At hundreds of convenience stores and retail outlets in Iowa, the drug trade has been and continues to be legal and in full force. Lowly paid wage workers ply a trade in tobacco, a deadly product that continues to be widely used. Where the author lives, workers queue up at the counter before their shift begins, selecting their preferred brand of cigarettes, snuff, snus, cigars or chewing tobacco. The clerk asks, “will one pack be enough?” Tobacco is the only legal consumer product that kills when used as intended. Tobacco use is the leading preventable cause of death worldwide, accounting for 6 million preventable deaths annually, and is a major contributor to the global pandemic of non-communicable diseases.
This may seem like old news, but the tobacco industry is still at work, caught up in the secretive trade talks going on this week in Brunei. While many of us are finishing up summer work to take vacation, and students are returning to campus, U.S. corporations are attempting to gain unfettered access to markets in 12 countries as part of the Trans Pacific Trade Partnership (TPTP). Tobacco trade is just one of the issues. (Read the Sierra Club memo on environmental issues here).
The tobacco trade issue reduces to a key point, according to Dr. John Rachow of Iowa Physicians for Social Responsibility, “this is a critically threatening attempt to restore unlimited international trafficking of tobacco, the greatest completely preventable cause of human death on the planet.”
U.S. Trade Representative Michael Froman released a statement in which he wrote, “this proposal will, for the first time in a trade agreement, address specifically the public health issues surrounding tobacco– preserving the ability of the United States and other TPP countries to regulate tobacco and to apply appropriate public health measures, and bringing health and trade officials together if tobacco-related issues arise– while remaining consistent with our trade policy objectives of negotiating a comprehensive agreement that does not create a precedent for excluding agricultural products.” Including reference to tobacco products in a trade agreement is the opposite of what public health officials want.
The Center for Policy Analysis on Trade and Health wrote, “the medical, health care, and public health community has consistently supported removing tobacco, tobacco products, and tobacco control measures from trade agreements as the most effective solution (to enabling participating countries to exercise their sovereignty to reduce tobacco use and prevent the harm it causes to public health).”
The tobacco industry likes adding the language because by giving tobacco products special treatment, it creates loopholes that could easily be exploited to circumvent restrictions on tobacco products in participating countries. By offering language on tobacco in the TPTP, the Obama administration is capitulating on public health to get a deal done that favors the tobacco industry.
“I took many aspects of these trade agreements and their impact on my home state of Iowa into account as I decided my vote on these proposals. I understand that there are important provisions that could reduce or eliminate obstacles to increase exports of Iowa agricultural products, manufactured goods and services offered by Iowa businesses. I listened intently to those who favor these agreements as the next step in expanding the export market for pork, beef, grain, agricultural and advanced manufacturing products. But after much consideration, I cannot support these trade agreements.
“History shows that the impact of various trade agreements is not experienced equally. Over the last 30 years, as America’s trade deficit has surged to over $500 billion in 2010, our manufacturing sector has been decimated. Iowans have felt these effects as much as other areas of the industrial heartland. As manufacturing has declined, so have the good middle class jobs that form the backbone of Iowa’s economy and the foundation of our middle class.
“Right now, rebuilding the American middle class should be Congress’s number one priority. Unfortunately, when judged against this benchmark, these trade agreements do not measure up. For example, the International Trade Commission’s report on the Korea agreement indicates that the net effect will be to increase our trade deficit with that country. Every dollar that we send abroad through a higher trade deficit is a lost opportunity to invest here at home in the products and industries we need to rebuild our economy and create good, middle class jobs.
“I firmly believe that American workers make the best products in the world, and I cannot support an agreement that would further endanger the American manufacturing industry and its workers. And I would also vehemently oppose any agreement that puts American workers in greater competition with countries like Columbia that have low wages, poor working conditions and a record of manifest disregard for workers’ rights. Instead of participating in this race to the bottom, we must support policies that create a level playing field for American companies that play by the rules and treat their workers with dignity and respect.
