‘NAFTA-gate’ story takes unexpected turn

[Dan J 277]

So will Obama renegotiate NAFTA so that jobs will no longer outsourced to Canada? (still unclear on the specific proposal here). What will he do if Canada slaps a bunch of tariffs on US imports in retaliation?

Not likely.

This explains the tax loophole that they are talking about:

http://techpolicy.typepad.com/tpp/2004/03/...reaks_for_.html

The tax code is written in a way that allows companies not to pay the full 35% U.S. corporate tax rate on foreign income when that money remains invested overseas.

Backing up a step, here's how it works before the loophole: A company earns $100 million abroad in Lowtaxistan where the corporate tax rate is 20%. The foreign subsidiary pays that money to the U.S. parent. The parent then pays $35 million to the U.S. government and takes a credit for the 20% (or

$20 million) payment to the Lowtaxistan government. So the net to the U.S. Internal Revenue Service is $15 million.

But here's how it works with the loophole: The U.S. subsidiary simply keeps the money offshore and certifies to its accountants that the money is invested overseas. It never remits the money to the parent and so never pays the $15 million extra to Uncle Sam.

Both candidates talk about closing this. All it would do is make it slightly more expensive to outsource, but labor is still cheaper. It may be just enough to make it more expensive to outsource to Canada or somewhere that is only slightly cheaper than the US. But it won't prevent outsourcing to Asia, where the savings is much greater.

But ironically most of our outsourcing has nothing to do with NAFTA. Since most of the countries are jobs are getting outsourced too are not even part of that agreement. With Canada, not very many manufacturing jobs have gone that way. TV and Movie production have outsourced to Canada, but as far as NAFTA is concerned, it mostly applies to IP protection, and trade of goods. Some manufacturing jobs have gone to Mexico, mostly for things that are too expensive to ship, otherwise most of the manufacturing jobs have gone to Asia. So NAFTA has become a target for issues that are not directly because of NAFTA. Its really become a buzzword to mean free trade in general.

But how many people in really have time to think about the complexities of free trade? For the candidates simple messages are appealing. Try to explain something, and its likely only part of the message will ever be heard. Most are just concerned that their jobs will be protected. They wont care if products are slightly more expensive. They just want to make sure they will have money to keep surviving. That group is much larger than the group who really benefits from free trade.

Hillary will probably take the approach that any free trade agreements would have to require provisions to protect workers.

Obama will probably find some way of taxing companies who send jobs overseas and use that money to provide training for displaced workers.

[one...two...tree 2,762]

Here's an excerpt from an excellent argument - "Productivity" A Straw Man In The Outsourcing Debate

Thomas Jefferson wrote in a September 28, 1821 letter, "The government of the United States, at a very early period, when establishing its tariff on foreign importations, were very much guided in their selection of objects by a desire to encourage manufactures within ourselves."

Conservatives don't want you to know this, and -- even more frenetically -- are working to prevent any discussion of "protectionist" tariffs on labor. Their main argument -- a straw man -- is that "productivity" is responsible for the loss of American jobs, not a fundamental realignment in the rules of the game of business starting in the Reagan era and climaxing with NAFTA and GATT/WTO.

Business publications love to quote 19th century economist David Ricardo as saying, in "On Wages," his 1817 work, "Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price."

Thus, they say, it's natural that American wages should have been in a free fall ever since Bill Clinton signed NAFTA and GATT: America's roughly 100-million workers now have to compete "on a level playing field" with five billion impoverished people around the world. Offshoring is simply the normal extension, they say, of Ricardo's classic view of economics.

What they forget is that Ricardo also wrote, in the following sentence, "The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution."

In other words, labor is part of the game of business, and one of the first goals of the game of business is "to perpetuate" the working class's existence.

http://www.albionmonitor.com/0408a/outsourcing7.html

[Trompe le Monde 1,107]

I don't think our economic future lies in being more protectionist.

