ONE WORLD ONE GOVERNANCE for only the global 1% MOVING FORWARD has WESTERN HEMISPHERE as a DARK CONTINENT----no domestic economy---only colonialism with global factories EXPORTING goods to overseas EASTERN MARKETS.
This means our US WALL STREET-----our US FED--------our US TREASURY is no longer SOVEREIGN-----there will only be a ONE WORLD CENTRAL BANK-----and global stock trades privatized allowing only global 1% and their 2% to trade stocks.
Having rich people is not bad ---it's when those rich people become only global banking 1% OLD WORLD KINGS AND QUEENS that extreme wealth extreme poverty hits.
Remember, global banking 1% CLINTON/BUSH/OBAMA created global BIG AG-----global BIG MEAT-----global BIG DAIRY just so the US would lose all of its FOOD SOVEREIGNTY-------and become a FOOD IMPORTING THIRD WORLD NATION.
So, overseas in EASTERN HEMISPHERE global BIG DAIRY is soaring sending all those dairy products to US while our US DAIRY farms are pushed out of business. When all FOOD SOURCES are IMPORTED--------TARIFFS work in the OPPOSITE direction. This is why US dairy businesses are now the one's feeling HIGH TARIFFS.
TRUMP did this because that is what MOVING FORWARD US FOREIGN ECONOMIC ZONES as COLONIAL ENTITIES entails.
So, if US 99% WE THE PEOPLE want to be DAIRY FARMERS you need to become an EX-PAT and move to UKRAINE/BULGARIA/LATVIA.
Wisconsin dairy farmers brace for cheese tariff impact
Tuesday, June 26th, 2018
Wisconsin cheese makers have found themselves caught in the middle of an escalating trade war.
Some local companies that export are preparing to take a major hit as countries retaliate President Trump’s newly imposed tariff on steel and aluminum.
Goeser Dairy hasn’t been limited on how much milk they provide for Sartori Company, a major cheese maker in Plymouth, but they’re concerned that day may come due to counter-tariffs. Josh Goeser is one of the reasons why Wisconsin is ‘America’s Dairyland’. He’s a fourth generation dairy farmer with more than 2,200 cattle. He’s worried about how much new tariffs could affect their bottom line.
“We’re a little nervous because of how it’s going to impact us,” Goeser said. “Milk price and feed price and overall quality of everything we produce.”
Goeser Dairy is one of the largest producers for Sartori Company which was featured in the New York Times Sunday about how Wisconsin cheese makers could get shut out of foreign markets. Sartori’s president Jeff Schwager said if that happens, quote, “I could see us getting to the point where we’re dumping our milk in the fields.”
“That’s pretty scary because …. are we going to get paid for it or how bad is it going to affect us?” said Goeser. “And how many tanks are we going to have to dump ourselves?”
Kerry Henning of the Wisconsin Cheese Makers Association hopes Trump comes to a deal with foreign countries.
“We’re leveraging as much as we can, but let’s hope we don’t dump,” he said.
With 10 percent of Sartori’s revenue coming from exports, Goeser wonders how long until the effects trickle down to the farmers like him.
“It’s all manufactured in Plymouth and the cheese is shipped overseas,” he said.
Mexico buys more cheese from the U.S. than any other country. Next week, Mexico will raise its tariff from 15 to 25 percent.
It doesn't take a rocket scientist to understand that FOOD industries cannot operate in FOREIGN ECONOMIC ZONES designated with the most TOXIC OF GLOBAL FACTORIES like FOXCONN. The northern-mid-west designated as global factory----global mining----global tar sands crude oil and fracking natural gas means all that wonderful BREADBASKET FOOD industry is slated to disappear.
TRUMP did not do this------these TARIFFS are a result of CLINTON/BUSH/OBAMA making the US a FOOD IMPORTER-----killing our domestic FOOD economy.
So, with this current TARIFF regime those GLOBAL BIG DAIRY ----global BIG AG-----global BIG MEAT will be able to IMPORT to US FOREIGN ECONOMIC ZONES------CHEAPER......and that is for what CLINTON/BUSH/OBAMA----now TRUMP work.
'Wisconsin dairy farmers brace for cheese tariff impact
Tuesday, June 26th, 2018'
When US was a colonial entity 400 years ago we at least had massive natural resources upon which to grow as a nation. Global banking 1% taking our domestic farming to GLOBAL BIG AG------calling it GREEN REVOLUTION ------absolutely devastated our natural resources---land and water needed to be a sovereign FOOD nation. This is why MOVING FORWARD has US as a FOOD IMPORTER-----ergo, TARIFFS favor those IMPORTING food from overseas.
This image paints that picture-----America's Dairyland will be tomorrow TOXIC WASTELAND courtesy global factories, global mining, global energy.
Wisconsin Foxconn Technology Group development project
On October 4, 2017, Foxconn announced it will be locating its first U.S. manufacturing facility in the village of Mount Pleasant in Racine County. The Foxconn Technology Group (Hon Hai Precision Industry Co., Ltd.) is a multinational electronics manufacturing company headquartered in Taiwan. The company is the world's largest contract electronics manufacturer and the fourth-largest information technology company.
As required by law, prior to construction and operation of the new facility, Foxconn must work with the state on receiving the appropriate permits and follow state and federal standards, including but not limited to applicable air and water quality and solid and hazardous waste regulations. Also, Foxconn is subject to federal wetland permitting requirements and must properly mitigate any impact on wetlands.
The DNR will be working with Foxconn, local government officials and other state and federal agencies to ensure all applicable permit requirements are met, including consideration of any environmental impacts associated with any permits or approvals.
Wisconsin Act 58In September 2017, the State Legislature passed 2017 Wisconsin Act 58 [exit DNR], authorizing the state to create an Electronics and Information Technology Manufacturing (EITM) Zone [PDF], within which Foxconn will be operating. The act also directed DNR to "ensure that the conditions of applicable permits, licenses, and approvals under the department's jurisdiction are met for all activities related to the construction, access, or operation of a new manufacturing facility within an electronics and information technology manufacturing zone designated under section 238.396 (1m) of the statutes, including but not limited to permits, licenses, and approvals required under [chapters 23 through 299] of the statutes and any associated rules promulgated by the department of natural resources."
Foxconn breaking ground on Wisconsin plant it received $4 billion to build
by Chris Isidore @CNNTech June 28, 2018: 9:15 AM ET
Taiwanese electronics manufacturer Foxconn breaks ground on a new plant in Wisconsin Thursday after receiving a controversial $4 billion package of tax breaks and other incentives to build there.President Donald Trump will attend the ceremony, as will Governor Scott Walker, who helped arrange local, state and federal incentives to woo the company.
The package is one of the richest ever offered to a business to locate a plant.
Foxconn is promising to hire 13,000 workers, and to place its North American corporate headquarters in nearby Milwaukee. Foxconn says it will spend up to $10 billion on the plant.
They may have trouble finding staff.
Wisconsin's unemployment rate is at a record low 2.8%, and there are fewer than 90,000 unemployed in the state.
The state has started an ad campaign to try to entice workers in other states to move to Wisconsin.
Jobs are expected to pay about $53,000 a year. Walker vowed it would give Wisconsin its own version of Silicon Valley.
"This is a once-in-a-century opportunity for our state and our country, and Wisconsin is ready," said Walker at the time of the announcement a year ago.
But opponents criticize it as an example of corporate welfare the state can not afford.
Foxconn is best known as the electronics manufacturer that builds Apple (AAPL) iPhones and Amazon (AMZN) Kindles and Echo Dots at massive factories in China.
The state alone is poised to give the company up to $3 billion in tax credits and breaks.
