WASHINGTON, March 31 – The 1,900-member U.S. Business and Industry Council today urged President Obama to focus on reducing America’s chronic trade deficit and the resulting global economic imbalances at the upcoming G-20 economic summit.  The Council also advised Obama that if the London conferees refuse to adopt such a plan, the United States will have no option other than to take matters into its own hands.

“America’s trade deficit and the reckless over-borrowing and over-consumption it has bred underlie both the U.S. and global economic crises,” said Council President Kevin L. Kearns.  “For too long, the world’s leaders – including America’s – have irresponsibly assumed that the entire planet can base its growth strategy on exporting to a consumption-happy and increasingly indebted United States.  That’s the model of the world economy that lies in ruins today.”

Continued Kearns, “If the G-20 leaders don’t produce a credible plan to slash America’s trade deficits quickly, including by increasing their own domestic consumption and lowering their exports, Washington should act unilaterally for the entire world’s good.  Without more balanced international trade patterns, resulting largely from increased U.S. domestic production and consumption thereof, lasting global recovery will be impossible.”

Kearns contends that, “The coordinated global economic stimulus President Obama is still pushing has no chance of restoring the world economy’s health.  Even if the Europeans agreed, it would simply create a bigger version of the global bubble that burst so disastrously in 2007.  The United States needs to produce more and import less, and the rest of the world needs to consume more and export less.

As Kearns explained, “The lessons of the past are clear.  More growth abroad does not automatically produce more balanced world trade flows and greater opportunity for America’s thoroughly competitive manufacturers and other producers.  Too many foreign trade barriers and other predatory practices still stand in their way.  Either the other G-20 leaders and their global counterparts dismantle their mercantilist systems and in particular drop their short-sighted obsession with export-led growth, or the United States will need to use its still-considerable clout to rebalance global trade for them.”

In Kearns’s view, Obama should announce that the summit’s failure to produce ironclad commitments by America’s major trading partners to reduce America’s trade deficits by specified amounts according to a strict timetable will result in immediate U.S. implementation of a unilateral deficit-reduction strategy.  

Kearns argues that the initial steps should include expanding Buy-American regulations to cover all federal, state, and local government procurement, enforcing these regulations much more stringently, introducing a border-adjustment tax on imports to offset the discriminatory effects of foreign value-added tax systems, imposing a “polluter pays” tariff on imports from countries with lax environmental protection regimes, and passing a currency manipulation bill that enables American manufacturing victims to file countervailing duty suits in U.S. trade courts.

Kearns concluded, “This G-20 meeting is one of the last chances to get the world trading system off the steroids of U.S. over-borrowing and over-consumption.  A failure to reach agreement on more U.S. domestic production and fewer imports with less attendant foreign borrowing -- and concomitantly more foreign consumption of foreign-produced goods and fewer exports -- will cause a catastrophic failure in that system.  If the G-20 meeting is marked by more foreign intransigence together with more charges of U.S, protectionism, followed by more U.S. apologies, the international trading system as we know it today is doomed.  American protectionism is not the problem.  The mercantilist strategy whereby every country gets rich by exporting to the over-leveraged United States is the problem.

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