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Gilbert B. Kaplan

By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

We have one trade problem in this country that so far surpasses every other one that it is almost not worth talking about any of the others. The problem is Chinese subsidy practices, and our resulting $260 billion sustained trade deficit with China. The problem has recently taken on a new, more dangerous bent. First, China has made it increasingly clear they are not going to do anything about their undervalued currency. One aspect of the currency problem has been much talked about — how it makes Chinese exports to the United States very cheap and our exports to China uncompetitive.

But it is now clear that the Chinese undervaluation has an even more nefarious and dangerous and long-term effect. It is a big driver forcing U.S. companies to leave the United States and relocate to China. This is because of the simple reason that a relatively “overvalued” dollar goes much further in China building plants and buying inputs and paying workers, than it does in the United States. This is not just a question of very low wages in China, it is about the additional accelerant of low cost renminbi making already low wages and cheap inputs even cheaper. So U. S. companies cannot afford to stay in the U. S. And once they leave it is very unlikely they will ever come back.

The other development is a Chinese government pronouncement late last year that they are pumping subsidies of $1.5 trillion into seven strategic industries. The money will be going to the same emerging industries that President Obama and substantially every governor in the United States touts as the “industries of the future” that will rescue the United States from its high unemployment and anemic growth. The industries include information technology, environmental protection, new forms of energy (read wind and solar), biology, and new materials. (more…)

At the United Steelworkers (USW) Rapid Response conference in Washington, D.C. this week, Holly Hart, assistant to the USW International President, said this video of Stephen Colbert interviewing Beri Fox, CEO of Marble King, shows why “we are losing our marbles and we are losing our jobs.”  Hart discussed the importance of a vital manufacturing sector to the American economy with panelists Tom Conway, USW International Vice President, and Scott Paul,  Executive Director of the Alliance for American Manufacturing.

In his State of the Union Speech last week, President Obama showed a new pro-business focus. Jobs no longer were  his number one priority. He didn’t directly mention the millions of unemployed once. But, isn’t business the biggest and best source of good jobs? To paraphrase an old saying: Isn’t what’s good for business good for America’s workers? Answer: It’s not necessarily so when it’s our multinational companies. They often put short-term profits ahead of domestic business and jobs by off-shoring  work that had been done here.

Since the dawning of globalization in the early 1970’s, a top group of America’s bankers and multinational companies has dominated U.S trade policy. They saw to it that the needs of some big domestic industries like textiles, steel, and consumer goods were frequently bypassed, supposedly to gain easier access to markets abroad for the multinationals. It turned out to be a destructive and wasteful over-reach that no other industrial nation adopted. Like them, the U.S. should have built on our own rich U.S. market, while also competing successfully overseas. (more…)

Gilbert B. Kaplan

By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

As President Obama prepares his State of the Union message, focusing on jobs, he should squarely face up to the problem of U. S. companies moving manufacturing jobs to China. All of the friendly handshakes with President Hu have not changed that.

Just a week ago, Evergreen Solar, a leading U. S. solar panel producer, announced that it was closing its Massachusetts plant, laying off at least 800 workers, and moving its manufacturing to China.

It’s a disheartening phenomenon, and by no means an isolated development. Even before the Evergreen Solar move, I heard the story of another U.S. solar company that was offered a low interest loan of well over $40 million by the U.S. government to build a plant here. The company was told it would take more than a year for the Department of Commerce to process the paperwork and provide the funds. By way of competition, the Chinese government offered hundreds of millions of dollars of interest-free funding, as well as free land, to build the plant in China, both to be delivered immediately. Where do you think the company will build its new plant? (more…)

Leo W. Gerard

By Leo W. Gerard
USW International President

America plays the role of abused partner in its relationship with China. Although the Asian giant repeatedly injures U.S. industry by violating international trade rules, America has responded, almost exclusively, by pleading and begging for China to stop.

China says it’s sorry. And continues to violate the rules. America respectfully beseeches China to discontinue manipulating its currency, and China says it will. Then it allows the value to increase a completely insignificant amount. Still America does nothing. Nothing. It simply accepts the abuse.

U.S. Sen. Bob Casey, D-Pa., and Michael Williams, senior vice president of U.S. Steel stood with me Wednesday at a press conference in Pittsburgh to urge President Obama in his meetings this week with Chinese President Hu Jintao to announce that America is done with soft talk. We want President Obama to tell President Hu that America has heard enough promises; the United States is bucking up and pulling out that big stick that Teddy Roosevelt carried in foreign policy negotiations.

