Trade Policy 2022

WM: Biden Administration’s 2022 Trade Policy Agenda, March 30, 2022

Finance: The President’s 2022 Trade Policy Agenda, March 31, 2022

Please consider the following issues, which are likely left off of the President’s current agenda.

If the Belt Road and forced labor in China are still an issue, the answer is probably resurrecting some form of the Trans-Pacific Partnership. The right of businesses to short-circuit local law in special tribunals must be modified or  ended in any redux. This should be the case with all such trade agreements.

Agreements which try to modernize other nation’s labor arrangements need  an awareness that America’s performance on issues of democracy, organized labor, wage & hour and safety enforcement are far from stellar. Perhaps any arrangements should include monitoring American employers and the government agencies that should be looking out for them.

At the very least, end right-to-work. Such laws are really right-to-exploit laws, including through the use of human trafficking. Migrant workers in the food industry, from harvesting to processing and packing face all sorts of bad treatment, sometimes with that treatment abetted by local law enforcement.

Immigration reform must be part of the trade policy agenda. Workers who do not have documentation problems cannot be easily exploited - especially if they are able to unionize. This will also help level the playing field for American workers. A unionized worker, whether they be an immigrant or a citizen, will make more money and be safer. The stories of workers having to do so sick was highlighted in the early days of the Pandemic. I have not heard that things have gotten any better.

An analysis of how consumption taxes can improve our trade policy is found in a second attachment. The first attachment on tax reform is included to clarify the terms of the second. These are attachments because they have been provided before. I am available to explain these topics. There are many who can talk about how value added taxes relate to trade, but I am the only one who can walk the Committee and staff through how an employer-paid subtraction value added tax applies.

Part of the trade equation is the recently completed agreement on Corporate Minimum Taxes. This faces challenges to enactment in the Senate. Perhaps it should. I am no fan of corporate income taxation when value added taxes (both GST/Invoice VAT and Subtraction VAT) are available.

Our proposal for an Asset Value Added Tax will require international cooperation. Part of trade is moving money around - including financial assets. An asset VAT as a replacement for capital gains taxes and capital returns must go farther than the border. It is too easy to shift to offshore stock exchanges where such taxes do not exist. International agreements on rates and enforcement structures are vital for such a tax to work. The model for negotiating the CMT on a multi-national basis can be used for this effort.

The other issue not usually discussed with Trade Policy is its impact on national debt ownership. Bond holdings backing the currencies of our trading partners is a key consideration. The possibility that the debt may outpace our trading capital needs must be a concern. A more urgent concern is the impact on Treasury bond prices if the European Union creates a consolidated debt with a continental tax system to back the Euro. Such an option would bring about a day of reckoning on our debt - a reckoning that income taxpayers will have to face. 

It is important to understand who owns and owes the debt. We are currently revising our previous study: Settling (and Squaring) Accounts: Who Really Owes the National Debt? Who Owns It? available from Amazon at https://www.amazon.com/dp/B08FRQFF8S  I can provide free copies of the prior version upon request and will distribute the latest edition once it is completed. The most recent bottom line estimates can be found in the second attachment. This shows who is on the hook for the debt and who benefits from it.

Note well that the top 22,000 households break even on debt owned and owed. Everyone else is in hock. Such an imbalance cannot continue. Please see the third attachment for more on this issue.

A main conclusion of our analyses is that the national debt is the leverage for capitalism to the extent that debt securities allow Wall Street to offer riskier assets, such as mortgage backed securities embedded in Exchange Traded Funds, as well as more traditional offerings. Wealth held by the few (and the attachment shows how very few we mean), provides management absolute control of most workplaces. Employee-owned firms would not need such an unbalanced economy leveraged by American Treasury holdings.

As you may have heard, China is in the middle of a housing finance and development crisis. The impact of these developments on both bilateral and world trade will be huge. They demand a separate set of hearings by multiple committees - but especially Finance and Ways and Means.

The most important long term trade issue is international employee-ownership, which is discussed in the second attachment. Domestic employee-owned firms will find it in their interest to offer the same standard of living and ownership rights to overseas subsidiaries and their supply chain. In the long term, such ownership ends the need for any political agenda on trade. 

Trade issues will take care of themselves within the enterprise, leaving currency arbitrage in the dust. Enacting the proposed Asset Value Added Tax, with zero rated sales to such firms, will make that day come sooner - leading to a more integrated world without the need for a worldwide war machine.

Our most urgent concern in trade is climate change. Our current approach is inadequate. We need to put our money where our mouths are - or rather - where the world is. We need more than international agreements. We need international retrofitting, primarily in the energy sector. This means funding abatement issues in the developing world - and helping to carry them out. It is not enough to insist on goals. We must pay for action anywhere our trading partners will let us.

Attachment: Trade Policy Video

Attachment: Tax Reform (with videos)

Attachment - Debt Ownership as Class Warfare Video