“I have voted for Free Trade Agreements in the past, and I would welcome the opportunity to do so again in the future, provided that they are fair agreements that better protect the interests of U.S. workers and the American economy. Despite providing some important benefits, particularly in these tough economic times, these agreements do not meet that test.”
[Editor's Note: Braley, Loebsack, Boswell and Harkin voted against the free trade agreements, Grassley, Latham and King voted for them.]
For fifteen minutes on Thursday, the Iowa delegation led by Lieutenant Governor Kim Reynolds, Secretary of Agriculture Bill Northey, Iowa Department of Economic Development Director Debi Durham and others spoke and answered reporter questions on a conference call about their trade mission to South Korea and China. Speaking in Beijing, the focus was on China and Iowa’s sister state of Hebei Province. The delegation is returning with a Memorandum of Understanding regarding trade, so something positive was accomplished. Blog for Iowa is appreciative of the Branstad Administration for making access to the call available to the general public.
If Iowa seeks trade with other nations, it must necessarily begin with who we know. Governor Branstad had traveled previously to China and the hosts in Hebei recalled that visit. Additionally, Iowa companies have been doing business in China for some time. Vermeer and Pioneer Hi-Bred were both on the itinerary, but Bandag, Hon Industries and others have had a substantial China footprint. The delegation came to the conference call within an hour of a reception with 100 people in attendance, all with Iowa connections. There was discussion of a Chinese visit to Iowa in the fall, and future trade missions. Without this type of work there would be less foreign trade growth.
Director Durham referred to the Chinese five year plan and said it is important to be knowledgeable of it, so Iowa could determine where we might fit in as a trading partner. There was a discussion about corn and soybeans, which many Iowans view as a key export commodity. While China is interested in buying soybeans, “China is seeking to be self-sufficient in grain.” One speaker said, “they were not excited about buying more corn, but didn’t say they wouldn’t.” Doesn’t sound like grain exports resulting from the trade mission would be sustainable, but China is such a large market that even in their quest for self-sufficiency, they could be a substantial buyer of Iowa field crops from time to time.
There was a discussion of biotechnology. “Pioneer 335 has
dramatically changed China’s farming,” said one speaker during the call.
In typical fashion for US investment in China, Pioneer Hi-Bred International entered into a partnership with Shandong Denghai Seeds Co. Ltd. Shandong Denghai holds a 51% stake in the company and Pioneer 335 is known as “Xianyu No.335” in China. The company reports the product has a gross profit rate of 68%. According to the China Business Intelligence web site,
We can see that Xianyu No.335 has already become the key profit source of the company. However, as the ownership of Xianyu No.335 is in the hands of the joint venture company, so Shandong Denghai has to pay huge for the seed use right. Therefore, though the profit of the joint venture totaled CNY38 million in 2007, Shandong Denghai only got net profit of CNY7.24 million from it, still resulting in a rise of its profit in 2007 by 26.85% year on year.
A 68% gross margin, of which Pioneer keeps 81%, is a pretty good deal, maybe for both companies in the joint venture. Hebei Province can be expected to start looking more like Iowa.
What does this trade mission mean for progressives? It means more of the same Iowa companies sourcing additional labor and manufacturing in China. It means expansion of GMOs and monoculture in China. It means glomming onto a communist five year plan, looking for how we fit in, instead of developing our own plan for a sustainable economy and being a leader. It means more of the Branstad effect.
Iowans See Another Side of CAFTA
by Paul Deaton
[Editor's Note: A lot of requests cross the editor's desk at Blog for Iowa, and in this case, the issue presented has not been aired at all in Iowa as far as we can tell. One of our roles is to report news others don't].
Following is an important letter to President Obama before his visit to El Salvador on March 22-23, 2011, his first Presidential tour in Latin America. His visit is an critical opportunity to bring international attention to an urgent threat to El Salvador’s sovereignty, human rights and environment.