This is a rare issue on which politicians, Republican and Democrat, manufacturers and organized labor all agree. Here’s what Sen. Casey said at the press conference, “In my estimation, and that of a lot of Americans, the time for talking is over. The time for action is now.” He, Sen. Sherrod Brown, D-Ohio, and Sen. Debbie Stabenow, D-Mich., plan to introduce legislation next week to force the federal government to hold China accountable, to enforce compliance with World Trade Organization (WTO) rules – rules that China agreed to comply with when WTO countries permitted it to join even though it is a non-market economy.

Mr. Williams described the effect of China’s unchallenged trade practices on American steel production:

“Our facilities in Pennsylvania and throughout the United States are among the most advanced in the world:

• We make the highest quality steel for the most demanding applications;
• Our technology is world competitive; and
• Our workers are second to none in skill and know-how.

However, the more than 21,000 U.S. Steel employees nationwide, and the more than 4,700 employees here in Pennsylvania, know all too well that we do not always operate in a fair global marketplace.   Instead, we are often faced with the reality of a distorted market – a market where we have to compete against job-stealing dumped and subsidized imports from countries that abuse the rules to gain a false competitive advantage.

No country more than China hurts all American manufacturing by the way it artificially undervalues its currency – making its exports artificially cheap and making competitive imports from the U.S. and elsewhere artificially expensive.”

Here are the facts: American industries have found that they can produce products, ship them to China and price them lower than Chinese competitors.  But all too often, China prohibits sale of the American-made products on the mainland.

Sen. Casey gave an example, C.F. Martin & Co., which manufacturers its world-famous guitars in Eastern Pennsylvania.  Martin tried to register its mark to sell its instruments in China. But it has been unable to do that because a Chinese manufacturer already registered the mark and is counterfeiting the guitars. “To say it is unlawful does not begin to describe the gravity of it,” the senator said.

In addition to countenancing counterfeiting, China provides illegal subsidies to its export industries, violates international regulations forbidding forced technology transfer when American companies seek to manufacture in China and deliberately undervalues its currency to falsely lower the price of its exports.

When Mr. Williams, Sen. Casey and I all said this must be stopped with enforcement of international regulations, someone in the audience asked if that would prompt a dreaded trade war. That won’t happen because we already are in a trade war. The United States simply is not fighting back. We are playing the passive partner in a perverted relationship, repeatedly allowing the abuser to pound us.

Mr. Williams said it best:

“U.S. Steel wants a strong America. To have a strong America, we need a strong manufacturing base. To have a strong manufacturing base, we need strong enforcement of international trade regulations.”

Sen. Casey agreed:

“Our government must take every step necessary. It is not enough to say to the unemployed, ‘We are trying and we are asking.’”

Wield the stick, President Obama.

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Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute.  He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union.

Gilbert B. Kaplan

By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

Wouldn’t it be nice if someone would come forward with a real jobs program? Instead the debate in Washington is on things like tax cuts and what to do — next year — with health care and the budget deficit. These are important subjects, but none of them will have any near-term effect on the unemployment level (9.6 percent officially and probably 20 percent unofficially). It is no accident America largely turned one party out of office for another. A party in control of the White House and both houses of Congress that does not have a radical reemployment program at a time the sustained unemployment level is at a record high is not going to get a lot of sympathy.

Yet there is something which can be done immediately, which will have an impact on U. S. jobs, particularly in the manufacturing sector. The Democratic party can do this now; they still have control of the Senate. If they want to send a message to America, there is a step they should take when they get back for the lame duck session starting Monday. The Senate should pass the China currency bill which already passed the House of Representatives in September, and which will make it much more likely the Department of Commerce will impose duties on imports of products from China to offset currency manipulation. The bill would remove an objection the Department of Commerce raised when it refused to investigate currency manipulation in two trade cases earlier this year, and clear the way for trade investigations of this pernicious, unfair practice.

The next step is in the hands of the large Democratic majority in the Senate, which is not altered by the election in the upcoming lame duck session. And the action could have a dramatic effect on the job base of the United States on a fast-track basis. There is hardly a manufacturing company in the U.S. that is not being impacted by low cost Chinese imports. Yet there is very little that is being done about that. The Fed’s monetary moves will lower the value of the U. S. dollar, but not against the Chinese yuan, as long as the Chinese do not change their strategy of essentially pegging their currency against the dollar.

