Monday, October 12, 2009

MN-03 : Guest Blogger Erik Paulsen Misses Free Trade Opportunity

Using old data, Representative Erik Paulsen becomes a guest blogger on The Heritage Foundation website to advocate for free trade agreements.
Why, he didn’t included a copy on his personal blog is for others to question (but my guess would be that your collection basket will grow when you preach to the choir.)

Reading his piece, there are three immediate observations.

First, he cites “a Peterson Institute study, the average American household is about $9,000 per year richer as a result of the country’s integration with the world economy since World War II."
Call me skeptical, but why does Paulsen go back to WWII as his starting point ? First, Representative Paulsen fails to mention that the report was written in 2004 … which begs the question, is that comment still current today. The report was criticized for its selective use of data … and if the time frame was from ”1982 to the present (a time that saw the passage of the North American Free Trade Agreement (NAFTA), the creation of the World Trade Organization (WTO), and the passage of permanent normal trading relations with China) added only $9 per U.S. household, not $9,000.” Reading the study cited, speaks significantly about the impact of China … somewhat making the WWII reference point inappropriate when the focus should be on the future and not the past. Also, Paulsen fails to acknowledge other comments cited in the Peterson study related to job and/or wage losses : “Manufacturing workers dislocated in trade-impacted industries also experience average wage declines of about 13 percent in their new jobs, losses that may be offset only partially by the lower prices they pay for imports.”
Representative Paulsen should be embarrassed for using a report that misleads the reader.

Second, Representative Paulsen promotes the benefits of free trade on “countless businesses, small and large, ” mentioning ONLY one company in his district -- ”Bloomington-based Donaldson Incorporated, a leading manufacturer of air filtration systems and other industrial products.” No doubt that Donaldson is a great company … as testified by its global reach with 40 manufacturing facilities worldwide and an employee base in the 10,000 range …. hardly a small business. Paulsen fails to mention that one of business segments of Donaldson that was hit hard … “Sales decreased in the United States by 56.6 percent primarily as a result of a 50 percent decrease in Class 8 truck build rates and a 53 percent decrease in medium duty truck build rates by the Company's Customers over the prior year quarter.” … somehow the necessity to stabilize the automotive industry was not deemed appropriate to be acknowledged.

Third, Representative Paulsen calls for “Opening the South Korean market.” It’s not open ? --- Look around your house for items that are currently imported into America and no doubt you find some Korean built products. Year to date, South Korea has exported $25,747 million while American producers have sent $17,700 million to South Korea … repeatedly over time, America has been on the unfavorable side of the trade balance.

Summing it up, free trade is not necessarily fair trade.

All that stated, Representative Paulsen goal of generating jobs through foreign trade makes sense … but he has not identified a clear opportunity that would directly benefit Minnesota --- Cuba !

Opening export opportunities to Cuba is not a subject that Representative Paulsen should be unfamiliar. Prior to being elected to Congress, then State Representative Paulsen had the opportunity to vote on resolution in 2008 to that effect. The opportunity was stated that “under an ideal trade scenario, Minnesota farmers could enjoy at least $45 million in new exports annually; the state's total economic benefit would be nearly $92 million, including 900 new jobs.” These are opportunity dollars …. as “Minnesota is ideally positioned to benefit from the market opportunities that free trade with Cuba would provide, as trade restrictions succeed only in driving sales to competitors in other countries that have no such restrictions”.
When it came down to the vote, it was passed in the House by a vote of 86-9 … but State Representative Paulsen declined to state his opinion and abstained.
It must be noted that not only did Paulsen not want to confront this issue, but Governor Tim Pawlenty (R-MN) vetoed despite having met with representatives of the Cuban government in Minnesota’s state capital and expressing to them that "he supported free trade and friendship with Cuba." …. Ah, that was before Presidential politics came in to Pawlenty’s mindset.

Today, the opportunity is more desperate for Minnesota’s agricultural industry. Minnesota Congressmen John Kline (R), Jim Oberstar(D), Collin Peterson (D) and Tim Walz (D) along with 60 other representatives have requested that the US Trade Representative to open export markets closed to US pork producers.

Additionally, Representative Paulsen has not joined 179 other co-sponsors of Representatives Bill Delahunt (D-MA) and Jeff Flake (R-AZ) to support HR 874. The legislation would lift travel restrictions to Cuba for all Americans, restoring our right as citizens of the United States to travel freely.

Representative Paulsen, if you want to create new jobs in Minnesota, start with supporting your fellow Congressmen’s efforts to open Cuba for American business opportunities. Cuba could be a rare opportunity for America to actually have a trade surplus with net job gains.

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