As you may know, two North American mining companies are suing El Salvador under the foreign investor provisions of the US-DR-Central America Free Trade Agreement (CAFTA). Pacific Rim Mining, a Canadian company that transferred a subsidiary to Nevada to take advantage of CAFTA, is suing El Salvador for at least $77 million for the government’s decision to deny their application for gold extraction. Commerce Group Corporation, based in Milwaukee, WI, is suing El Salvador for $100 million for canceling its existing exploitation permit on the grounds of environmental devastation to the San Sebastian River.
Unfortunately, death threats and kidnapping attempts against community leaders, journalists and religious leaders in Cabañas who continue to denounce metallic mining are continuing today.
We believe that the United States, as the chief architect of DR-CAFTA, has a moral and political obligation to take concrete action to support El Salvador’s position in the face of these CAFTA lawsuits. The letter thus calls on President Obama to take several actions before and during his visit to El Salvador on March 22-23 (see below), including eliminating these rights for foreign corporations as he promised to do during his campaign.
Alexis Stoumbelis on behalf of the International Coalition against Mining in El Salvador and the Midwest Coalition Against Lethal Mining.
President Barack Obama
1600 Pennsylvania Ave.
Washington, DC 20508
Dear President Obama:
On the eve of your upcoming trip to Latin America, we are writing to raise an urgent concern for the people of El Salvador. El Salvador is currently facing two investor-state arbitration suits filed under the provisions of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) for the government’s decision not to grant permits for metallic mining.
The environmental regulations at issue here are exactly the type of policy you pledged to protect as a Presidential candidate when you stated, “With regards to provisions in several FTAs that give foreign investors the right to sue governments directly in foreign tribunals, I will ensure that foreign investor rights are strictly limited and will fully exempt any law or regulation written to protect public safety or promote the public interest.”
As shown in neighboring Guatemala and Honduras, metallic mining can irreparably pollute fresh drinking water, contaminate water used for crop irrigation, and pose grave threats to fishing livelihoods, thus permanently endangering the health and well-being of generations. El Salvador, the smallest and most densely populated country in Central America, already grapples with severe shortages of clean water.
It was for these reasons, and the failure of two companies, Pacific Rim Mining and Commerce Group Corporation, to fulfill the requirements of El Salvador’s mining law, that the Ministry of the Environment and Natural Resources rejected Pacific Rim’s application for exploitation permits in 2005 and revoked Commerce Group’s exploitation permit in 2006.
Rather than applauding El Salvador’s commitment to promoting the health of its citizens and protection of the environment, the United States, through its current trade policy, is allowing the people of El Salvador to be punished. Together, these two companies are demanding nearly $200 million dollars in compensation from the Salvadoran state, equivalent to one percent of the nation’s Gross Domestic Product (GDP). The U.S. equivalent, relative to GDP, is close to $276 billion. We hope you agree that the hundreds of millions of dollars at stake could be better invested by the Salvadoran government into economic growth and fundamental social guarantees like health and education.
The lawsuits by Pacific Rim Mining Company and Commerce Group Corporation against El Salvador demonstrate how the present terms of DR-CAFTA jeopardize the environment and public health throughout the hemisphere. When these expansive corporate rights impede a government’s ability to respond to its communities’ calls for positive environmental and economic policy, for example, El Salvador is currently considering a national ban on metallic mining, similar to the ban recently passed by Costa Rica, they can threaten human rights and even democracy itself.
The pending DR-CAFTA arbitration has provided a pretext for the Pacific Rim’s continued presence in the region of Cabañas, where three community leaders who opposed metallic mining were assassinated in 2009. While some of the perpetrators of these crimes have been prosecuted, the intellectual authors and financers of these crimes have not; death threats and kidnapping attempts against community leaders, journalists and religious leaders who denounce mining continue today.
On March 2nd, the communities and member organizations of the Mesa Nacional frente a la Minería Metálica (National Roundtable against Metallic Mining), who have been organizing to defend their land and water from the threat of metallic mining, presented amicus curiae to the tribunal at the International Centre for the Settlement of Investment Disputes (ICSID). We wish to express our support for the members of the Mesa Nacional and urge the Tribunal to honor the legitimate right of civil society to play an active role in this case.