There is not a commitment by the Democrats to take action on the currency bill. What are the implications of waiting until next year? In a word, disastrous for working Americans (and even worse for the millions of not-working Americans). Representative Kevin Brady (R- Texas), the likely next Chairman of the Ways and Means Trade Subcommittee, has already said he does not expect the House to act on currency legislation next year. So assuming the Republican House would ever act, which is doubtful, we are looking at well over a year before a bill would get back to the Senate. Meanwhile Americans watch their jobs move to China. (more…)

Gilbert B. Kaplan

By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

The outcome of today’s Security and Economic Dialogue (S & ED) talks in Beijing is discouraging for those of us who want to see an immediate effect on Main Street. No specific movement has taken place on currency issues. China’s President Hu says he will take action on currency, but he doesn’t say what action he will take or when he will take it. China’s currency is undervalued by about 40%. It is unlikely that anything he is even contemplating would close that gap. And while we wait for him to make up his mind, more jobs in the U. S. will be lost to China.

The United States is playing defense everywhere in the world. Militarily we are losing influence and appear to be losing wars. Diplomatically our powers of persuasion are waning. And in international trade, jobs are moving off-shore, we have no sustained manufacturing policy, and the production sectors in other countries’ economies are growing faster than ours.

There is certainly a great effort to solve the military and diplomatic problems, but what are we doing on trade? President Obama is aware of the issue, but the solutions are hard to find and are not being articulated. To me, a large part of the problem is that industrial growth in this country, indeed what used to be called industrial policy, takes a second chair to almost every other policy in Washington. The biggest example of that right now is this failure to address currency undervaluation in China, in a forthright and immediate fashion. It has now been years since the problem has been identified.

When I served in the United States government, I heard regularly that we could never deal with the Japan trade issues aggressively because we needed our military bases in Japan in order to stand up to the then-Soviet Union. Now we hear we can’t stand up to China because we need their help on Iran and North Korea or on global warming issues.

But we can’t keep paying for military and diplomatic victories–assuming we are even achieving these–by trading away our economic prowess. Put simply, the cost is too high and we don’t have enough chips left. As Clyde Prestowitz puts it in his new book, The Betrayal of American Prosperity, “the United States fell into the habit–and the addiction continues today–of making economic concessions in order to obtain geopolitical objectives.” He also notes that the blind adherence to laissez faire economics and trade policy was not the way we became a great power and world technology leader. Indeed, the time when America emerged as a world leader–broadly the beginning through the middle of the twentieth century–was when the U. S. government intervened in the economy and actively supported U. S. manufacturing.

Why aren’t we able or willing to do that today? I think the biggest single reason is the failure of the policy community to come up with a sustained and powerful rationale for doing so. There are voices out there calling for this renaissance: Prestowitz, many elected representatives on Capital Hill, Leo Gerard and other union leaders. But for every one of these there are more on the other side, repeating stale mantras calling for more work on the Doha Round, saying we should only talk softly to China while they continue to engage in mercantilist policies, and standing up for a trading system that is not reciprocal.

What we need is a renaissance of American production. We need to make things in this country and balance the terms of trade or our future, and even more our children’s future, will be very dim. As a country we will go further in debt and we will not have the productive capacity to work our way out of it.

How do we create this renaissance? First, we need to create a sustained policy dialogue that will challenge the current assumptions and develop alternatives. To this end, I plan to sponsor a Conference calling for the revival of American manufacturing which will meet in early fall, bringing together the key players on the issue, companies in the U. S., trade associations concerned about this issue, labor leaders, and policy and legal thinkers. This will be under the rubric of the Committee to Support U. S. Trade Laws, an organization devoted to keeping American trade laws strong, of which I am the President.

As part of this effort, we are coming up with new legislation which will strengthen the U. S. trade laws, particularly in the area of ending evasion and fraud. It is amazing that the U. S. has allowed foreign producers to take advantage of weaknesses in enforcement powers under these laws for so long.

