(May 10, 2004) — For a government that prides itself on discipline and focus, the Bush administration has found another way to leave manufacturers confused about its actions.
Business lobbyists were surprised, to say the least, when three members of Bush's cabinet and his top trade negotiator jointly announced April 28 that manufacturers should not move ahead with a trade complaint against China's currency policy.
In part, what caught them off-guard is that the business groups, including the National Association of Manufacturers, had been working behind the scenes with the Bush administration to coordinate their complaint, which charges that China props up its currency and makes its exports as much as 40 percent cheaper.
The manufacturers had not actually filed it yet, but Bush officials lumped their complaint in with one filed by labor unions, seeking tariffs to punish China for its working conditions.
In contrast to the labor unions, the manufacturers saw themselves as working together with the U.S. government, with their complaint providing Bush's aides with more leverage in their talks with China.
That's not the way the Bush administration saw it. They rejected both petitions, saying they will keep talking with the Chinese, but arguing that petitions amount to “economic isolationism.” The government said it believes trade and economic growth in China will bring about improvements in its currency policy.
The manufacturers, for their part, said they are not asking for economic isolationism, but that's a topic for later.
What's important is that business lobbyists are puzzled by the outright rejection, before they even filed their petition. They say the administration could have accepted the petition, studied it, used it as leverage in talks and given a restrained answer.
Business groups are puzzled by other aspects of administration policy, such as what they see as a lack of support for things like the Advanced Technology Program and the Manufacturing Extension Partnership.
The Bush administration considers itself as taking the practical path on Chinese currency. The unspoken reason, however, may be that policy makers don't expect China to do much because its fragile banking system can't handle it, so they don't want to raise expectations.
The Bush government says it's hearing the concerns. It issued a manufacturing policy statement in January, which has won some praise from manufacturers, and it's pursuing a trade case against Chinese plastic bag firms, among others. It's an about-face from 2002, when senior Bush aides told a delegation of plastic firms that the economy was in good shape.
But business leaders like John Byrd, president of the Association for Manufacturing Technology, are quick to point out the large and small ways in which they believe the government continues to hinder manufacturers.
Byrd talks about delays in getting visas for Chinese business people to come to the United States, and about how Congress' inability to come up with a new export tax regime has led to sanctions against U.S. firms.
There aren't easy answers. It's just not reassuring to see the Bush administration hand businesses an April surprise and dismiss one of their key plans.