You know, in Obama's book he recognises that a tariff on imported steel may provide temporary relief to American steelmakers, but it will also make every American manufacturer that uses steel less competitive.

If we put tariffs on imports, we can only expect other countries to respond in kind to US exports. This costs as many jobs as outsourcing (for example 65% of revenues in entertainment come from overseas, which helps create a lot of jobs here in the USA - look at the front of today's Hollywood Reporter )

Anyways, I'm pretty sure Obama is not going to repeal NAFTA in spite of all his rhetoric in Ohio - I'm pretty sure I read somewhere when he was pressed on the issue that he said that would cause more job losses than gains. Of course if he renegotiates, I think Stephen Harper would have some things he would like to bring to the table as well.

[one...two...tree 2,762]

I don't think our economic future lies in being more protectionist.

You know, in Obama's book he recognises that a tariff on imported steel may provide temporary relief to American steelmakers, but it will also make every American manufacturer that uses steel less competitive.

If we put tariffs on imports, we can only expect other countries to respond in kind to US exports. This costs as many jobs as outsourcing (for example 65% of revenues in entertainment come from overseas, which helps create a lot of jobs here in the USA - look at the front of today's Hollywood Reporter )

Anyways, I'm pretty sure Obama is not going to repeal NAFTA in spite of all his rhetoric in Ohio - I'm pretty sure I read somewhere when he was pressed on the issue that he said that would cause more job losses than gains. Of course if he renegotiates, I think Stephen Harper would have some things he would like to bring to the table as well.

Interestingly, Bush moved to impose heavy tariffs on steel imports ...so much for laissez faire economics. I think you're oversimplifying the complexity of trade. Nobody is talking about Protectionism to the degree that it hurts our exports, but the current condition of trade both in NAFTA and through the WTO is hazardous, not only US Labor, but to our economy as well. The EU seems to have a better grasp on keeping a balance of trade. In any case, there are better ways to handle trade and laissez faire economics are a failure. It will take some real political courage and will to throw the yoke off of corporations in brokering such agreements...at least with Obama, he's not pimping himself out to corporations like Hillary has.

[Dan J 277]

I don't think our economic future lies in being more protectionist.

You know, in Obama's book he recognises that a tariff on imported steel may provide temporary relief to American steelmakers, but it will also make every American manufacturer that uses steel less competitive.

If we put tariffs on imports, we can only expect other countries to respond in kind to US exports. This costs as many jobs as outsourcing (for example 65% of revenues in entertainment come from overseas, which helps create a lot of jobs here in the USA - look at the front of today's Hollywood Reporter )

Anyways, I'm pretty sure Obama is not going to repeal NAFTA in spite of all his rhetoric in Ohio - I'm pretty sure I read somewhere when he was pressed on the issue that he said that would cause more job losses than gains. Of course if he renegotiates, I think Stephen Harper would have some things he would like to bring to the table as well.

I don't disagree with you, but the world is more complex than a simple statement.

Until the world is socioeconomically equal or relatively anyway, free trade primarily benefits companies and those who own them.

While as you say, jobs may be created in the Entertainment industry, is a factory worker from Ohio going to be hired for that job?

Not that free trade is a bad thing, but any deal should be re-evaluated as economics and technology changes and but any agreement should benefit the whole of the country, not just those in one industry or economic class.

[Trompe le Monde 1,107]

is a factory worker from Ohio going to be hired for that job?

Is a factory worker from Ohio going to have a job if the products he makes can't be sold competitively overseas?

Is the factory worker from Ohio going to stop buying cheap products from Walmart? Is he willing to pay more for American made?

Will farmers in Ohio be happy that Canada, the #1 market for US agriculture is shunning US exports for because the Canadian government slapped punitive tariffs because we pulled out of NAFTA?

Oh and spare me this "oh so complex" #######.

[Dan J 277]

is a factory worker from Ohio going to be hired for that job?