The conference and our policy analysis needs to lead into 2010 House and Senate elections, and make it clear that, quite simply, we are not going to take it any more. The loss of jobs and manufacturing needs to be an election issue. We cannot walk away from manufacturing and remain any kind of great power in the future. Candidates who support this goal of returning production to the U. S. should be supported by the American electorate. Those who soft pedal it should not. Indeed this was a key issue in the special election in Western Pennsylvania in which Mark Critz was elected to John Murtha’s seat, and where he stood up strongly against the off-shoring of U. S. jobs.

Making manufacturing a sacrificial lamb has got to come to an end as part of the 2010 elections.

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Mr. Kaplan is the Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce and he is currently a partner in the international trade firm of King & Spalding in Washington, D. C. He filed the first successful anti-subsidy case by any U. S. industry against China, which led to large anti-subsidy duties on imports of Chinese pipe into the United States in 2008. Mr. Kaplan can be contacted at gkaplan@kslaw.com.

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This piece was first published on The Huffington Post

Gilbert B. Kaplan

By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

Corporate citizens like Apple have a greater responsibility than just making money for their shareholders. They have a responsibility to the future of this country. Given the problems that are occurring at the Foxconn plant where they have been subcontracting iPad production, they should fulfill their responsibilities and move the production of the iPad back to the United States.

Let’s first look at what’s gone wrong at Foxconn, the sprawling subcontracting plant where iPads and other high tech products are made in Shenzhen, north of Hong Kong. Let’s look at the most fundamental point first, at least as it relates to the United States. That is that the workers at Foxconn’s plant are paid $130 a month. Assuming that they work four fifty hour weeks a month, this translates to a wage of 65 cents an hour. That is basically a slave labor wage, at least as compared to the wages in western markets where the iPad is sold. How can we continue to tolerate a trading system that not only allows this, but in fact encourages it? It is true that workers in China seem to want these jobs because the alternative is even worse, but even that conclusion has now been thrown into doubt. If it’s such an ideal career path, why have ten workers thrown themselves off buildings at the Foxconn plant (nine died and the other suffered severe injuries), why have their been reports of security guards abusing workers, and why has the work been described as relentless, as “making people numb,” as turning them into machines?

It is a scandal that this is where the high tech goods that people across America are enjoying are being made. And Apple does not need to make them there. The classic economic argument that the very low wages are economically necessary for a product like the iPad simply makes no sense at all. iSuppli, a well respected international economics firm, estimates that the cost of manufacturing including labor in the iPad, is about $10 in a product that retails for about $600, in other words less than 2% of the price. And the profit Apple makes on the iPad is over $300 an item. Even if this $10 manufacturing cost (which includes such other things as factory overhead and energy costs) were doubled or tripled or quadrupled by paying a U.S. worker a reasonable wage and helping restore the U.S. economy, Apple’s profits would still be enormous.

About 100 years ago Henry Ford realized you cannot have a sustained industrial economy if the people who make goods don’t have enough money to buy them. So he paid his workers enough money that over time they could buy his cars, buy their homes and move into the middle class. Apple, now the largest technology company in America, is trying to squeeze every penny it can out of the U.S. consumers, and give nothing back, not even a manufacturing job in Silicon Valley or somewhere else in the United States for people making the iPad. 65 cents an hour is a better wage from their point of view. I’m a lawyer and I like to make a good income. I guess I should try and figure out how to pay my employees 65 cents an hour too.

One of the saddest footnotes, to me, in the whole Foxconn suicide story came from a nonchalant comment made by one of the Foxconn employees who an AP reporter interviewed next to the company swimming pool. The pool was supposedly built for the workers. But the worker commented that the pool closes at 9 pm, and she gets off too late to ever use it. It was sad both because this is just part of the whole Foxconn picture, unending routine, depersonalization, and migrant workers coming to Shenzhen with no way out. But it was also sad because it appears that Foxconn has built a Potemkin village, a fake façade, to appeal to U. S. outsourcers and U. S. journalists, and until recently, we all bought it.

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Mr. Kaplan is the Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce and he is currently a partner in the international trade firm of King & Spalding in Washington, D. C. He filed the first successful anti-subsidy case by any U. S. industry against China, which led to large anti-subsidy duties on imports of Chinese pipe into the United States in 2008. Mr. Kaplan can be contacted at gkaplan@kslaw.com.