During your upcoming trip to El Salvador, you have an important opportunity to offer concrete support to President Funes and to the people of El Salvador in the continued exercise of their sovereign right to develop economic, environmental and social policy that promotes the well-being of its peoples. We call on you to:
We, the undersigned organizations, believe that the United States government as the architect of DR-CAFTA has an obligation to act quickly and concretely to support El Salvador’s position with regard to the arbitration, and to address the underlying policy issues in DR-CAFTA that threaten the exercise of democracy throughout our hemisphere.
Iowa Agriculture, Sustainability and the Commodities Boom
by Paul Deaton
If the 84th Iowa General Assembly is anything, it has been a battleground for competing ideologies. To call it Armageddon, the scene of a final battle between good and evil before the end of the world, would be hyperbole. However, considering the deteriorating air and water quality in the state, disruption of crop growing cycles around the world, along with incidents of extreme weather, global food shortages, food riots and rising food prices, an argument could be made that we are living in the end times. But let's be optimistic and say that we are not currently heading towards the biblical apocalypse. What then?
Perhaps the most sobering recent account of the impact of these things was Friday on the Iowa Public Television program Market to Market. Host Mark Pearson interviewed analyst Sue Martin about the commodities markets for cotton, wheat, corn, soybeans, cattle and hogs. The good news about higher commodity prices was tempered with concern for what is going on in the world and whether these prices could be sustained. In a brief segment, Martin pointed to problems around the world, specifically naming China, Argentina, Brazil, Mexico, Australia, France and the former Soviet Union countries as all having food production and supply problems to some degree caused by weather. What does this mean? Pearson summed it up, “Ten, eleven dollars, pretty fancy prices for wheat, Sue.” It is the same across the board for commodity prices and Martin's firm recommended farmers make sales last week with high market prices. Record high commodity prices point to concerning problems with our food supply.
Martin said, “it appears like France is pretty much almost out of wheat. In fact, they dropped their import tariffs on feed grains until, I think, like, the end of June, basically because they need feed grains…” While Iowa farmers can profit from this environment, history tempers enthusiasm.
Martin: “No, we haven't and I think that part of it is going to be tied to the world buyer. These countries that are very concerned. You know this is the first time Mark that the Chinese have had to worry about competing against everybody else. Before they kind of had their way with the rest of the world because it was plentiful supplies, but this is the first time now that they've had to think about competing against the other countries that are very worried about their governments being overthrown because of high food costs and also the fear of not having enough.“
Governments being overthrow by higher food prices and food shortages? Mark Pearson and Sue Martin are not tree hugging liberals by any means. If they are concerned about climate change, food shortages, over production of corn based ethanol and “where's the rationing going to start?” then perhaps we should be too. Perhaps we should take another look at Iowa's approach to agricultural commodities.
Senator Grassley and President Obama both look to trade agreements with South Korea, Columbia and Panama as being a way to expand commodity sales and foster jobs in Iowa and elsewhere in the US. Last week, Governor Branstad promoted the Korea-United States free trade agreement, saying he would open an office in South Korea should the treaty be ratified by the U.S. Senate. At some point, we need to take a deep breath midst the current commodity prosperity and listen to the dialogue of people like Pearson and Martin.
We may not be living in the end times, but the good times can't last, as many farmers will tell you. Martin's firm recommended making some sales of old crop and new crop at last week's prices. There will only be so much crop to sell and then it will be gone or committed once harvested. With ethanol production taking 40% of last year's corn crop, growing populations in developing nations seeking cotton clothes, and American families increasing hamburger demand because of the financial pressure they feel, something has to give. A place to start is to develop an agricultural policy that supports more sustainable agricultural practices. That is hard to do when row crop agriculture and the commodities it produces are experiencing the current boom.
The alternative to more sustainable agriculture is to engage in the ideological debates going on in Des Moines and in the corporate media, stick our heads in the sand and wait for the apocalypse, saying “God grant me one more commodities boom and I promise not to piss it away.”