It will take until at least 2043 for the state to recoup that lost tax revenue, according to Wisconsin's estimates.
Most of the rest of the funds will come from county and local governments and the feds.
The Village of Mount Pleasant and Racine County, where the plant is to be built, have greed to provide $764 million in tax incentives to help get the facility constructed, including buying the land and giving it to Foxconn for free.
State and local governments will also spend $400 million on road improvements, including adding two lanes to the nearby Interstate 94. And the federal government has committed to spend $160 million more in federal money to help pay for the interstate expansion.
In addition, the local electric utility is upgrading its lines and adding substations to provide the necessary power that will be used by the plant, at a cost of $140 million. The cost of those projects will be paid by 5 million customers in the area.
If China is bringing all its GLOBAL FACTORIES over to US FOREIGN ECONOMIC ZONES-----like FOXCONN in Wisconsin-----then TARIFFS against CHINA have no effect on these US FOREIGN ECONOMIC ZONE EXPORT manufacturing factories. Chinese factories inside US FOREIGN ECONOMIC ZONES sending products as EXPORTS from North America would not pay THOSE TARIFFS directed at CHINA.
If global banking 1% are doing all their economic activities in EASTERN HEMISPHERE-------then a colonial NORTH AMERICA filled with FOREIGN GLOBAL FACTORIES with trade policies allowing only EXPORTING from these US FOREIGN ECONOMIC ZONES-----would see TARIFF scheme reverse from these 300 years of US sovereign manufacturing corporate history.
We no longer have US sovereign manufacturing corporations to PROTECT with TARIFFS.
'Tecma University by Ernesto Bravo
Chinese Manufacturing Companies Moving to the US'
Trump Increases China Tariffs as Trade Deal Hangs in the Balance
By Ana Swanson and Alan Rappeport
- May 9, 2019
WASHINGTON — President Trump escalated his trade war with China on Friday morning, raising tariffs on $200 billion worth of Chinese goods and taking steps to tax nearly all of China’s imports as punishment for what he said was Beijing’s attempt to “renegotiate” a trade deal.
Mr. Trump’s decision to proceed with the tariff increase came after a pivotal round of trade talks in Washington on Thursday night failed to produce an agreement to forestall the higher levies. The White House said talks would resume again on Friday but it remains uncertain whether the two sides can bridge the differences that have arisen over the past week.
In his comments at the White House on Thursday afternoon, Mr. Trump vacillated between threatening China and suggesting a deal could still happen. The president said he had received a “beautiful letter” from President Xi Jinping of China and would probably speak to him by phone, but said he was more than happy to keep hitting Beijing with tariffs.
[U.S.-China trade war worsens, but global markets find a footing.]
“I have no idea what’s going to happen,” he said. “They’ll see what they can do, but our alternative is, is an excellent one,” Mr. Trump added, noting that American tariffs on $250 billion worth of Chinese products were bringing “billions” in to the United States government.
In a statement on Friday, China’s Ministry of Commerce said that the government “deeply regrets that it will have to take necessary countermeasures.” It didn’t specify what those countermeasures might be.
“It is hoped that the U.S. and Chinese sides will meet each other halfway and work together” to resolve their dispute, the statement added.
Markets in Asia and Europe rose in Friday trading, suggesting investors still believe the two sides can reach a deal.
The renewed brinkmanship has plunged the world’s two largest economies back into a trade war that had seemed on the cusp of ending. The United States and China were nearing a trade deal that would lift tariffs, open the Chinese market to American companies and strengthen China’s intellectual property protections. But discussions fell apart last weekend, when China called for substantial changes to the negotiating text that both countries had been using as a blueprint for a sweeping trade pact.
Mr. Trump, angered by what he viewed as an act of defiance, responded on Sunday by threatening to raise existing tariffs to 25 percent and impose new ones on an additional $325 billion worth of products. China has said it is prepared to retaliate should those tariffs go into effect.
“We were getting very close to a deal then they started to renegotiate the deal,” Mr. Trump said. “We can’t have that.”
Chinese officials said the decision to come to the United States after Mr. Trump’s tariff threat showed they are serious about trying to reach a resolution. But it is unclear whether China is willing to make the changes that the Trump administration is demanding, including codifying much of the agreement into Chinese law.
“I come here facing pressure,” Liu He, China’s vice premier, said on Thursday in an interview with China Central Television in Washington. “That expresses China’s greatest sincerity. And we want to resolve some of the differences we face honestly, confidently and rationally. I think there is hope.”
An administration official described Mr. Xi’s letter to Mr. Trump as conveying a nice, diplomatic tone but noted that the word “equality” was included, suggesting that China believes the United States is demanding too much and that a trade agreement must be more equitable. Mr. Xi also said he believed that his friendship with Mr. Trump would endure the trade dispute.
Despite the overture, the administration official said that this round of talks had the dour feeling of heading toward a breakup. There is a growing sense of disappointment in Mr. Xi being unable to follow through on things that Mr. Trump’s trade negotiators thought had been addressed.
Mr. Trump’s decision to impose 25 percent tariffs on nearly one-third of all Chinese products is the biggest trade action that Mr. Trump has taken so far. The higher tax hits many consumer products that Americans rely on from Beijing, like seafood, luggage and electronics, raising prices for American companies and their customers across a large portion of sectors.
Stock markets fell Thursday in the United States, but pared some of those losses after Mr. Trump’s comments in the afternoon. The S&P 500 index ended the day down less than 0.5 percent.
Talks resumed at 5 p.m. on Thursday at the offices of the United States trade representative, and Steven Mnuchin, the Treasury secretary, and Robert Lighthizer, Mr. Trump’s top trade negotiator, continued them over a dinner with Mr. Liu and some members of the Chinese delegation.
The new 25 percent rate went into effect at 12:01 a.m. Friday. But the higher tariffs will hit only products that leave China after that time, not those already in transit. That could provide some additional time for the two sides to reach an agreement. Mr. Trump may also be able to rescind the tariffs once a deal is reached, retroactively reversing the higher rates.
“This week is really a challenge if you’ve got boats on the ocean,” said Brian Keare, the field chief information officer at Incorta, who advises companies like Broadcom, Starbucks and Apple on scenario planning amid the uncertainty they face under the Trump administration. “If I’ve got 30 days’ notice, I can make a smarter decision. If I’ve got 72 hours, my hands are more tied.”
China, which has already placed tariffs on nearly all of America’s exports, including agriculture products, has threatened to respond with additional “countermeasures” to Mr. Trump’s latest tariff.
Lyle Benjamin, the president of the Montana Grain Growers Association, said that China had essentially stopped buying American wheat since last year. He was hopeful that a trade truce would change that, but now he expected prices to keep falling.
“It’s highly frustrating, particularly in the agricultural sector, to be collateral damage as we try to achieve these trade goals for other industries,” Mr. Benjamin said. “It’s a tough game right now and it’s tied almost entirely to this trade war.”
But Mr. Trump, already emboldened by a healthy American economy, may be encouraged to keep his trade war going given the monthly trade deficit with China fell in March to its lowest level since 2014 as China slowed its exports to America. The overall United States trade deficit with the world increased 1.5 percent in March to $50 billion, as it continued to import more goods and services than it exported worldwide.
Mr. Trump has seized on that shrinking deficit as evidence that his trade policy is narrowing the trade deficit and boosting growth, as have some of his supporters.
The Trump administration has done projections on the effect of the additional tariffs on the economy and believes that the negative effects will be minimal and pale in comparison to those facing China, an administration official said. The White House will consider taking additional measures to mitigate the effects of any retaliatory measures that China takes against America’s farmers.