Is a factory worker from Ohio going to have a job if the products he makes can't be sold competitively overseas?

Is the factory worker from Ohio going to stop buying cheap products from Walmart? Is he willing to pay more for American made?

Will farmers in Ohio be happy that Canada, the #1 market for US agriculture is shunning US exports for because the Canadian government slapped punitive tariffs because we pulled out of NAFTA?

Oh and spare me this "oh so complex" #######.

Your industry relies on protections built into trade agreements. Otherwise other countries could pirate what Hollywood makes and face no repercussions, some do quite a bit already. Can an average worker expect the same, at least to some extent. Maybe help in getting education or retraining to find another similar paying job? Or are they doomed to working in low wage service jobs?

[Trompe le Monde 1,107]

Your industry relies on protections built into trade agreements. Otherwise other countries could pirate what Hollywood makes and face no repercussions, some do quite a bit already. Can an average worker expect the same, at least to some extent. Maybe help in getting education or retraining to find another similar paying job? Or are they doomed to working in low wage service jobs?

You aren't answering my questions.

Incidentally, what you are referring to (retraining and help finding another job) is exactly what John McCain said we should be talking about in Ohio, not renegotiating NAFTA.

I only referred specifically to entertainment because relies so heavily on overseas for revenue - almost all our growth in the past 5 years has come from outside the US, which has created jobs at home. It'a only there as an antecdote.

[Dan J 277]

Your industry relies on protections built into trade agreements. Otherwise other countries could pirate what Hollywood makes and face no repercussions, some do quite a bit already. Can an average worker expect the same, at least to some extent. Maybe help in getting education or retraining to find another similar paying job? Or are they doomed to working in low wage service jobs?

You aren't answering my questions.

Incidentally, what you are referring to (retraining and help finding another job) is exactly what John McCain said we should be talking about in Ohio, not renegotiating NAFTA.

I only referred specifically to entertainment because relies so heavily on overseas for revenue - almost all our growth in the past 5 years has come from outside the US, which has created jobs at home. It'a only there as an antecdote.

So is Obama.

But you said you don't want protectionism. Which is ironic, since IP creators rely on copyright treaties to help insure that their creations are not pirated in the countries they are licensed in.

But workers cannot get some form of protection because it would make products more expensive? I'm pretty sure we can find a happy medium somewhere, where workers have an exit to somewhere other than low paying service jobs and companies can still take advantage of the cost savings of outsourcing.

[Trompe le Monde 1,107]

So is Obama.

But you said you don't want protectionism. Which is ironic, since IP creators rely on copyright treaties to help insure that their creations are not pirated in the countries they are licensed in.

But workers cannot get some form of protection because it would make products more expensive? I'm pretty sure we can find a happy medium somewhere, where workers have an exit to somewhere other than low paying service jobs and companies can still take advantage of the cost savings of outsourcing.

I think protectionism with regard to trade and tariffs and copyright protection are 2 different things

A happy medium can be achieved, yes. I don't think suggestion we shouldn't scrap NAFTA and other trade agreements is really that extreme. I also think both Obama and Clinton have been posturing in Ohio on the issue of free trade.

[Dan J 277]

So is Obama.

But you said you don't want protectionism. Which is ironic, since IP creators rely on copyright treaties to help insure that their creations are not pirated in the countries they are licensed in.

But workers cannot get some form of protection because it would make products more expensive? I'm pretty sure we can find a happy medium somewhere, where workers have an exit to somewhere other than low paying service jobs and companies can still take advantage of the cost savings of outsourcing.

I think protectionism with regard to trade and tariffs and copyright protection are 2 different things

A happy medium can be achieved, yes. I don't think suggestion we shouldn't scrap NAFTA and other trade agreements is really that extreme. I also think both Obama and Clinton have been posturing in Ohio on the issue of free trade.

