Facing the Facts About Predatory Trade Practices

John R. Davis, CEO, Squared R Element Corp.

Communist Chinese leaders that dupe our government and take advantage of our free-trade policies with predatory trade are draining the U.S. of its economic wealth.

China’s leaders take offense to our superpower status and show hostility to our naval fleet in oceans bordering their shores. But, China does not have to fight a war to have the fleet go home. It is much easier and less costly to mislead and deceive our government officials into making decisions that have and are continuing to destroy our wealth-producing manufacturing capacity. Cheap labor, the visions of large markets, and the greed for profits have seduced our transnational corporate owners and managers.

They outsource labor, capital, technology, R&D, manufacturing know-how and trade secrets. They have and are continuing to dismantle our wealth-producing industries. These owners and managers have no loyalty or allegiance to the United States. As our economic strength declines, so will our Navy’s presence in the Pacific and our ability to defend our country.

The Chinese already have already accomplished so much economic damage, it is dangerous and frightening.

We had a total trade deficit of $764 billion in 2006 — a new record. With China, the trade deficit was $233 billion — the largest ever with a single country. For the last five years the U.S. trade deficit with China has increased by 20% each year.

Trade is necessary for America to prosper, but it must be balanced trade. Our total national debt is $9 trillion. Of this, $5 trillion is owed to foreign countries and $1.3 trillion of that to China. All three numbers are pointing to an economic crisis.

Both the trade deficit and the debt owed to foreign countries show Americans are living beyond our means. A $764 billion/ year trade deficit is the same as $2 billion/day. Look at it this way, we are borrowing $2 billion/day from foreign countries to maintain our standard of living.

A nation with a large trade deficit is similar to a person living above its means. If you have a successful career but lose your source of income (a job) you still may have credit available on credit cards and ownership in your home and car. Thus, you can continue to maintain your standard of living (for a while) by increasing debt on your credit card or refinancing or selling your home and car.

But, just as a person cannot continually increase debt, neither can a nation. The key difference between a nation and a person is that a nation can print money and delay the day of reckoning. Eventually, foreign countries will not accept paper of decreasing value for their products or in payment of debt.

In the past seven years, the U.S. dollar has lost over 50% of its value versus the Euro, and it will continue to decline in value. At some point, the U.S. dollar will be replaced as the world’s reserve currency.

In addition to the $5 trillion we owe foreign countries, they also own or control over 8,000 U.S. companies with a combined value of more than $8 trillion. Many of these companies were bought with the intent of gaining global control of key technologies and raw materials needed to produce advanced weapons, i.e. airplanes, computers, satellites and intercontinental ballistic missiles.

When blindly following the ideology of free trade, many Americans fail to see the connection and damage caused by predatory trade policies that result in huge trade deficits and a huge national debt, a portion of which is owed to foreign countries.

Most Americans believe we are a superpower: It is only our military that is a superpower; our economy is second- or third-world class.

Most Americans don’t see or understand the emerging economic disaster. Our government officials continue to encourage companies to offshore research and development, engineering and manufacturing.

The Wall Street Journal reported in December that the U.S. Treasury Department once again declined to designate China a currency manipulator. All the numbers indicate the Yuan is 20 to 50% lower than its true market value compared to the U.S. dollar. This is no accident. The Chinese are currency manipulators. This provides exports from China with price advantages when competing with U.S. companies, and it causes many U.S. companies to fail or to be so weakened that foreign companies can buy them at a discount.

China also promotes exports and discourages imports. They keep wages low, rebate value-added taxes on their exports, and charge value-added taxes on imports. They counterfeit and steal copyrights, trademarks, and patents. They provide domestic industries with local tax incentives, offer special financing, and charge tariffs on imports. They target specific industries to monopolize.

No U.S. company can compete with these predatory practices. Each of these tactics violates the World Trade Organization regulations, and yet even with what appears to be numerous violations, the U.S. Commerce Dept. (like the U.S. Treasury Dept.) fails to take action against China.

American politicians made a terrible mistake in 1996 when they voted to join the WTO. Joining the WTO gave thirdworld bureaucrats control of U.S. international commerce. It is very difficult for the U.S. to succeed with a complaint to the WTO. Most of its bureaucrats demonstrate an anti-U.S. bias, and many are as corruptible as the bureaucrats at the United Nations have proven to be. The chances of the U.S. receiving fair treatment at the WTO are remote.

The U.S. Constitution states; “Congress shall have the power to regulate commerce with foreign nations,” but Congress gave control of foreign commerce to the WTO. Congress must do what the people elected them to do, and what they were sworn to do, “regulate commerce with foreign nations.”

If Congress will not immediately cancel the U.S. membership in the WTO, Asian countries will continue their predatory trade practices, continue destroying or buying U.S. companies, continue financing our debt, and continue buying our country. They will do this until we have nothing left to sell — no industries, no real estate, and no natural resources.

Then, the U.S. government will have additional trillions of dollars of debt: If a government could be bankrupt it would be. Social Security, Medicare, and pensions will be without funds. All of our wealth-producing industries, mines, and farms will be foreign-owned. The government’s ability to tax will be significantly reduced, along with its ability to defend us.

Our elected officials do not see, or do not understand, the coming economic crisis, nor do the leading presidential candidates. Wake up America, our day of reckoning is coming.

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