradeTrade

Currency manipulationCurrency manipulation China and other Asian countries keep the value of their China and other Asian countries keep the value of their

currencies artificially low to make their exports cheaper and currencies artificially low to make their exports cheaper and imports more expensiveimports more expensive

SubsidiesSubsidies China has provided billions of dollars in subsidies, directly and China has provided billions of dollars in subsidies, directly and

indirectly, to its steel industryindirectly, to its steel industry

Attempts to weaken the trade lawsAttempts to weaken the trade laws Multinational corporations that want to be able to rely on Multinational corporations that want to be able to rely on

dumped and subsidized merchandisedumped and subsidized merchandise

Climate changeClimate change Some solutions would encourage U.S. manufacturing to move Some solutions would encourage U.S. manufacturing to move

to China and elsewhere, leading to greater greenhouse gas to China and elsewhere, leading to greater greenhouse gas emissionsemissions