~Paul Deaton is a native Iowan living in rural Johnson County and weekend editor of Blog for Iowa. E-mail Paul Deaton
State Capitol News – Weekend Recap
State Capitol News – Weekend Recap
by Paul Deaton
Note: Following is a weekly recap of stories from Des Moines that
came through the Weekend Editor's in-box in the fifth week of the
legislative session. Check out the House Democrats page for a
different take on the week here.
Senate Democrats are here.
Watch for this feature every Saturday while the legislature is in
45 Assigned to Senate Subcommittee
Speaker Kraig Paulsen's signature bill (HF 45) to cut spending during
the current fiscal year was assigned to a Senate appropriations
subcommittee consisting of Senators Bob Dvorsky (D-15), Jeff
Danielson (D-10) and Steve Kettering (R-26) on Tuesday. According to the Des Moines Register, “Democratic senators wielded sharp scissors on [...] (HF 45), rejecting several big Republican proposals for spending cuts over the next five years.” In his weekly
update to constituents, Senator Dvorsky made no mention of HF 45,
focusing instead on the challenges of setting priorities for Iowa. From a budget standpoint, this means “protecting opportunities for
Iowa children first” Dvorsky said. Not to be outdone, Governor Branstad, Lieutenant Governor Reynolds and Director of the Department of Education unveil their Preschool Proposal on Monday at 9AM. Stay tuned.
or Silly Bills?
what does the Republican House majority plan to do about jobs? It is
hard to tell. It appears the plan is some echo of a perception of the
Reagan era in which making life better for corporations and large
scale entrepreneurs is in the works, hoping that jobs will trickle
down. With the bills to allow people to ride equine animals on public
lands, to end the sales tax on washers and dryers for laundromats and
allow Iowans who take a self-defense class to buy a gun tax-free
sucking up all of the oxygen, conservatives may not have time to
work on creating a pro-job environment in the state in any more
substantial manner. Senator Joe Bolkcom (D-39), who normally refrains from commenting on what goes on in the other body, referred to the House propensity for silly bills that fulfill election promises: “It must be what it’s like to cough up a hairball. Just guessing.”
there Hope for the Usual Suspects?
74 and HF 210 popped up on the legislative horizon in a way that is
fairly consistent with bills supported by powerful interest groups in
previous sessions. HSB 74 would repeal the bottle bill that requires
a nickel deposit on certain beverage containers, something that
retail establishments loathe because it is an expense rather than a
revenue generator for them. Check out the
lobbyist page to see which of the usual suspects is for and
against this perennial bill to see where things stand. Word is that the grocers like the senate version of the bill better, but that has not been posted on the legislature's web site as of this writing. Blog for Iowa's take is somewhat different. View a video about water bottles here to see where we land.
is “an act relating to the identification of historic properties by
certain rural electric cooperatives.” The bill defines the amount
of work rural electric cooperatives must exert to identify and
preserve historic properties when laying new routes. Basically, they
would be required to review existing information on historical
properties and if a survey would be required, such survey, conducted
by the electric cooperative, would balance the impacts of preserving
the historic site and the project costs. There are
two flaws: there is no contingency for if a new historic site is
discovered as a result of laying the new route, and it appears that
the fox is guarding the hen house regarding the value of potential
historic sites. This during the growth period for wind energy, which
will require laying of new routes to harvest the electricity and get
it to the grid. For people interested in preserving Iowa's
history, HF 210 is one to watch. See the positions of the
registered lobbyists here,
but thus far, no lobbyist has registered against this bill.
Conlin Lobbying on the Hill
Moines attorney Roxanne Conlin posted this on Facebook this week:
“Went to Iowa Senate to prevent them from removing the Civil Rights
remedies for women in prison who are sexually harassed by guards. The
Corrections Dept seeks to reverse a Sup Ct decision for my client.
Unfortunately the subcommittee passed it. What can they be thinking?
