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During World War II American manufacturers provided the arsenal of tools, machines and weapons to defeat enemies in Europe and Japan. However, present trade laws now provide incentives for U.S. manufacturers to ship capital and jobs overseas leaving American workers with unemployment benefits, welfare, or job retraining. The U.S. is also becoming increasingly dependent upon other countries for products that used to be manufactured in the United States. U.S. manufacturers move operations overseas because it is more profitable. There are few environmental regulations and foreign workers receive lower wages, and reduced or non existent job benefits which keep costs low. Companies producing products in the U.S. are subject to taxes on income and property whereas overseas companies are not. As of January 2007, the U.S. traded with 137 countries which use a “Value Added Tax” or VAT on imports from the U.S. into their country, yet goods and services from foreign countries sold in the U.S. are not subject to VAT, resulting in unequal trade conditions which hurt U.S. based producers. Countries with VAT taxes often rebate the VAT when their manufactures sell products to the U.S. in effect subsidizing most imports into the U.S. although U.S. exports to VAT countries are not eligible for VAT rebates. In 2005, 94% of U.S. exports and imports were traded with VAT nations. Foreign manufacturers trading in the U.S. received $239 Billion from their governments for VAT rebates on exports to the U.S. In 2007, European Union nations imposed an average tariff of 4.4% plus 19.4% VAT equivalent tax for a total levy of 23.8% on products imported from the U.S. Under present World Trade Organization rules, imports into the U.S. are charged an average tax of 1.3% with no VAT penalty. However, U.S. exports face average tariffs of about 40% plus VAT border adjustment penalties of 15.7% according to the U.S. National Textile Association. Unequal trade policies which penalize American companies must be changed or we will continue to lose jobs overseas. Companies may profit immediately by moving operations overseas but if American consumers lose jobs, there will be fewer consumers able to purchase products and company profits will not be sustained. I support measures that equalize the trade playing field so that foreign nations which continue to impose VAT taxes on American products would be subject to similar tariffs imposed by our country to neutralize border-adjustable VAT taxes. |
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