“To the president’s credit, the tariffs are working,” said Dan DiMicco, the chairman of the trade lobbying group Coalition for a Prosperous America and a former trade adviser to Mr. Trump during his 2016 campaign. “America’s manufacturers and workers are now seeing gains as manufacturing employment rises and China’s hold on the U.S. market shrinks.”
Mr. Trump’s toughened stance toward China has rattled American businesses, which had been anticipating a trade truce but are now bracing for higher tariffs.
“Clearly, we think a negotiating strategy based on tariffs is the wrong direction,” said David French, the senior vice president of government relations at the National Retail Federation.
Retailers wielded their influence successfully in 2017 when Republicans were considering a tax plan that they believed would have harmed their businesses. But when it comes to trade, Mr. French said that the Trump administration had been intransigent about their tariff concerns. To make its point, the retail association has been holding events featuring businesses that are suffering from tariffs in politically important states like Ohio.
Most business groups agree with Mr. Trump that China engages in unfair trade practices. Among the shared concerns is that China needs to protect American intellectual property and curb subsidies for state-owned enterprises. But those businesses, which depend on China for many of the products they rely on and sell, say the economic pain of tariffs makes them a poor negotiating tool.
“American business continues to have major problems with China’s commercial policies, but we simply must find a way to tackle these that doesn’t turn our most competitive companies into collateral damage,” said Peter Robinson, the chief executive of the United States Council for International Business.
Mr. Robinson suggested that the United States should team up with other trading partners to pressure China to change its ways and work with the World Trade Organization to adjudicate its complaints.
But administration officials have begun to run out of patience with China, which they say reneged on several areas of agreement over the weekend. After a meeting last week in Beijing, Mr. Mnuchin and Mr. Lighthizer were angered to receive a new draft of the agreement from the Chinese with major revisions to provisions they thought had been agreed to. According to people who have been tracking the talks, Chinese officials determined that many of the concessions they were being asked to make would clash with Chinese laws, which the government was not prepared to change.
“The administration has been talking to China for months now about specific things that needed to change in Chinese law,” said Clete Willems, a former member of Mr. Trump’s trade team who left recently to become a partner at the law firm Akin Gump. “The administration was operating under the assumption that some of that would be part of the deal, so to the extent that China is saying that’s no longer possible, that is a pretty big reversal.”
Wall Street analysts have been girding for more volatility this week and many have been adjusting their predictions about the likelihood of an all out trade war.
“The opportunity window for avoiding a trade war is closing fast,” economists at Citigroup wrote in a note to clients.
They warned that an increase in tariffs could begin to push up inflation in the United States and tighten financial conditions. A full-blown trade war is expected to be a drag on global economic growth.
Thus far, most companies have managed to absorb the brunt of the initial batch of China tariffs, keeping inflation at bay, but analysts said that jumping to a rate of 25 percent is impossible to ignore.
“Any maneuverability these companies had been using to blunt the impact of these tariffs is very likely exhausted,” said Henrietta Treyz, the director of economic policy at the investment advisory firm Veda Partners.
Remember, FOREIGN ECONOMIC ZONES in overseas third world nations were carved into sovereign nations like China-----but filled with MULTI-NATIONAL corporations which were not CHINESE. That is now FLIPPING. US FOREIGN ECONOMIC ZONES will be filled with MULTI-NATIONAL CORPORATIONS which are not US.
Mr. Benjamin said. “It’s a tough game right now and it’s tied almost entirely to this trade war.”
If Chinese global corporation inside US FOREIGN ECONOMIC ZONE as WISCONSIN-----is EXPORTING products----they will not be paying those TRUMP high TARIFFS aimed at Chinese-based manufacturing coming in as IMPORTS.
While Chinese-based manufacturers sell those products to everyone but US------those Chinese-based manufactures here in US will PROFIT from TRUMP'S TARIFF laws-----same with all other foreign corporations filling US FOREIGN ECONOMIC ZONES.
'“The opportunity window for avoiding a trade war is closing fast,” economists at Citigroup wrote in a note to clients'.
WHERE IS THE TRADE WAR?
Not here in US as colonial FOREIGN ECONOMIC ZONE----the TRADE WAR is in EASTERN HEMISPHERE as China fights for market-share in Eastern Hemisphere nations.
'But Mr. Trump, already emboldened by a healthy American economy, may be encouraged to keep his trade war going given the monthly trade deficit with China fell in March to its lowest level since 2014 as China slowed its exports to America'.
Below we see how 'FOREIGN OWNERSHIP was being promoted with figures from 2002---BUSH era showing most US corporations becoming majority FOREIGN-OWNED. Super-duper merger and acquisition during OBAMA----and VOILA----these percentages of foreign majorities are now high across all industries.
Foreign ownership of U.S. corporations
This article is part of the Coal Issues portal on SourceWatch, a project of Global Energy Monitor and the Center for Media and Democracy.
According to the website Economy in Crisis, "Foreign ownership refers to ownership of assets of a particular industry by foreign controlled domestic U.S. Corporations (FDC) 50% or more owned by a foreign entity."
By that definition, the percentage of foreign ownership as of 2002 by industrial sector was as follows:
- Sound recording industries - 97%
- Commodity contracts dealing and brokerage - 79%
- Motion picture and sound recording industries - 75%
- Metal ore mining - 65%
- Motion picture and video industries - 64%
- Wineries and distilleries - 64%
- Database, directory, and other publishers - 63%
- Book publishers - 63%
- Cement, concrete, lime, and gypsum product - 62%
- Engine, turbine and power transmission equipment - 57%
- Rubber product - 53%
- Nonmetallic mineral product manufacturing - 53%
- Plastics and rubber products manufacturing - 52%
- Plastics product - 51%
- Other insurance related activities - 51%
- Boiler, tank, and shipping container - 50%
- Glass and glass product - 48%
- Coal mining - 48%
- Sugar and confectionery product - 48%
- Nonmetallic mineral mining and quarrying - 47%
- Advertising and related services - 41%
- Pharmaceutical and medicine - 40%
- Clay, refractory, and other nonmetallic mineral products - 40%
- Securities brokerage - 38%
- Other general purpose machinery - 37%
- Audio and video equipment mfg and reproducing magnetic and optical media -
- Support activities for mining - 36%
- Soap, cleaning compound, and toilet preparation - 32%
- Chemical manufacturing - 30%
- Industrial machinery - 30%
- Securities, commodity contracts, and other financial investments and
- Other food - 29%
- Motor vehicles and parts - 29%
- Machinery manufacturing - 28%
- Other electrical equipment and component - 28%
- Securities and commodity exchanges and other financial investment
- Architectural, engineering, and related services - 26%
- Credit card issuing and other consumer credit - 26%
- Petroleum refineries (including integrated) - 25%
- Navigational, measuring, electromedical, and control instruments - 25%
- Petroleum and coal products manufacturing - 25%
- Transportation equipment manufacturing - 25%
- Commercial and service industry machinery - 25%
- Basic chemical - 24%
- Investment banking and securities dealing - 24%
- Semiconductor and other electronic component - 23%
- Paint, coating, and adhesive - 22%
- Printing and related support activities - 21%
- Chemical product and preparation - 20%
- Iron, steel mills, and steel products - 20%
- Agriculture, construction, and mining machinery - 20%
- Publishing industries - 20%
- Medical equipment and supplies - 20%
Here is CLINTON ERA ROBERT REICH of WORLD BANK telling the US 99% WE THE PEOPLE this back in 1990. Today, we no longer have US CORPORATIONS------they have almost all been sold and enfolded into MULTI-NATIONAL corporations not tied to being SOVEREIGN US corporations.
