Advocacy = Results: Proposal to Disguise Offshoring Shelved after Groundswell of Opposition
Can one person make a difference? Hard to say. But apparently 26,000 of them can.
About a month ago we warned of an administration proposal to reclassify U.S. corporations that offshore their manufacturing as “factoryless goods” manufacturers. Calling Apple a “manufacturer” – though its iPhones are made in Foxconn factories in China – defies common sense. But why does it matter?
Because it would mask the erosion of U.S. manufacturing incentivized by offshoring-friendly policies, including a raft of unfair trade deals. The Orwellian proposal would undermine efforts to replace more-of-the-same policies with a fair trade model.
Under the proposal, reported U.S. “manufacturing” jobs and wages would balloon overnight, as brand managers and programmers would suddenly be counted as “manufacturing” workers. The broad reclassification initiative would also deceptively deflate the large U.S. manufacturing trade deficit. U.S. imports of made-in-China iPhones would not be tallied as manufactured goods imports but as imports of Foxconn's “services,” while iPhones exported from China to, say, Europe would actually be rebranded as “U.S.” manufacturing exports.
During an official period to comment on the proposal, Public Citizen, many labor groups, and other allies invited people to send their two cents to the administration. The response was overwhelming.
In short order, about 26,000 people filed comments in opposition to the “factoryless goods” proposal. The last time the administration tried to implement this proposal, they received 10 comments.
This past Friday, the administration responded. This announcement appeared in the Federal Register:
“Given these initial research results and the large number of public comments submitted on the topic of FGPs [Factoryless Goods Producers], OMB [the Office of Management and Budget] here announces that the FGP recommendation will not be implemented in 2017.”
If you submitted a comment, congratulations. According to the administration, your voice of reason contributed to a chorus that helped convince the administration to rethink the wisdom of categorizing firms that do not manufacture anything as U.S. manufacturers. Advocacy, as it turns out, can work.
Please place your hand above your back and pat vigorously. But don’t break out the champagne glasses.
Thanks to the groundswell of public opposition (and the contributions of some clear-minded naysayers within the administration), the “factoryless goods” proposal has been shelved. But it has not been dustbinned.
OMB makes clear that the “factoryless goods” fantasy will likely emerge again, albeit in a different form:
“Without the deadline imposed by the 2017 NAICS revisions, the relevant statistical agencies will now have the opportunity to complete the additional research, testing, and evaluation needed to determine the feasibility of developing methods for the consistent identification and classification of FGPs that are accurate and reliable. This process will also be informed by questions raised in public comments. Results of this research, testing, and evaluation could lead to a different FGP proposal for consideration or implementation.”
As "factoryless goods" proponents regroup and decide what to do next, we will remain vigilant. Future bouts of pressure will likely be needed to keep our data, and the policymaking that it informs, free of distortion. As we push to change our trade policies, we will need to keep pushing against efforts to simply change our numbers.
But for now, kudos.