This is a vulnerable population that has lost some of its rights but
certainly not the right to be free from discrimination and
Branstad Seeks to Open Office in South Korea
Tuesday, Governor Branstad announced he would like to open an office
in South Korea should the United States Senate ratify the US-South
Korea Free Trade Agreement. Read the author's comments on this
The Dubuque Telegraph Herald's story here.
Deaton is a native Iowan living in rural Johnson County and weekend
editor of Blog for Iowa. E-mail
Working Iowans Should Oppose the US-South Korea Free Trade Agreement
by Paul Deaton
On Friday, Senator Chuck Grassley (R-IA) released an article on his government web site
titled “Q & A: Export Markets for Iowa.” In it, among other things,
he promoted the United States-South Korea Free Trade Agreement that has
been re-negotiated by the Obama administration. In the article,
Grassley covers the benefits of the agreement, citing a potential growth
of $1.6 billion in agricultural exports to South Korea where the United
States is already that nation's largest trading partner. The agreement
would phase out South Korean tariffs on beef, pork, corn and soybeans,
which would benefit Iowa's large scale, industrial agriculture
big agriculture would benefit from a U.S.-South Korea Free Trade
Agreement, the other side of the coin is that South Korea would benefit
from greater access to U.S. Markets. What does South Korea export? Among
their key exports are
electronic goods like semi conductors and computers, along with more
traditional items like foodstuffs, iron and steel, automobiles, textiles
(footwear and apparel), office machinery and other manufactured goods.
In other words, the U.S.-South Korea Free Trade Agreement would further
the globalization of the industrial economies to benefit large
corporations, supporting jobs in South Korea that used to be in the
United States. Where does that leave Iowans?
When former Secretary of State Colin Powell was in Iowa last year, he said that the future under a U.S. South Korea Free Trade agreement would look like the South Korean owned company PMX Industries, Inc. with U.S. operations based in Cedar Rapids.
company created Iowa manufacturing jobs making copper and copper alloys
included in things we use every day like computers, telephones, hand
held electronic devices, ammunition, locks on our doors, and coinage,
including some of our U.S. Coins. While the profits of PMX Industries
may flow back to the Korean parent company Poongsan Corporation, it is undeniable that the presence of their plant in Cedar Rapids creates economic benefit for Iowans.
It is old news
that dumping of steel, by South Korea and other countries, on the U.S.
economy jeopardized the long term viability of our industry and workers.
At the same time, when Senator Grassley, House Speaker Boehner and
others speak for the need to ratify the U.S.- South Korea Free Trade
Agreement, there is an underlying presumption that members of the middle
class are either not paying attention or have forgotten that
unrestricted access to U.S. markets benefits the wealthy and puts
pressure on the middle class. While a protectionist stance is not always
good for Iowans, one asks, “what is it we aren't being told about this
As Blog for Iowa reported,
Poongsan Chairman and CEO Jin Ryu is politically well connected in the
United States and has a close, personal relationship with Colin Powell
and other members of the two Bush administrations. His influence is
evident in what little public discussion there has been over the
U.S.-South Korea Free Trade Agreement. While we don't know what
narratives are being spun within Chairman Ryu's sphere of influence,
what we do know is that this trade agreement, if ratified, would be
another weapon for large corporations to use in the assault on Iowa
working people. If you can find someone who knows about this agreement,
stand up for working Iowans and oppose it.
~Paul Deaton is a
native Iowan living in rural Johnson County and weekend editor of
Blog for Iowa. E-mail
Another Free Trade Agreement Will Impact Iowans
by Paul Deaton
Blog for Iowa has covered the South Korea-United States Free Trade Agreement since Colin Powell visited Cedar Rapids, Iowa to help dedicate the Iowa Korean War memorial at Veterans Stadium in early June.
Late Friday, the White House announced that modifications in the free trade agreement have been made and agreed between the parties. Key US concerns have been addressed pertaining to environmental and labor standards, according to the White House.