When US national media and FAKE left political groups yell at TRUMP for killing our domestic economy or sell higher TARIFFS on China while Chinese corporations fill our US FOREIGN ECONOMIC ZONES------that is all FAKE NEWS------
It was REICH'S job as a far-right wing CLINTON NEO-LIBERAL to sell to US 99% of workers that killing our US domestic corporations and replacing them with global corporations would be good for US WORKERS.
TRADE WARS discussed on our US media are trade wars in EASTERN HEMISPHERE----not here in US. So, will global 1% OLD WORLD KINGS European corporations win market share in Eastern Europe----in Asia-----in India -----over global 1% CHINESE corporations.
TPP here inside US FOREIGN ECONOMIC ZONES are specifically written to BOOST PROFITS for FOREIGN CORPORATIONS and that includes changing TARIFF laws that make EXPORTING from US FOREIGN ECONOMIC ZONES cheaper for those foreign manufacturing corporations.
THE TRADE WAR IS BELOW-----CHINA VS OLD WORLD KINGS EUROPEAN CORPORATIONS IN GAINING MARKET SHARE IN THESE REGIONS.
TPP in Vietnam----TPP in South Korea----TPP in Malaysia-----TPP in Philippines------TPP in Cambodia-----TPP in Thailand.......etc.
Who Is Us?
- Robert B. Reich
From the January–February 1990 Issue
Across the United States, you can hear calls for us to revitalize our national competitiveness. But wait—who is “us”? Is it IBM, Motorola, Whirlpool, and General Motors? Or is it Sony, Thomson, Philips, and Honda?
Consider two successful corporations:
- Corporation A is headquartered north of New York City. Most of its top managers are citizens of the United States. All of its directors are American citizens, and a majority of its shares are held by American investors. But most of Corporation A’s employees are non-Americans. Indeed, the company undertakes much of its R&D and product design, and most of its complex manufacturing, outside the borders of the United States in Asia, Latin America, and Europe. Within the American market, an increasing amount of the company’s product comes from its laboratories and factories abroad.
- Corporation B is headquartered abroad, in another industrialized nation. Most of its top managers and directors are citizens of that nation, and a majority of its shares are held by citizens of that nation. But most of Corporation B’s employees are Americans. Indeed, Corporation B undertakes much of its R&D and new product design in the United States. And it does most of its manufacturing in the U.S. The company exports an increasing proportion of its American-based production, some of it even back to the nation where Corporation B is headquartered.
As the American economy becomes more globalized, examples of both Corporation A and B are increasing. At the same time, American concern for the competitiveness of the United States is increasing. Typically, the assumed vehicle for improving the competitive performance of the United States is the American corporation—by which most people would mean Corporation A. But today, the competitiveness of American-owned corporations is no longer the same as American competitiveness. Indeed, American ownership of the corporation is profoundly less relevant to America’s economic future than the skills, training, and knowledge commanded by American workers—workers who are increasingly employed within the United States by foreign-owned corporations.
So who is us?
The answer is, the American work force, the American people, but not particularly the American corporation. The implications of this new answer are clear: if we hope to revitalize the competitive performance of the United States economy, we must invest in people, not in nationally defined corporations. We must open our borders to investors from around the world rather than favoring companies that may simply fly the U.S. flag. And government policies should promote human capital in this country rather than assuming that American corporations will invest on “our” behalf. The American corporation is simply no longer “us.”
American corporations have been abroad for years, even decades. So in one sense, the multinational identity of American companies is nothing new. What is new is that American-owned multinationals are beginning to employ large numbers of foreigners relative to their American work forces, are beginning to rely on foreign facilities to do many of their most technologically complex activities, and are beginning to export from their foreign facilities—including bringing products back to the United States.
Around the world, the numbers are already large—and still growing. Take IBM—often considered the thoroughbred of competitive American corporations. Forty percent of IBM’s world employees are foreign, and the percentage is increasing. IBM Japan boasts 18,000 Japanese employees and annual sales of more than $6 billion, making it one of Japan’s major exporters of computers.
Or consider Whirlpool.
After cutting its American work force by 10% and buying Philips’s appliance business, Whirlpool now employs 43,500 people around the world in 45 countries—most of them non-Americans. Another example is Texas Instruments, which now does most of its research, development, design, and manufacturing in East Asia. TI employs over 5,000 people in Japan alone, making advanced semiconductors—almost half of which are exported, many of them back to the United States.
American corporations now employ 11% of the industrial work force of Northern Ireland, making everything from cigarettes to computer software, much of which comes back to the United States. More than 100,000 Singaporeans work for more than 200 U.S. corporations, most of them fabricating and assembling electronic components for export to the United States. Singapore’s largest private employer is General Electric, which also accounts for a big share of that nation’s growing exports. Taiwan counts AT&T, RCA, and Texas Instruments among its largest exporters. In fact, more than one-third of Taiwan’s notorious trade surplus with the United States comes from U.S. corporations making or buying things there, then selling or using them back in the United States. The same corporate sourcing practice accounts for a substantial share of the U.S. trade imbalance with Singapore, South Korea, and Mexico—raising a question as to whom complaints about trade imbalances should be directed.
The pattern is not confined to America’s largest companies. Molex, a suburban Chicago maker of connectors used to link wires in cars and computer boards, with revenues of about $300 million in 1988, has 38 overseas factories, 5 in Japan. Loctite, a midsize company with sales in 1988 of $457 million, headquartered in Newington, Connecticut, makes and sells adhesives and sealants all over the world. It has 3,500 employees—only 1,200 of whom are Americans. These companies are just part of a much larger trend: according to a 1987 McKinsey & Company study, America’s most profitable midsize companies increased their investments in overseas production at an annual rate of 20% between 1981 and 1986.
Overall, the evidence suggests that U.S. companies have not lost their competitive edge over the last 20 years—they’ve just moved their base of operations. In 1966, American-based multinationals accounted for about 17% of world exports; since then their share has remained almost unchanged. But over the same period, the share of exports from the United States in the world’s total trade in manufactures fell from 16% to 14%. In other words, while Americans exported less, the overseas affiliates of U.S.-owned corporations exported more than enough to offset the drop.
How Foreign-Owned Businesses Can Contribute to U.S. Competitiveness
by: Todd Hixon by: Ranch Kimball
What kind of foreign-owned businesses really contribute to national competitiveness? Actually, there are four models to consider, each doing business at a different level of complexity and local intellectual content: importers, assemblers, plant complexes, and fully integrated business operations. For those complex discrete manufacturing businesses such as electronics and automobiles that are at the heart of trade concerns, it is only fully integrated operations that build the local skill base and infrastructure in ways that increase international competitiveness and consequently raise living standards. They do so by bringing in-country the essential engine of business competitiveness.
The Matsushita consumer electronics complex at Kadoma, Japan demonstrates the importance of a fully integrated operation. All four key intellectual elements of the television and videocassette recorder (VCR) product and production systems—product design, manufacturing, process engineering, and vendor management—take place there. Although many components are outsourced, these key intellectual elements are “insourced” at Kadoma so they can be tightly integrated and optimized. Matsushita even builds most of its manufacturing equipment. Mech decks, the highly complex head and tape transport assemblies for VCRs, are assembled by Matsushita robots.
This tight integration enables Matsushita to raise quality, reduce labor hours, provide a high level of product variety to the market, and rapidly incorporate new technology into new products. The mech decks are designed so that every part can be assembled with a simple vertical motion, which facilitates 100% assembly automation and high process reliability. This “producible design,” which can only be accomplished when there is close teamwork among product designers, process designers, component vendors, and manufacturing managers, in part explains why Matsushita has been able to maintain a leading competitive position worldwide despite the yen shock.
