NAM urges crackdown on product counterfeiting, currency manipulation 

By Plant Engineering Staff February 11, 2005

John Engler, President and Chief Executive Officer of the National Association of Manufacturers, called on the Bush Administration to increase pressure on China to cease its unfair trade practices, specifically product counterfeiting and currency manipulation.

“The U.S. can compete with anyone on a level playing field,” Engler told reporters at the National Press Club. “But economists estimate the Chinese currency could be as much as 40 percent undervalued. That translates into a huge tariff on anything we try to sell there, and an equally large artificial price advantage for anything they sell here. Is it any wonder we have a $162 billion bilateral trade deficit with China %%MDASSML%% mostly in manufactured goods.”

Engler said the Chinese are selling products in the U.S. for less than domestic manufacturers must pay for raw materials. “Currency manipulation is a contributing factor,” he said, “but subsidies may be a factor as well. We’ve lost a lot of good companies in recent years because of this, and we will lost a lot more if it isn’t stopped.”

Engler said counterfeiting of U.S. products is rampant in China and that the Chinese government is doing little to stop it. “This is grand larceny, highway robbery, theft on a massive scale,” he said. “The Chinese pass laws against counterfeiting and then decline to enforce them. The trade numbers released today underscore the magnitude of this criminal activity.”

Engler said the Bush Administration is performing an analysis of Chinese counterfeiting. “If that analysis shows continued egregious failure of China to live up to its commitments, then the NAM would support designating China as a‘priority foreign country’ and initiating a WTO case,” Engler said.

Engler said also that the NAM will make legal reform, and the confirmation of judges, a top priority in 2005. “In 2002, we spent $246 billion on our tort system,” he said. “That works out to $845 per person. Only 46 cents of every dollar actually gets to the plaintiffs. This represents a huge misallocation of national resources. It is vital that we achieve real legal reforms at both the federal and state level to create a fair, impartial and predictable legal system from coast to coast.”

Reducing external costs on production in the U.S. remains the guiding principle of the NAM, Engler said. “The burdens of litigation, excessive taxes, regulation, energy and health care add at least 22.4 percent to the hourly labor costs of U.S. manufacturers compared to our nine major trading partners. These are self-inflicted wounds that could be fatal is we don’t establish a connection between public policies and their impact on manufacturing.”

For Plant Engineering magazine’s exclusive interview with John Engler, click here