I don't think scraping is the right idea, but any agreement should be open to re-negotiation or changes. The economic reality we face today, is not the same as it was when NAFTA was first passed. And there are likely unforeseen consequences on all sides.

NAFTA has been the target, mostly because thats the one people know about. They can connect on that. But it is not the one responsible for most of the outsourcing. The use of NAFTA in politics is more symbolic of Free trade, than the actual NAFTA agreement.

[no name 1]

PMO: Canadian officials only got briefing from Obama campaign - not Clinton

OTTAWA — Democratic presidential hopeful Hillary Clinton never gave Canada any secret assurances about the future of NAFTA such as those allegedly offered by Barack Obama's campaign, Prime Minister Stephen Harper's office said Friday.

With the NAFTA affair swirling over the U.S. election and Canadian officials skittish about saying anything else that might influence the race, it took the PMO two days to deliver the information.

After being asked whether Canadian officials asked for - or received - any briefings from a Clinton campaign representative outlining her plans on NAFTA, a spokeswoman for the prime minister offered a response Friday.

"The answer is no, they did not," said Harper spokeswoman Sandra Buckler.

That response will come as a relief to the Clinton campaign, which has angrily denied that it has engaged in the kind of double-talking hypocrisy of which it accuses Obama.

The so-called NAFTA-gate affair took a bizarre twist this week that threatened to ensnare Clinton after having already damaged Obama at a critical phase of the U.S. election.

Obama had stinging criticism for the North American Free Trade Agreement while campaigning two weeks ago in Ohio. That rust belt state has lost thousands of jobs and the unions courted by Obama have blamed the trade pact for their job losses. Clinton was also unsparing in her criticism of NAFTA, stating flatly that the United States should withdraw from the agreement if it could not be renegotiated.

Suggestions of hypocrisy cost Obama critical votes in the Ohio and Texas primary - both of which were won by Clinton - and put a stop to his streak of a dozen straight primary wins.

The Associated Press obtained a Canadian government memo that suggested Austan Goolsbee, Obama's senior economic policy adviser, met Canadian diplomats the consulate in Chicago last month.

It was revealed this week that Harper's chief of staff Ian Brodie initially tipped off a television news station to the story on Feb. 26, when in an off-the-cuff conversation he suggested Clinton's attacks on NAFTA were less than sincere.

After investigating the story, a television news station reported the next day that the Clinton and Obama campaigns had both offered Canada assurances that they would leave NAFTA untouched. Both camps issued denials.

But Obama's campaign was further torpedoed by the leak of the diplomatic memo. Goolsbee insists the Canadian memo mischaracterized his position.

Harper has called in an investigation unit to find out who leaked the document to the American media - a probe that will see government employees interviewed and their electronic records searched.

But the opposition says that's not good enough.

They want Brodie fired or suspended for his alleged indiscretions.

And they want the Mounties called in to determine whether any security-of-information laws were broken - just like they were called in when a junior staffer at Environment Canada allegedly leaked climate-change documents to the media last year.

NDP Leader Jack Layton says this incident is far worse.

"It created a political storm," Layton said.

"It has changed the dynamic of the U.S. primary for the Democratic party and it has given a club to the Republican candidate which he can use time and time again to go after whether it's Senator Clinton or Senator Obama."

The revelations about Brodie's conversation with the television news station have left a key unanswered question that holds some implications for the U.S. election.

Sources who overheard that conversation say he specifically mentioned that Canadian diplomats did get assurances from the Clinton camp - and he never raised Obama's name.

That begs the question: why was Clinton's name raised at all?

Brodie does not deny downplaying the Democrats' anti-NAFTA rhetoric in a conversation with the television news station, but he says he cannot recall mentioning any specific presidential candidate.

Clinton's team reacted furiously to the Brodie story and offered the Canadian government "blanket immunity" to publicly release the name of any campaign official who might have offered such back-channel assurances.

http://canadianpress.google.com/article/AL...NSeQj3bTyETSagQ