What Trade Really Means to North Carolina

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What Trade Really Means to North Carolina

• Dr. Andrew Brod, Director
• Office of Business and Economic Research
• Bryan School of Business and Economics
• University of North Carolina at Greensboro
• Email AndrewBrod_at_uncg.edu
• Web www.uncg.edu/bae/ober

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First, a word from my sponsor, OBER

• Main contact point at UNCG for economic-developmen
  t research
• Contract research
• Economic-impact analysis
• Surveys
• Data mining and more!
• Public education

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Emissaries for Trade

• No need for me to preach to the choir!
• But international trade is a tough sell in N.C.
• Serve as emissaries for international trade
• In N.C., the public and many politicians cling
  tightly to an array of trade myths
• By debunking these myths, we can show our fellow
  North Carolinians what trade really means to the
  states economy

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Some North Carolina trade myths

• NAFTA is bad for North Carolina
• Dumping is bad for North Carolina
• The U.S. is the good guy in international trade
• Outsourcing is bad for America
• Washingtons bad trade deals are hurting North
  Carolina

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NAFTA is bad for North Carolina

• Repeated often and uncritically
• To be sure, there have been many jobs lost in
  textile manufacturing, especially in apparel
• But this trend started before NAFTA
• Textile/apparels eternal search for cheap labor
• N.C. was once the low-wage economy
• In 1993-2000, N.C. exports grew 88
• Nationally, exports grew only 68 in that time

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Dumping is bad for North Carolina

• Originally designed to address market failures in
  exporting country
• Monopoly, government subsidies
• Now such issues are rarely mentioned
• Low prices in U.S. are the prime evidence
• Dumping is a legal, not an economic, concept
• Having it both ways re cheap labor
• The fallacy of predatory dumping
• Pricing to market is capitalism at work

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Dumping is bad for North Carolina

• Review process is rigged in favor of anti-dumping
  petitioners
• The weirdness of using third-country prices to
  infer dumping by non-market economies
• The U.S. ranks 3 in recent years in dumping
  accusations against it
• WTO and the Byrd Amendment
• Anti-dumping actions are like trying to outlaw
  gravity

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The U.S. is the good guy in trade

• The U.S. is one of the worst offenders in
  agricultural subsidies
• Impoverishes farmers in developing nations
• Why do social liberals forget their principals
  when trade is the issue?
• Why developing countries walked out of the 2003
  Cancun trade talks
• Impose our luxurious environmental and labor
  standards on the rest of the world?

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Outsourcing is bad for America

• Outsourcing is simply another kind of trade, in
  labor services
• Outsourcing is a win-win overall
• McKinsey study Each 1 sent offshore ? 1.13 of
  net benefit to U.S. (including .46 in labor
  benefits)
• Outsourcing is a drop in the bucket
• Forrester Research 3.3 million service-sector
  jobs to be outsourced in 2003-2015
• U.S. loses 10 times that many jobs each year!

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Washingtons bad trade deals hurt NC

• Confounding recession/post-recession effects,
  trade effects, and long-term transformation
• In 1993-2000, N.C. exports grew 88, as opposed
  to 68 for the U.S.
• N.C. is now the 13th or 14th biggest exporting
  state (16th in 1993)
• WTO/GATT has opened up foreign markets for N.C.
  agricultural products, notably poultry
• Largest exports electronics, chemicals

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What could hurt N.C.

• Protectionist subsidies price domestic jobs out
  of market
• Tobacco quotas and N.C. farmers
• Sugar subsidies and American candy manufacturers
• Security fears shut off the flow of student visas
• Human capital and the New Economy in N.C.
• U.S. is acting as if it wants to establish Europe
  as the destination for foreign scientists

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What Trade Really Means to North Carolina

• Dr. Andrew Brod, Director
• Office of Business and Economic Research
• Bryan School of Business and Economics
• University of North Carolina at Greensboro
• Email AndrewBrod_at_uncg.edu
• Web www.uncg.edu/bae/ober