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This piece was first published on The Huffington Post

Gilbert B. Kaplan

By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

It is now time for the President and the Congress to turn to international trade. That should be the next big push. The area has been neglected on Capital Hill since 1994. It is hard to imagine why Americans have put up with it for so long. The benefits of trade have been superseded by the downsides. Unfair trade hurts the many Americans who have lost their jobs, the U.S. companies that have gone out of business, and the communities across this country that now look like ghost towns. But it also hurts those multinationals and export-oriented companies, many in the high technology and pharmaceutical sectors, that favor the trading system. They will find support for trade diminishing over time.

There has not been a major revamping of the trade laws in this country since the Uruguay Round Act passed in 1994, with much fanfare and much hope for the future. There were good things in that bill, and in the WTO Agreement it implemented. New commitments were made to allow U. S. services to be exported, subsidies were further disciplined, and a mandatory dispute settlement system was agreed to, designed to enforce United States companies’ access to foreign markets.

Some of the promises have been kept, but many have led only to disappointment. More importantly, the world has changed a lot since 1994. China joined the WTO in 2001 and has became the dominant force, perhaps after the U. S. and the EU and perhaps even ahead of them, in the world trading system. The internet expanded exponentially and has reached a surprising level of maturity and importance. And perhaps most critically for the United States, our manufacturing sector has been broadly undercut by our trading system and is leaving our shores in vast and quickening waves.

It is time for the Congress and the Administration to address these issues in a comprehensive trade bill that will start turning the tide back in our favor. If we don’t–and if you think things are bad now–imagine what our country will look like in ten years. At the rate of manufacturing decline we are experiencing, it is likely that soon no new factories will be built in the U. S. Is this the legacy we want to leave our country and our children?

Many people say there are problems other than international trade that are undercutting our productivity and our manufacturing sector. High wages, excessive health care costs, not enough engineers or scientists, too much regulation. There may be some truth to this, but as someone who has worked in international trade, representing U. S. companies, for over twenty years, I think the number one issue is the failure to design a trade system that helps U. S. producers. It is simply not possible to compete if our foreign trading partners heavily subsidize their industries, allow or encourage them to break every rule in the book, and keep our exports out of their markets.

Imagine two dry cleaners on a side street in Binghamton, New York (one of the many mid-size cities in the U. S. that has been largely destroyed by international trade). Imagine that one of the dry cleaners gets a million dollars a year from the city, is not required to pay any taxes, has a guaranteed, mandatory market share from a big part of all the potential customers, and is allowed to dump its noxious dry cleaning chemicals in the river out back at no cost. The second dry cleaner gets no million dollar subsidy, pays a high tax rate, has to compete for customers, and has to carefully dispose of any environmental contaminants at a high cost. Oh, and imagine that because it’s fair to its workers the second dry cleaner pays them $10 an hour instead of 87 cents an hour (the average wage in China.) How long do you think dry cleaner number two is going to stay in business? That’s what we’re facing, not because dry cleaner number two is less competitive. But because the laws and rules of international competition cut against the U. S. They have been determined by multinational companies that don’t care about our country’s long term health, by free trade economists that only see one side of the picture, and by foreign governments well represented in international trade forums, and not by the U. S. in the articulation and implementation of a robust and fair and results-oriented trade policy.

A short list of the key provisions in The Trade Bill of 2010 should include the following:

1) Strengthened authority for the U. S. to offset subsidies, including currency manipulation subsidies, in China and other countries engaging in unfair trade.

2) Strengthened rules that punish any foreign companies that fail to follow our trade rules or lie to our trade enforcers.

3) Requirements to revise our trade agreements to deal with labor rights and wage disparities that undercut our workers.

4) Requirements to revise these agreements so that other countries are not allowed to rebate their taxes at the border when their companies export, while the U. S. is not.

5) Payments to communities, workers, and companies harmed by unfair trade, that would be financed by tariffs on the unfairly traded imports.

6) Special provisions financing and encouraging high-tech and innovative industries to remain in the U. S.

Certainly, other ideas will emerge. The key point is that we need to engage now, before the next election, and get something done. This should be something both parties can agree on. No one should want more jobs to move off-shore. And no one should want to watch the last factory in America shut down its assembly lines, and go dark.

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 Mr. Kaplan is the Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce and he is currently a partner in the international trade firm of King & Spalding in Washington, D. C. He filed the first successful anti-subsidy case by any U. S. industry against China, which led to large anti-subsidy duties on imports.