Typical importing and assembly operations are at the opposite end of the scale. Importing companies limit local economic activity to sales, marketing, and distribution; their aim is to win local market share and broaden the business base for an engine of competitiveness located offshore. (We use the term “local” to mean activity carried out in the host country.) Assemblers, a category that includes the U.S. organizations of many Asian-owned consumer electronics companies, make products locally, using designs, processes, and management approaches developed in the home country. They may buy some components locally, but they are likely to import key components, and all the sourcing decisions are made in the home country. As a result, it is difficult for local companies to become suppliers, and the most important supply positions often go to local subsidiaries of home-country suppliers.
Plant complexes add a further level of value added and begin to add intellectual content. Typically, a complex will fabricate product components, and the amount of local engineering content increases. Examples in the United States include the Nissan complex in Smyrna, Tennessee, which makes its own transmissions and transaxles, and the Sony television complex in San Diego, California, which makes its own tubes and (together with other Sony operations in California) has a significant engineering force. Still, a plant complex falls well short of a fully integrated business operation. The key intellectual elements of the product and production system are still in the home country, even if the distinctions are becoming more subtle. High-resolution tubes for computer monitors and jumbo television tubes that drive the product and process technology are made at Sony’s lead plant in Inazawa, Japan. The U.S. plant makes more mature products.
Assembly operations and plant complexes (particularly the latter) look good on simple economic measures. They employ many assembly workers and some middle managers and engineers. They also can help with catch-up in weak areas of management skills: the GM-Toyota NUMMI plant in California, for example, has shown U.S. managers that management approach rather than automation accounts for much of the Japanese advantage in assembly productivity. These operations cannot bring the host country to the forefront of competitiveness, however, because the engine of competitiveness remains offshore. Thus they do not upgrade the local skill base and technology infrastructure to world leader status; they won’t attract the best young managers and engineers; and they are unlikely to stimulate the creative work that spins off new businesses (the “Silicon Valley effect”).
The real payoff from local operations for foreign-owned companies, then, comes in the form of fully integrated business operations—when product design, process design, manufacturing, and vendor management are co-located and tightly integrated in-country and the operation is set up to do business in the global market. In this fully integrated operation, the span of activities closely resembles similar operations in the home country.
Examples of fully integrated operations in the United States include the consumer electronics businesses of Philips and Thomson (which were built from acquired companies) and, increasingly, Honda’s automobile business. These companies appear to have made commitments to devolve whole product lines to their U.S. subsidiaries. The new Honda Accord Coupe, for example, was designed and is made only in the United States and is exported in small quantities to Japan. Likewise, U.S. multinational companies have built many successful fully integrated operations in other parts of the world, for example, IBM’s TI’s, and GE Plastics’s operations in Japan, Hewlett-Packard’s in Singapore, and Ford’s in Europe.
The foreign-owned businesses that benefit national competitiveness most are those that commit their engine of competitiveness to the host country. When foreign-owned companies come only to win local market share, they add little to the host country’s competitiveness. When they come to build a platform to compete in global markets, then they contribute to national competitiveness.
The old trend of overseas capital investment is accelerating: U.S. companies increased foreign capital spending by 24% in 1988, 13% in 1989. But even more important, U.S. businesses are now putting substantial sums of money into foreign countries to do R&D work. According to National Science Foundation figures, American corporations increased their overseas R&D spending by 33% between 1986 and 1988, compared with a 6% increase in R&D spending in the United States. Since 1987, Eastman Kodak, W.R. Grace, DuPont, Merck, and Upjohn have all opened new R&D facilities in Japan. At DuPont’s Yokohama laboratory, more than 180 Japanese scientists and technicians are working at developing new materials technologies. IBM’s Tokyo Research Lab, tucked—away behind the far side of the Imperial Palace in down-town Tokyo, houses a small army of Japanese engineers who are perfecting image-processing technology. Another IBM laboratory, the Kanagawa arm of its Yamato Development Laboratory, houses 1,500 researchers who are developing hardware and software. Nor does IBM confine its pioneering work to Japan: recently, two European researchers at IBM’s Zurich laboratory announced major breakthroughs into superconductivity and microscopy—earning them both Nobel Prizes.
An even more dramatic development is the arrival of foreign corporations in the United States at a rapidly increasing pace. As recently as 1977, only about 3.5% of the value added and the employment of American manufacturing originated in companies controlled by foreign parents. By 1987, the number had grown to almost 8%. In just the last two years, with the faster pace of foreign acquisitions and investments, the figure is now almost 11%. Foreign-owned companies now employ 3 million Americans, roughly 10% of our manufacturing workers. In fact, in 1989, affiliates of foreign manufacturers created more jobs in the United States than American-owned manufacturing companies.
And these non-U.S. companies are vigorously exporting from the United States. Sony now exports audio- and videotapes to Europe from its Dothan, Alabama factory and ships audio recorders from its Fort Lauderdale, Florida plant. Sharp exports 100,000 microwave ovens a year from its factory in Memphis, Tennessee. Last year, Dutch-owned Philips Consumer Electronics Company exported 1,500 color televisions from its Greenville, Tennessee plant to Japan. Its 1990 target is 30,000 televisions; by 1991, it plans to export 50,000 sets. Toshiba America is sending projection televisions from its Wayne, New Jersey plant to Japan. And by the early 1990s, when Honda annually exports 50,000 cars to Japan from its Ohio production base, it will actually be making more cars in the United States than in Japan.
The New American CorporationIn an economy of increasing global investment, foreign-owned Corporation B, with its R&D and manufacturing presence in the United States and its reliance on American workers, is far more important to America’s economic future than American-owned Corporation A, with its platoons of foreign workers. Corporation A may fly the American flag, but Corporation B invests in Americans. Increasingly, the competitiveness of American workers is a more important definition of “American competitiveness” than the competitiveness of American companies. Issues of ownership, control, and national origin are less important factors in thinking through the logic of “who is us” and the implications of the answer for national policy and direction.
Ownership is less important
Those who favor American-owned Corporation A (that produces overseas) over foreign-owned Corporation B (that produces here) might argue that American ownership generates a stream of earnings for the nation’s citizens. This argument is correct, as far as it goes. American shareholders do, of course, benefit from the global successes of American corporations to the extent that such successes are reflected in higher share prices. And the entire U.S. economy benefits to the extent that the overseas profits of American companies are remitted to the United States.
But American investors also benefit from the successes of non-American companies in which Americans own a minority interest—just as foreign citizens benefit from the successes of American companies in which they own a minority interest, and such cross-ownership is on the increase as national restrictions on foreign ownership fall by the wayside. In 1989, cross-border equity investments by Americans, British, Japanese, and West Germans increased 20%, by value, over 1988.
The point is that in today’s global economy, the total return to Americans from their equity investments is not solely a matter of the success of particular companies in which Americans happen to have a controlling interest. The return depends on the total amount of American savings invested in global portfolios comprising both American and foreign-owned companies—and on the care and wisdom with which American investors select such portfolios. Already Americans invest 10% of their portfolios in foreign securities; a recent study by Salomon Brothers predicts that it will be 15% in a few years. U.S. pension managers surveyed said that they predict 25% of their portfolios will be in foreign-owned companies within 10 years.
Control is less important
Another argument marshaled in favor of Corporation A might be that because Corporation A is controlled by Americans, it will act in the best interests of the United States. Corporation B, a foreign national, might not do so—indeed, it might act in the best interests of its nation of origin. The argument might go something like this: even if Corporation B is now hiring more Americans and giving them better jobs than Corporation A, we can’t be assured that it will continue to do so. It might bias its strategy to reduce American competitiveness; it might even suddenly withdraw its investment from the United States and leave us stranded.