Back in August, BFIA wrote, “Proponents
of the Korea-US Free Trade Agreement may get the treaty improved and
ratified by the US Senate. Yes, additional jobs would be off-shored to
South Korea. Yes, South Korean farmers would be impacted by the US
subsidies of corn, soybeans, wheat and cotton as the Mexican farmers
were by NAFTA. Yes, the wealthy would increase their assets. And yes,
those of us in the middle class would feel additional pressure on our way
of life in the post-Reagan era.”
Read this one for yourself. President Obama's statement is here and a fact sheet on the agreement is here. Once you have had a look, think about whether this agreement will be good for jobs and for the middle class. It may be too early to tell, but I stand by my original analysis.
The treaty is expected to be signed by the parties and sent to the United States Senate for ratification.
Iowa and China's Currency Valuation
by Paul Deaton
the post-Reagan society, where the middle class is under continuous
assault, we value the ability to buy cheap roofing nails, cans of beans,
shoes or hand held communications devices and don't see the connection
between their import from China and the decimation of the economy of the
During a conversation with a contractor, we discussed the impact of China on the roofing business. It came down to the roofing nails. He had identified two U.S. sources for roofing nails, but the cost was fifty percent higher than those manufactured in China. In China, labor is cheap, enabling use of old technologies and inefficient working conditions, said the contractor. He had viewed video footage of this. It seems unlikely that appreciation of the Chinese currency would fix this disparity, especially when people who can't afford to replace the roof have to.
Some argue that valuation of the Chinese Yuan is important, but most Iowans do not understand that it is even an issue in their lives. In the post-Reagan society, where the middle class is under continuous assault, we value the ability to buy cheap roofing nails, cans of beans, shoes or hand held communications devices and don't see the connection between their import from China and the decimation of the economy of the middle class. The loss of jobs due to sourcing of manufacturing in China is an effect we deal with without associating it with something as seemingly abstract as the value of the Yuan.
In a recent statement, Congressman Dave Loebsack (D-IA) said, “China has manipulated its currency for years in order to promote its own manufacturing and to enable it to flood the US market. I have heard time and again from industries and businesses in Iowa that this manipulation directly affects not only their ability to export American-made goods abroad but to sell American-made goods here at home. China’s protracted undervaluation of its currency has reduced US exports, hurt American businesses’ competitiveness abroad, caused the loss of American manufacturing jobs, promoted outsourcing of American jobs and American manufacturing, and significantly contributed to our large trade deficit with China.”
People who know more about this topic than the author agree. This includes U.S. Treasury Secretary Timothy Geithner, who said of China's undervaluation of the Yuan, “it's not tenable for China long-term, and it's not fair to all of China's trading partners, America and others, because it creates a playing field that's unbalanced.”
In all of this talk about Chinese currency, there is an assumption that trade relations can ultimately occur on a “level playing field.” That will never happen. While the United States can strive for balance with specific trading partners like China, multinational corporations have built their business models on regional disparities in labor, environmental compliance and resource costing. China is in the mix of most multinational corporation business models. As China, India and countries in Africa emulate American consumer behaviors, markets have opened for Iowa companies like HNI Corporation and Bandag of Muscatine. They built or acquired Chinese manufacturing facilities to support those markets. These Iowa companies benefit from Chinese currency valuation, at least in the short term.
When NAFTA passed, an exodus of U.S. Manufacturing to Mexico commenced. When Mexican manufacturing became uncompetitive, multinationals moved operations to China. If China were to become uncompetitive, manufacturing could move elsewhere. Constantly seeking to drive out costs, businesses large and small “buy cheap and sell dear.” Members of the middle class so often are on the “sell dear” part of the equation. Chinese currency valuation is a factor in this, but middle class consumers will seek out the best value in the goods they purchase, and the impact of the Yuan's value is a minor consideration if its impact may not be.
Kudos to Congressman Loebsack for taking on this issue, but relief cannot come fast enough for everyday people in Iowa who depend on the low prices created partly by China's manipulation of its currency. In the post Reagan society, the purchase price of consumer goods remains a key consideration and we can't afford to pay more if China were to appreciate its currency. Perhaps this is short sighted, but it is the plain truth as economic hard times become our norm.