Gilbert B. Kaplan

By Gilbert B. Kaplan
Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce

The concept of reciprocity in trade has a long and storied history, and one that ought to be remembered today. Simply put, if we allow market access for the fruits of the great Chinese industrial machine, creating jobs for 100 million Chinese workers (the number of Chinese employed in manufacturing), they need to allow access to our creative enterprises, such as Google.

But not only is Google being forced out by a series of actions and deliberate inactions of the Chinese government, but Google’s affiliate, YouTube, was never even let into China in the first place. It is perennially blocked by their “great firewall”. Nor do most other U. S. websites have unfettered access to China. eBay has left China. Many newspaper websites are regularly censored. The Chinese competitive sites that are willing to go along with the censorship and the dictates of the Chinese government, like Baidu and Alibaba, are the dominant players on the Chinese internet. This is not only a question of freedom of speech. It is also a trade barrier and a major economic problem for the United States. Google alone has over 20,000 employees, many in the United States, and they and the company are undercut by these actions, as are the workers at eBay and other website companies.

We are struggling to rebuild our manufacturing sector, but while that occurs, we need to make sure companies like Google have full access to the largest internet market in the world, China. If a company cannot access the largest market in the world for its product it loses enormous revenue opportunities. And as a matter of economies of scale and ability to move down the learning curve, it becomes economically disadvantaged versus its competitors going forward.

There had been an implicit agreement about the internet made between China and the United States. The United States agreed to lower all its tariffs on high technology manufactured goods to zero, and we agreed to let in all that China could send over here, no questions asked. What is the result of that? The result is that substantially all United States computers are now made in China. We even went so far as to allow the first U. S. PC maker, IBM, to sell its PC division to a Chinese company, Lenovo. That sale could have been stopped, under a U. S. law called the Exon-Florio Act, but not only did we not stop it, we did not even question it.

Why? Because we believed that as China industrialized and moved along the economic and knowledge highway they would become a great market for those goods where we continue to have an advantage, things like search engines, and streaming video, and innovative web sites. We believed they would keep their side of the bargain.

But they have not. So we are now in a completely untenable position, as a country and as an economy. The hardware of the internet, computers, disk drives, semiconductors, peripherals, are all made in China, not here. Much of the software of the internet, which is made here, advanced here, and continually reinvented here, is banned from China. So their industries grow, they develop more jobs, their economy avoids the recession. Our economy shrinks, our job base deteriorates, and our creative enterprises suffer because they are denied access to the largest internet market in the world.

And the trend is only getting worse. More and more high-tech producers are moving their factories to China, because of subsidies, cheap labor, low environmental standards, and currency manipulation. Ironically, it was only a short time ago that we thought computers and semiconductors were the kind of creative industries we would always keep in the U. S. But they have now basically left our shores, though the even more creative side of the internet has not (yet). The largest computer manufacturing area in the world is in Guangdong Province, north of Hong Kong, where Foxconn employs 200,000 people as a subcontractor to many U. S. and other worldwide computer brands. While this is occurring, thousands of U. S. engineers and assembly line workers are unemployed.

The Chinese government wants trade to be a completely one-sided affair where China builds up knowledge and industrial might and trade reserves and we get nothing. If there is any area where we clearly have a comparative advantage it is the complex and dynamically creative space that Google occupies.

In 2009, China exported $126 billion of computers and electrical equipment to the United States. We exported a paltry $14 billion to them. Given these favorable terms of trade, one would think they would be careful with our further downstream internet companies, but they are not.

Demanding reciprocity is not protectionist and should not subject us to criticism from China, the WTO, or even the most free of free traders. Reciprocity is what the trade agreements of the world are about. We let you sell in our market the goods you can make more efficiently and more creatively. You let us sell in your market the goods and services we produce. If China shuts out our internet companies, we need to shut out their hardware that the internet runs on.

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Mr. Kaplan is the Former Deputy Assistant and Acting Assistant Secretary of the U. S. Department of Commerce and he is currently a partner in the international trade firm of King & Spalding in Washington, D. C. He filed the first successful anti-subsidy case by any U. S. industry against China, which led to large anti-subsidy duties on imports of Chinese pipe into the United States in 2008. Mr. Kaplan can be contacted at gkaplan@kslaw.com.

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This piece was first published on The Huffington Post