But this argument makes a false assumption about American companies—namely, that they are in a position to put national interests ahead of company or shareholder interests. To the contrary: managers of American-owned companies who sacrificed profits for the sake of national goals would make themselves vulnerable to a takeover or liable for a breach of fiduciary responsibility to their shareholders. American managers are among the loudest in the world to declare that their job is to maximize shareholder returns—not to advance national goals.
Apart from wartime or other national emergencies, American-owned companies are under no special obligation to serve national goals. Nor does our system alert American managers to the existence of such goals, impose on American managers unique requirements to meet them, offer special incentives to achieve them, or create measures to keep American managers accountable for accomplishing them. Were American managers knowingly to sacrifice profits for the sake of presumed national goals, they would be acting without authority, on the basis of their own views of what such goals might be, and without accountability to shareholders or to the public.
Obviously, this does not preclude American-owned companies from displaying their good corporate citizenship or having a sense of social responsibility. Sensible managers recognize that acting “in the public interest” can boost the company’s image; charitable or patriotic acts can be good business if they promote long-term profitability. But in this regard, American companies have no particular edge over foreign-owned companies doing business in the United States. In fact, there is every reason to believe that a foreign-owned company would be even more eager to demonstrate to the American public its good citizenship in America than would the average American company. The American subsidiaries of Hitachi, Matsushita, Siemens, Thomson, and many other foreign-owned companies lose no opportunity to contribute funds to American charities, sponsor community events, and support public libraries, universities, schools, and other institutions. (In 1988, for example, Japanese companies operating in the United States donated an estimated $200 million to American charities; by 1994, it is estimated that their contributions will total $1 billion.)1
By the same token, American-owned businesses operating abroad feel a similar compulsion to act as good citizens in their host countries. They cannot afford to be seen as promoting American interests; otherwise they would jeopardize their relationships with foreign workers, consumers, and governments. Some of America’s top managers have been quite explicit on this point. “IBM cannot be a net exporter from every nation in which it does business,” said Jack Kuehler, IBM’s new president. “We have to be a good citizen everywhere.” Robert W. Galvin, chairman of Motorola, is even more blunt: should it become necessary for Motorola to close some of its factories, it would not close its Southeast Asian plants before it closed its American ones. “We need our Far Eastern customers,” says Galvin, “and we cannot alienate the Malaysians. We must treat our employees all over the world equally.” In fact, when it becomes necessary to reduce global capacity, we might expect American-owned businesses to slash more jobs in the United States than in Europe (where labor laws often prohibit precipitous layoffs) or in Japan (where national norms discourage it).
Just as empty is the concern that a foreign-owned company might leave the United States stranded by suddenly abandoning its U.S. operation. The typical argument suggests that a foreign-owned company might withdraw for either profit or foreign policy motives. But either way, the bricks and mortar would still be here. So would the equipment. So too would be the accumulated learning among American workers. Under such circumstances, capital from another source would fill the void; an American (or other foreign) company would simply purchase the empty facilities. And most important, the American work force would remain, with the critical skills and capabilities, ready to go back to work.
After all, the American government and the American people maintain jurisdiction—political control—over assets within the United States. Unlike foreign assets held by American-owned companies that are subject to foreign political control and, occasionally, foreign expropriation, foreign-owned assets in the United States are secure against sudden changes in foreign governments’ policies. This not only serves as an attraction for foreign capital looking for a secure haven; it also benefits the American work force.
Work force skills are critical
As every advanced economy becomes global, a nation’s most important competitive asset becomes the skills and cumulative learning of its work force. Consequently, the most important issue with regard to global corporations is whether and to what extent they provide Americans with the training and experience that enable them to add greater value to the world economy. Whether the company happens to be headquartered in the United States or the United Kingdom is fundamentally unimportant. The company is a good “American” corporation if it equips its American work force to compete in the global economy.
Globalization, almost by definition, makes this true. Every factor of production other than work force skills can be duplicated anywhere around the world. Capital now sloshes freely across international boundaries, so much so that the cost of capital in different countries is rapidly converging. State-of-the-art factories can be erected anywhere. The latest technologies flow from computers in one nation, up to satellites parked in space, then back down to computers in another nation—all at the speed of electronic impulses. It is all fungible: capital, technology, raw materials, information—all, except for one thing, the most critical part, the one element that is unique about a nation: its work force.
In fact, because all of the other factors can move so easily any place on earth, a work force that is knowledgeable and skilled at doing complex things attracts foreign investment. The relationship forms a virtuous circle: well-trained workers attract global corporations, which invest and give the workers good jobs; the good jobs, in turn, generate additional training and experience. As skills move upward and experience accumulates, a nation’s citizens add greater and greater value to the world—and command greater and greater compensation from the world, improving the country’s standard of living.
Foreign-owned corporations help American workers add value
When foreign-owned companies come to the United States, they frequently bring with them approaches to doing business that improve American productivity and allow American workers to add more value to the world economy. In fact, they come here primarily because they can be more productive in the United States than can other American rivals. It is not solely America’s mounting external indebtedness and relatively low dollar that account for the rising level of foreign investment in the United States. Actual growth of foreign investment in the United States dates from the mid-1970s rather than from the onset of the large current account deficit in 1982. Moreover, the two leading foreign investors in the United States are the British and the Dutch—not the Japanese and the West Germans, whose enormous surpluses are the counterparts of our current account deficit.
For example, after Japan’s Bridgestone tire company took over Firestone, productivity increased dramatically. The joint venture between Toyota and General Motors at Fremont, California is a similar story: Toyota’s managerial system took many of the same workers from what had been a deeply troubled GM plant and turned it into a model facility, with upgraded productivity and skill levels.
In case after case, foreign companies set up or buy up operations in the United States to utilize their corporate assets with the American work force. Foreign-owned businesses with better design capabilities, production techniques, or managerial skills are able to displace American companies on American soil precisely because those businesses are more productive. And in the process of supplanting the American company, the foreign-owned operation can transfer the superior know-how to its American work force—giving American workers the tools they need to be more productive, more skilled, and more competitive. Thus foreign companies create good jobs in the United States. In 1986 (the last date for which such data are available), the average American employee of a foreign-owned manufacturing company earned $32,887, while the average American employee of an American-owned manufacturer earned $28,954.2
This process is precisely what happened in Europe in the 1950s and 1960s. Europeans publicly fretted about the invasion of American-owned multinationals and the onset of “the American challenge.” But the net result of these operations in Europe has been to make Europeans more productive, upgrade European skills, and thus enhance the standard of living of Europeans.
Now Who Is Us?
American competitiveness can best be defined as the capacity of Americans to add value to the world economy and thereby gain a higher standard of living in the future without going into ever deeper debt. American competitiveness is not the profitability or market share of American-owned corporations. In fact, because the American-owned corporation is coming to have no special relationship with Americans, it makes no sense for Americans to entrust our national competitiveness to it. The interests of American-owned corporations may or may not coincide with those of the American people.
Does this mean that we should simply entrust our national competitiveness to any corporation that employs Americans, regardless of the nationality of corporate ownership? Not entirely. Some foreign-owned corporations are closely tied to their nation’s economic development—either through direct public ownership (for example, Airbus Industrie, a joint product of Britain, France, West Germany, and Spain, created to compete in the commercial airline industry) or through financial intermediaries within the nation that, in turn, are tied to central banks and ministries of finance (in particular the model used by many Korean and Japanese corporations). The primary goals of such corporations are to enhance the wealth of their nations, and the standard of living of their nations’ citizens, rather than to enrich their shareholders. Thus, even though they might employ American citizens in their worldwide operations, they may employ fewer Americans—or give Americans lower value-added jobs—than they would if these corporations were intent simply on maximizing their own profits.3
On the other hand, it seems doubtful that we could ever shift the goals and orientations of American-owned corporations in this same direction—away from profit maximization and toward the development of the American work force. There is no reason to suppose that American managers and shareholders would accept new regulations and oversight mechanisms that forced them to sacrifice profits for the sake of building human capital in the United States. Nor is it clear that the American system of government would be capable of such detailed oversight.
