Interview of Congressman Duncan Hunter
Congressman Duncan Hunter of California is one of the few Republican members of Congress with the distinction of having voted against both the NAFTA and CAFTA trade agreements. His congressional district in the San Diego area shares a border with Mexico. He is currently campaigning for the GOP presidential nomination. We caught up with him on Patriot's Day at Washington's Capitol Hill Club in between weekend trips to South Carolina to campaign for the upcoming presidential election. The early primary state, which has seen its textile industry devastated by trade-deal-greased off-shoring, will host the first televised GOP presidential candidate debate on May 15.
Congressman Hunter was interviewed by Jim Capo, national spokesman for the John Birch Society on trade policy.
THE NEW AMERICAN: Congressman Hunter, a key issue that sets you apart in the GOP presidential race is your position on U.S. trade policy. Why have you opposed trade agreements like NAFTA and CAFTA ?
Rep. Duncan Hunter: I see these agreements as business deals. NAFTA was a bad business deal. We gave up something of value, the American market, and got essentially nothing in return. We were promised that NAFTA would develop a Mexican middle class that would buy Kenmore washers and Cadillacs. The promise was also made that NAFTA would stem the tide of illegal immigration. Instead, NAFTA destroyed many small businesses and farms in Mexico that were incubators of a potential middle class in Mexico, and we have seen illegal immigration surge. Similar unrealistic promises were made for CAFTA.
Let me say here one more thing about how these trade deals are bad business deals. The 1946 General Agreement on Tariffs and Trade [GATT] was upgraded to the World Trade Organization a year after NAFTA. When the GATT was created, the United States allowed a loophole for something called the VAT--the Value Added Tax. Almost all of our trading partners use a VAT to put U.S.-based manufacturers at a significant disadvantage in all these so-called free-trade deals we are signing. Right now it has been calculated that the VAT system creates up to a $327 billion annual disadvantage for the United States just in manufacturing goods, not including services. This is almost half our ballooning yearly trade deficit.
TNA: Since you bring it up, can you give us the nickel version of how the VAT works?
Rep. Hunter: In simplest terms the VAT is a tariff-and-subsidy scheme masquerading as a GATT/WTO compliant tax. Here is an example of how it works. China has a VAT of about 17 percent. Under the VAT system, a manufacturer produces a table that costs $100. If that manufacturer ships that table out of the country to the United States, that manufacturer is rebated $17 of taxes that were collected along the manufacturing supply chain in China under the VAT system. The manufacturer can then deliver that table to the United States for $83. When a U.S. manufacturer wants to ship a similar table into China he gets a bill for $17 at the Chinese border, so the cost of his good now becomes $117. This means that before the opening kickoff in this international competition we call world trade, the other side has 34 points on the scoreboard before the game even begins! That is a built-in disadvantage we have signed up to.
TNA: On Capitol Hill there seems to be a movement to address the situation. Are you aware of a bill called the Border Tax Equity Act that is soon to be introduced? This bill calls for countervailing taxes to be assessed to VAT countries in an effort to level the playing field for U.S. manufacturers.
Rep. Hunter: I am very much aware of that bill, and I will proudly be adding my name to it as one of the initiating co-sponsors. We are not going to continue to play the global trade game at a built-in disadvantage. I know there will be many U.S. companies that will resist this effort because they have already moved their production outside our country to take advantage of this designed-in disadvantage for U.S. producers, but we have to begin the process of rebuilding our country's manufacturing base. No country can remain strong and successful without one. Two years ago when we went looking for high-grade armor steel plate to protect our soldiers against IED's in Iraq, we found that there was only one supplier left in the United States for this critical item. We have to do better.
TNA: You mentioned China in your VAT example. Is that country a particular concern?
Rep. Hunter: As the recent former Chairman of the House Armed Services Committee, I am very much concerned about China. The Chinese are arming with American trade dollars. They are expanding their military capabilities. They have bought missiles from Russia that will allow them to destroy aircraft carriers. They are building next-generation fighter jets. The tragedy is that at some point in the future, American military personnel may end up facing off against equipment that was purchased through our trade deficit with China.
TNA: Was this what led you to introduce the Hunter-Ryan/Fair Currency Act (H.R. 1498) ?
Rep. Hunter: In a large part, yes. The Chinese yuan has been pegged to the U.S. dollar. Despite a slight revaluation in 2005, the yuan remains undervalued by as much as 40 percent. The Chinese government is cheating. The legislation that Congressman Ryan and I have offered defines currency manipulation as an illegal trade subsidy. This practice, when coupled with other tariffs and trade penalties, creates an uneven playing field and a one-way street for trade. This one-way street heads right to China.
TNA: What are the prospects for this bill?
Rep. Hunter: It will be difficult. The multinationals in our country are saying, "Wait a minute. We are Chinese corporate citizens. We like the situation as it is" Honestly, we will need more businessmen to put America first. I was encouraged by the recent split in the National Association of Manufacturers (NAM) over the currency-manipulation issue. There are still many patriots in the United States business community, and they are speaking out. We need more to step forward. American business advisers are advising American manufacturers to pack up and leave our shores for tax and tariff purposes. A major part of my presidential campaign is to restore our nation's manufacturing base. As president of the United States, I'll junk bad trade deals and bring competitors back to negotiate new ones.
TNA: Our trade deals have all been negotiated under the Trade Promotion Authority (TPA) or "fast track" that Congress has given to the president. The current TPA runs out on June 30 of this year. What is your position on TPA renewal?
Rep. Hunter: I'm not supportive of TPA. In fact, I won't support TPA. We don't have people that are competent working on these deals. In the private sector, if we had negotiators who promised us so much and delivered so little, we would not be doing business with them any longer. NAFTA under President Clinton's negotiation team was bad. President Bush's team has not changed much. They are not interested in doing a good job for us. Leaving it to the administration's trade team is not working. I understand that it is not efficient to negotiate a deal by committee (as in the Congress), but we need another path.
TNA: Are you aware that NAFTA is being expanded under the Security and Prosperity Partnership, and that the creation of something like a North American Union and a NAFTA Superhighway is being discussed outside the oversight of Congress ?
Rep. Hunter: Yes, I have recently become aware of this effort, and in no way do I support it.
TNA: Are you supporting Virgil Goode's bill, House Concurrent Resolution 40, which calls on the president to stop work on the North American Union and NAFTA Superhighway?
Rep. Hunter: Yes. I support the Goode bill. My name is being added as a cosponsor. Along with Marcy Kaptur [D-Ohio], I have also introduced a bill called the NAFTA Safe Trucking Act. This bill requires that Mexican motor carriers attempting to operate in the United States meet all the same safety requirements U.S. companies and drivers are required to meet. It also requires that they can address all our security concerns regarding truck shipments coming into the United States from Mexico. Additionally, under the bill no Mexican carrier will be allowed to operate freely in the United States until the Secretary of Transportation has submitted to Congress a plan to enforce English language proficiency as already required.
TNA: Regarding security on our border with Mexico, what is your assessment of the situation for U.S. Border Patrol agents Ramos and Compean, who were arrested and jailed for shooting and wounding a Mexican drug smuggler whom they thought was armed?
Rep. Hunter: I read the relevant transcripts of their trial, and I came to the conclusion that their convictions and sentences were an extreme injustice. We have sent the wrong message to those protecting our borders. When the president didn't pardon them, I introduced a bill for a congressional pardon, H.R. 563. The bill currently has 94 cosponsors. These men have been unjustly imprisoned.... Upon being elected president, if Ramos and Compean are still tragically in jail, I will pardon them.…