WASHINGTON, December 23– The U.S. Business and Industry Council is pleased to announce that the January 2010 Harper's Magazine features a major economic policy article, written by USBICEF Research Fellow Alan Tonelson.  The piece warns that recent high-profile calls for a domestic manufacturing revival will flop unless accompanied by a thorough trade policy overhaul doggedly resisted by many of the sector's putative new champions.

As noted by Tonelson, several leading political and business figures now apparently agree with 1,900 member USBIC's long-held position that the current economic crisis largely stems from a national neglect of manufacturing in favor of finance and services-led economic policies.  Although the economy's dominant wealth-creation sector –  manufacturing –  shed plants and jobs throughout the last decade, many American politicians and economists preached that expansion in finance, services, and real estate (largely supported by a nation-wide binge borrowing) could maintain the country's high living standards instead.  Given these policies, the resultant bubble, which burst in late 2007, and the ongoing downturn were inevitable..

Yet as Tonelson documents, since the recession's official onset, in December, 2007, the industrial sector has continued to lag the rest of the economy.  And manufacturing's woes are hardly confined to the beleaguered automotive complex.  Economic data reveals the plunge of output in numerous key manufacturing segments to multi-decade lows.

In Tonelson's view, the new "manufacturing revivalists" like GE Chairman Jeffrey Immelt, deserve considerable blame for manufacturing's ongoing deterioration.  Many contributed to manufacturing's decades-long neglect.  Some even continue to outsource while mouthing sound bites on industrial renewal.  And even in their new-found enthusiasm, most are touting an overly timid agenda. "[A]n actual manufacturing revival is a goal that is not only distant but receding," the author writes.  "And the prospects for one will remain bleak as long as so many new advocates, including President Obama, keep shying away from the bold policy departures that are needed – especially in America's international trade policies."

In particular, Tonelson says, these manufacturing revivalists keep ignoring longstanding trade policy failures, which undercut their favored domestic reforms.  For example, tax and regulatory incentives will spur little new manufacturing investment in America as long as U.S. trade competitors maintain their own much greater subsidies.  Domestic reforms would also be negated by NAFTA-like trade deals, which keep encouraging "a business model based on supplying the high-priced U.S. market from extremely low-cost countries."  Keeping in place such outsourcing-focused trade policies will likely dash hopes for fostering "green manufacturing" at home, too.

A real manufacturing-revival agenda, Tonelson writes, would center around new trade policies long spearheaded by the U.S. Business and Industry Council.  These measures include strong measures to fight currency manipulation by China and other countries; expansion of the stimulus bill's Buy American provisions to cover all federal procurement; a border-adjustable tax to offset the effects of discriminatory foreign value-added tax (VAT) systems; and a stiff carbon tariff on products from notorious CO2 emitting countries.

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