The only practical answer lies in developing national policies that reward any global corporation that invests in the American work force. In a whole set of public policy areas, involving trade, publicly supported R&D, antitrust, foreign direct investment, and public and private investment, the overriding goal should be to induce global corporations to build human capital in America.
We should be less interested in opening foreign markets to American-owned companies (which may in fact be doing much of their production overseas) than in opening those markets to companies that employ Americans—even if they happen to be foreign-owned. But so far, American trade policy experts have focused on representing the interests of companies that happen to carry the American flag—without regard to where the actual production is being done. For example, the United States recently accused Japan of excluding Motorola from the lucrative Tokyo market for cellular telephones and hinted at retaliation. But Motorola designs and makes many of its cellular telephones in Kuala Lumpur, while most of the Americans who make cellular telephone equipment in the United States for export to Japan happen to work for Japanese-owned companies. Thus we are wasting our scarce political capital pushing foreign governments to reduce barriers to American-owned companies that are seeking to sell or produce in their market.
Trans Pacific Trade Pact are trade deals with EASTERN HEMISPHERE ---------those TPP regions in the AMERICAS ------have been designated FOREIGN ECONOMIC ZONES------North America----Mexico----Central America----South America----which means-------MULTI-NATIONAL CORPORATIONS especially from Asia will be using these nations as COLONIAL SLAVE LABOR MANUFACTURING regions. The WESTERN HEMISPHERE------which includes Western Europe, Middle/Near East/Africa are designated FOREIGN ECONOMIC ZONES where MULTI-NATIONAL CORPORATIONS EXPORT products for sale in EASTERN HEMISPHERE markets.
'The Biggest American Companies Now Owned by the Chinese
By Stephen Gandel
March 18, 2016'
TRUMP's MADE IN AMERICA is not SOVEREIGN US-----it is simply saying that rather then China manufacturing in China----it is manufacturing in what was sovereign US------in THE geographical AMERICA'S
Being a PLAYER in global economies means gaining market share in EASTERN HEMISPHERE-----
When US corporations went overseas to Asian FOREIGN ECONOMIC ZONES-----TARIFF policies made it cheaper to IMPORT products from overseas------now this is reversing-------foreign corporations must be allowed to EXPORT cheaper from US FOREIGN ECONOMIC ZONES-----ergo, TARIFFS are higher on CHINA------lower on Chinese global manufacturing inside US.
Asia Free Trade Zones Discussed at Trilateral Summit
October 30, 2015 5:27 AM
- Brian Padden'
Understanding ASEAN’s Free Trade Agreements
February 13, 2014 Posted by ASEAN Briefing
Reading Time: 6 minutes Op-Ed Commentary: Chris Devonshire-Ellis
ASEAN, the Association of South-East Asian Nations, is gaining considerably in importance as a trade bloc and is now the third largest in the world after the European Union and the North American Free Trade Agreement. Comprising the Asia Tigers of Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam (the ASEAN 6) with the smaller players such as Brunei, Cambodia, Laos and Myanmar, it has a combined GDP of US$2.31 trillion (2012) and is home to some 600 million people.
The ASEAN bloc have largely cancelled all import and export duty taxes on items traded between them, with the exception of Cambodia, Laos, Myanmar and Vietnam, who continue to impose nominal duties on certain items. However, these too will be completely lifted as of December 31st, 2015, meaning that the entire region will be duty free from this date.
ASEAN has entered into a number of free trade agreements with other Asian nations that are now radically altering the global sourcing and manufacturing landscape. It has a treaty with China, for example, that has effectively done away with reduced tariffs on nearly 8,000 product categories, or 90 percent of imported goods, to zero. These favourable terms have taken effect in China and in the original ASEAN members, including Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.
Cambodia, Laos, Myanmar and Vietnam will also implement these terms by December 2015.
This has specific impact upon where manufacturing capacity is heading in the future. At the heart of this is China, which for the past twenty years has been enjoying a ‘worker dividend’ of cheap, young labour and has become, as a result, the world’s manufacturing hub. However, China is also growing old – and fast, as that same workforce is now greying and becoming more wealthy. This means that cheap Chinese labour is a thing of the past, yet this is compensated for by China now emerging as a vast consumer market. With an estimated 250 million Chinese of middle class standards in 2013, this number is set to explode to 600 million by 2020.
The manufacturing trend therefore is to continue to develop products destined for this huge consumer market, yet place the manufacturing capacity required to do so in a cheaper location. ASEAN’s free trade agreement with China allows regional companies and MNC’s involved in Asia to do just that. It is a trend already in process – as we note with Foxconn, manufacturer of many of the components that end up in Apple’s products, which is looking to shift its 1.3 million strong workforce out of China and to Indonesia where wages are lower and a large and available workforce exists. It is a sound strategy and one that is being increasingly adopted by many manufacturers.
When Vietnam comes into full play with the ASEAN treaty in just under a years’ time, this development of manufacturing capacity servicing the Chinese market to that country in particular will increase. Vietnam has also deliberately positioned itself to take advantage of the treaty with China by reducing its corporate income tax rate to 22 percent – 3 percent lower than in China.
Vietnam, Indonesia and other ASEAN countries are benefiting from the China FTA by being able to offer lower wages, and as such are attracting foreign investment both for the Chinese market, but also from global destinations such as the EU and United States. There has been some resistance to this, not least where the subject of China’s superior infrastructure is raised. However, countries across ASEAN have been upgrading, and especially the ASEAN 6. As a general rule of thumb, despite the production capability being reduced in some ASEAN nations when compared to China, it makes economic sense to place manufacturing capacity into the ASEAN 6 if production levels can reach 70 percent of that achievable in China. Details of the ASEAN-China FTA can be downloaded here.
ASEAN has a similar FTA with India, which is being phased in and is in the process of reducing tariffs on 90 percent of all traded goods between ASEAN and India. Come 2016, import-export duties on over 4,000 products will be abolished. This will have a similar effect to the China FTA in that it opens up the Indian consumer market to ASEAN manufactured goods. India, in fact, has a sizeable middle class consumer market in its own right of some 250 million, although it is not expected to grow as fast as China’s in the short term. The ASEAN-India FTA is also being expanded to include services, discussions are already at an advanced stage and a conclusion is expected to be reached later this year. Details of the ASEAN-India FTA can be found here.
These two agreements have the collective impact of making ASEAN the strategic hub for global sourcing and manufacturing. With ASEAN’s own middle class consumer base of 150 million, this market alone, then coupled with China and India’s 250 million each represent a total middle class consumer market with complete free trade of some 650 million people – today. By 2030, given Asia’s increasing wealth and dynamics, some 64 percent of the global middle class population will be based in Asia, accounting for 40 percent of all global middle class consumption.
In addition to the China and India FTA, ASEAN also has a combined FTA with Australia and New Zealand, known as the AANZFTA. The deal, also being phased in, has eliminated tariffs on 67 percent of all traded products between the regions, and will expand to 96 percent of all products by 2020. It is the first time ASEAN has embarked on FTA negotiations which covers all sectors, including goods, services, investment and intellectual property rights, making it the most comprehensive trade agreement that ASEAN has ever negotiated. Details of this agreement may be found here.
Further ASEAN treaties are in the process of being negotiated, not least with Japan, who already has a series of Comprehensive Economic Partnerships, while South Korea already has an FTA. Both of these are along similar lines to those identified above – the reduction of over 90 percent of all traded goods between ASEAN and these countries.
