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James Boyd: Is Ralph Norman Being Duped On Trade?

Dear Editor, Corporate promises to create jobs don’t always pan out.  It’s a lesson South Carolina learned the hard way in what has now become #NukeGate.  Seduced by the promise of a new nuclear power plant in the state, South Carolina politicians allowed power companies to hike rates on consumers…

Dear Editor,

Corporate promises to create jobs don’t always pan out.  It’s a lesson South Carolina learned the hard way in what has now become #NukeGate.  Seduced by the promise of a new nuclear power plant in the state, South Carolina politicians allowed power companies to hike rates on consumers to foot the bill for the expansion. Now the plants are half-built, the jobs aren’t coming, and taxpayers are stuck with both the bill and an ongoing legal saga.

So it’s curious, particularly against this backdrop, Rep. Ralph Norman is advocating with such enthusiasm for Korean companies that make the nuclear power plants look like responsible investments.

In a letter last month, Rep. Norman urged the U.S. International Trade Commission (ITC) not to recommend trade remedies against Samsung and LG Corporation. Doing so, he warned, would jeopardize the opening of a “state-of-the-art manufacturing facility” in Newberry, South Carolina that will supposedly generate $400 million in investments for the local economy and create some 1,000 new jobs in the first two years.

Rep. Norman’s letter notwithstanding, the ITC ruled earlier this month that trade practices by Samsung and LG are harming American manufacturers. In two earlier decisions, the ITC found that Samsung and LG are illegally mass producing washing machines and flooding them into the United States below market value in an attempt to undercut American companies. The reason the ITC was forced to weigh in on the issue again is because the conglomerates have been evading country-specific tariffs by moving their production to Mexico and various developing countries in East Asia.

Perhaps Rep. Norman can be forgiven for ignoring the profound U.S. interests at stake in the case. The battle with Samsung and LG, at its core, is a test of whether or not the United States will prevent free trade from turning into lawless trade.

As President Donald Trump underscored during his campaign, free trade does not work in the national interest when companies, subsidized by foreign governments, dodge their legal obligations even as the United States plays by the rules and opens its economy to its competitors. But Norman, after all, is a congressman with an obligation to look after the citizens of his own district.

More perplexing is why Rep. Norman is taking at face value the promises Samsung and LG are making about the investments and jobs they will deliver to South Carolina. Available evidence, not to mention the companies’ track records, suggests that the factories Samsung and LG are touting will be shells. They would handle the final assembly of “American” washers that are in fact constructed with foreign parts. When political or economic circumstances change, Samsung and LG will be able to relocate these transient assembly plants to places with cheaper labor and less regulation.

In the meantime, genuine job creators like Whirlpool , which use more American produced parts, are scaling back investments to hedge against the dumping of foreign-made washers from Samsung and LG.

Rep. Norman and other members of Congress could prove influential as the ITC and the Trump administration consider whether to impose tariffs and quotas against Samsung and LG. Rep. Norman’s concern for the local economy in South Carolina is laudable. But banking on the illusory promises of transient corporations—particularly those with a track record of cheating—is hardly the way to attract sustainable investments to the state.

Regardless of Rep. Norman’s calculus, the people of South Carolina would benefit if President Trump imposes tariffs on foreign manufacturers that skirt trade law. South Carolina would remain an enticing market. But enforcement of U.S. and international trade law would encourage conglomerates like Samsung and LG to enter the market in a manner that is consistent with the rule of law. This is the surest way to bring durable jobs to the state and avoid another #NukeGate.

Sincerely,

James Boyd
Fort Mill, S.C.

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