Deaton is a native Iowan living in rural Johnson County and weekend
editor of Blog for Iowa. E-mail
through Election Day – Early Voting across Iowa**
Iowa's Relationship with Mexico
by Paul Deaton
Iowa agribusiness is supported by federal subsidies, reliant on cheap energy, and dependent upon producing large quantities of row crops of corn
and soybeans with very few farm workers is a characteristic of Iowa
exports that makes it hard for Mexican farmers to compete.“
Iowans don't think much about our relationship with Mexico, but maybe we should. The number of Iowans of Hispanic or Latino origin has grown to more than 135,000 people and comprises 4.5% of Iowa's population, making Hispanics the largest minority population in the state. While Iowa lags the national average in percentage of Hispanic residents, most people recognize the increased numbers in the state in the form of the challenges of delivering public services, competition for certain construction jobs, and the highly visible immigration raids in Marshalltown and Postville. Our relationship with Mexico is more complex than what is obvious to all.
What we don't hear about is the way Iowa is tied to the Mexican economy and the importance of improved U.S.-Mexican relations to agriculture. According to the United States Department of Commerce, during the first six months of 2010, Iowa exported agriculture and livestock products valued at $417,712,094 and 73.4% ($306,773,989) of that went to Mexico. If we add in agricultural and livestock exports to Canada, these two countries make up 82% of Iowa's export market. Iowa and its agribusiness have been a primary beneficiary of NAFTA.
According to the United States Department of Agriculture, in 2008 there were 108,072 acres in Iowa in organic crops, rangeland and pasture. Compare that to the 30,747,550 acres that make up Iowa farmland and it is easy to see that industrial agriculture is the primary beneficiary of good relations with Mexico. That Iowa agribusiness is supported by federal subsidies, reliant on cheap energy, and dependent upon producing large quantities of row crops of corn and soybeans with very few farm workers is a characteristic of Iowa exports that makes it hard for Mexican farmers to compete. Some say that the surge in immigration from Mexico to the United States after NAFTA was driven partly by Mexican farmers being driven out of business by cheap imports from the US.
During the 2010 midterm elections, immigration has become an issue discussed at newspaper editorial boards across the state. Among most Iowans, there appears to be common ground in that most say we should enforce the law, protect the borders and hold businesses who knowingly employ undocumented workers accountable. Critics point to the Mexican trade in methamphetamine and coyotes trafficking in people along interstates 80 and 35 as significant social problems. The
truth about this is that undocumented immigrants perform work that
Iowans don't want to do like harvesting produce, pruning apple trees and
grape vines and working in packing houses. It is the economic benefits
of living in the United States that pulls Mexican workers here. As long
as that continues to be the case, and employers need the labor and won't
comply with the law, immigration reform seems unlikely.
According to Iowa Public Television, “Mexican immigration to the United States has occurred for several generations, but the permanent settling of Mexican immigrants in Iowa is a recent phenomenon. The relationship between these immigrants and their hometowns in Mexico remains strong, especially among first generation newcomers. Direct phone communication, the availability of Spanish language media and the proximity of Mexico to the United States means that immigrants are often in daily contact with family, friends and neighbors back home. Annual trips back and forth across the border are not uncommon. Latino newcomers in Iowa often provide crucial financial assistance to their families, communities and churches back in Mexico.”
Iowa's ties to Mexico are becoming increasingly strong. Like with many immigrant groups, there is an insularity of culture that ties Hispanic communities in Iowa together. To the uneducated, it can raise suspicion that our immigrant populations are up to no good. This is not borne out by the facts. When we consider the entire relationship between Iowa and Mexico, it is clear there is a symbiosis without which life in Iowa would be more difficult, regardless of from where our ancestors came or in which segment of the economy we make our living. For Iowans, time spent on understanding our relationship with Mexico can lead to mutual tolerance and respect that can only be good for ourselves and our communities.
Deaton is a native Iowan living in rural Johnson County and weekend
editor of Blog for Iowa. E-mail Paul