For international businesses, the ability to take advantage of ASEAN status and the FTA benefits the region has is simple: all that is required is for the foreign investor to establish a subsidiary in one of the ASEAN nations. It is a geographical qualification only. To this end, and as the region – plus the countries of China and India – is huge, it is Singapore that has developed as a regional Asian hub to reach out across ASEAN and beyond and provide management, financial and other support services to subsidiaries throughout the area.
Incorporation in Singapore is quick and easy – it is regularly positioned as first in the World Bank Global Ease of Doing Business Rankings, while the city state employs a high degree of international standards in its laws and compliance. Singapore also offers a low tax base of 17 percent corporate income tax and provides tax incentives for all SME’s – including foreign investors. As a result, some 7,0000 MNC corporations have already established operations in Singapore – for the sole purpose of looking at what ASEAN has to offer, the suitability of its various member states for establishing subsidiary manufacturing facilities, and the emergence of ASEAN as a production base from which to reach out to the domestic markets of China, India and beyond.
While TARIFFS RISE for EXPORTING from CHINA-------multi-national corporations still keeping a US sovereignty are overseas in FOREIGN ECONOMIC ZONES that will build products to be marketed in EASTERN HEMISPHERE markets----not to US markets.
Those US CORPORATIONS inside Chinese FOREIGN ECONOMIC ZONES do not want to send those products back to US-----they are fighting for market-share in ASEAN TRADE ZONE.
If MOVING FORWARD ONE WORLD continues our US 99% WE THE PEOPLE and new to US immigrants will be those third world workers not having any disposable income to BUY PRODUCTS----ergo, no reason to send IMPORTS to US FOREIGN ECONOMIC ZONES unless it is natural resources needed for manufacturing.
Dell to expand sales force in Asia-Pacific'
'Made-in-America Steel Includes Mills Owned by Russians ...
Steel plants owned by non-American companies such as ArcelorMittal account for a large chunk of total U.S. production, with the Luxembourg-based company’s plants alone representing about 16 ...'
This is how more and more and more of our US 99% WE THE PEOPLE black, white, and brown citizens will be MADE EX-PATS-------whether working in US manufacturing factories overseas or working to make market share----sell products over in ASEAN TRADE ZONES-------global labor pool 99% being brought into US FOREIGN ECONOMIC ZONES to work for these foreign manufacturing corporations while US 99% WE THE PEOPLE are made global labor pool working overseas.....
NO US SOVEREIGNTY IN MOVING FORWARD ONE WORLD ONE GOVERNANCE.
Why US manufacturers are nixing the US for China
Published Mon, Sep 21 2015 10:00 AM EDT
Elaine Pofeldt, special to CNBC.com
On the hunt for a factory to manufacture her “smartwatch for Grandma,” Jean Anne Booth headed to China recently to check out several facilities. “If you’re going to build that level of technology, China is really the place to go for cost effectiveness and capability for what it is we’re doing, ” said Booth, the CEO of four-employee UnaliWear, a two-year-old firm in Austin, Texas.
Booth, a veteran of the semiconductor industry, may soon find an even greater incentive to manufacture overseas if current economic trends continue. The recent devaluation of the yuan is expected to drive manufacturing costs lower in China, where average yearly wages in manufacturing rose from 15,757 renminbi in 2006 to 51,369 renminbi in 2015, according to Trading Economics, a global economics research firm in New York City. That is equivalent to a jump from $2,472 to $8,060.
“Chinese factories are cutting prices,” said attorney Daniel Harris, a partner and founder at Harris Moure in Seattle, which advises manufacturing clients and others on doing business in China. Harris is also co-author of the popular China Law Blog. “Their costs are going down. People are upping their manufacturing in China. We see this in our practice.”
In July the U.S. imported $41 billion worth of goods from China. That was up from $40.5 billion the same month last year. However, with China’s manufacturers seeing new orders and exports dip in August and the steepest declines in new output since November 2011, softer demand led to “marked” falls in both costs and charges by factories, according to Markit, a provider of financial information services. The Producer Price Index, which tracks changes in manufacturing prices, fell by 5.9 percent in August from the same time in 2014, the biggest decline since the global financial crisis in 2009.
The recent devaluation of the yuan is expected to drive manufacturing costs lower in China.
One reason for declining manufacturing costs in China is that it is shifting more of its production to robots, counterbalancing the effects of rising wages. In a report to be released later this month, the International Federation of Robotics found that China accounted for 25 percent of industrial robot sales in the world in 2014 and had purchased about 56,000 units, with the automotive industry the leading buyer. China’s share of the world’s robots is up from last year’s 20 percent, which made China the country with the largest percentage of the world’s industrial robots.
That said, it may take a while before many U.S. manufacturers ramp up their production in China significantly. For one thing, many manufacturers in China aren’t likely to dangle price breaks to U.S. firms easily, even when declining overhead justifies it, according to Gary Young, president of Avela, which has helped companies source products and services in China since 2002 and has offices in Houston and Shanghai. Often, he has found, U.S. firms find there is resistance when they try to renegotiate deals with Chinese manufacturers whose costs are declining.
“There’s always pushback,” said Young. “For the most part, manufacturers’ profit margins are pretty small. They are anywhere from 4 percent to 12 percent. That’s all the profit margin they have. They guard that. That’s their lifeblood.”
He added, “Everything is a negotiation. It can take a couple of days. They try to wear you down. Their attitude is, ‘You’re an American. You’re rich. You really shouldn’t even be doing this.’”
Certainly, even with the potential for lower costs, not every manufacturer wants to make products in China. “There is supply-chain risk,” said Greg Cullison, a senior executive at Big Sky Associates, an operations management advisory firm in Charlotte, North Carolina, and Washington, D.C., and an expert in geopolitical risk analysis. “China is very far away. You have to consider the shipment costs. Are you going to be subject to export tariffs or delays, which are actually costly in shipping the goods?”
Instead, her three-person firm, founded about two years ago, contracts out the cutting, sewing and other production work to about 26 people who work locally. “I’m really lucky being in Los Angeles now,” she said. “We have manufacturing coming back. I was really lucky to have found people who could do everything, including toys, which are hard to do. I couldn’t really see myself putting my stuff in someone else’s hands, not having met them.”
Some manufacturers have turned to China for reasons other than lower costs, such as its abundant supply of highly educated talent for research and development. Dell, for instance, recently announced it plans a $125 billion investment in China in the next five years to expand its research and development efforts. JHL Biotech has had similar motivations.
Racho Jordanov is CEO and president of JHL Biotech, the three-year-old biologic pharmaceutical company, which has raised $135 million in capital from Kleiner Perkins Caulfield and Byers and other investors and was founded by former employees of Genentech and Amgen. The 100-employee company has employees in China and Taiwan because it intends to sell the pharmaceuticals it makes in its own plants to customers in Asia.
“The very expensive biotech drugs that are discovered and made in the U.S. are simply out of reach in this part of the world but are very much needed,” said Jordanov, who co-founded the firm with Genentech veteran Rose Lin.
The availability of highly educated workers graduating from local universities in China is a more powerful lure than low labor costs. Still, it isn’t lost on JHL Biotech that it costs less to hire needed talent in China, which keeps overhead down.
“For us, it’s more important to find well-educated, motivated people at the right cost—which, by the way, is probably one quarter of the U.S. cost,” Jordanov said.
JHL Biotech isn’t alone in finding that China is an increasingly appealing place to manufacture.
As Booth at UnaliWear sees it, obtaining an attractive manufacturing deal could mean charging customers lower prices for her watches—a definite advantage. “If it is too expensive, your adoption is going to be very poor,” she said.