Changing to WTO's 'Made in the World' Labeling Would Harm Americans

Michele Nash-Hoff
Author, ‘Can American Manufacturing be Saved? Why We Should and How We Can’ 
Follow Michele Nash-Hoff on Twitter: www.twitter.com/saveusmfg 

How would you like to go shopping and find that everywhere you went, the label said “Made in the World” instead of “Made in China,” “Made in India,” “Made in USA” etc.? The label on products Americans purchase that names the country in which they are made may soon be gone. How could this be possible? 

The World Trade Organization has been working on the “Made in the World” initiative for years, and in 2008, the WTO and Organization for Economic Co-operation & Development (OECD) began cooperating with other stakeholders to provide data that would shed lights on what is called “trade in tasks” i.e., the domestic value added content of trade. While traditional statistics are necessary, they don’t identify the contribution of each trade partner to the total value of the final good in the supply chain. By contributing to specific segments of a global value chains, trade partners are actually “trading tasks” rather than trading final products.

In 2011, Andreas Maurer, chief of the WTO’s International Trade Statistics Section, said “… in the past two or three years there has been huge momentum to get the necessary information” that would be used to rationalize elimination of country of origin labeling.”

The World Trade Organization and the European Union moved one step closer to eliminating “country of origin” labeling. On April 16, 2012, the European Commission and WTO held a conference to mark the launch of the World Input-Output Database (WIOD). This new database allows trade analysts to have a better view of the global value chains created by world trade.

Globalization is changing business models and increasing fragmentation of production. Companies divide their operations around the world, from product design, manufacturing, to assembly and marketing, creating global production chains. More and more products are “made in the world” rather than in any particular country.

Today’s traded products are not produced in a single location but are the end-result of a series of steps carried out in many countries around the world. For example, cars and trucks produced by General Motors or Ford may have parts and assemblies coming from several other countries, including China.

Instead of counting the gross value of goods and services exchanged, the new database reveals the value-added that make up these goods and services as they are traded internationally. The findings the Europe-based organizations instead want to adopt is a “Made in the World” logo for all products on the grounds that global supply chains have rendered country of origin labeling inaccurate and obsolete. This is significant as they may change the perception of the competitiveness of certain industrial sectors in some countries.

The WTO and OECD have been working with the U.S. International Trade Commission and the World Bank in the United States, the Institute of Developing Economies (IDE) and the Japan External Trade Organization in Asia, and the recently created World Input-Output Database (WIOD) consortium in Europe to implement the new trade statistics. The WTO has signed a contract with the OECD to start issuing official statistics on international trade based on value added.

The WTO’s Made in the World initiative is part of the process of “re-engineering global governance,” said WTO Deputy Director General Alejandro Jara at the event launching the opening of the World Input-Output Database. With the rise of global supply chains “it is misleading to rely solely on gross trade flows as a measure” of a country’s competitive position. As companies have created global supply chains, “attributing the full commercial value of imports to the last country of origin can skew bilateral trade balances, pervert the political debate on trade imbalances and may lead to wrong and counter-productive decisions,” says the WTO.

The intent of the WTO’s “Made in the World” initiative is to modernize global trade statistics, reduce public pressure on politicians for protectionist trade policies, and reduce public opposition to free trade.

Director-General Pascal Lamy has said that “improved measurement and knowledge of actual trade flows will help better understand the interdependencies of today’s national economies, supporting the design of better policies and better trade regulation worldwide.”

In an article on the Economy in Crisis website, “WTO Pushes “Made in the World” on May 16, 2012, Karl Rusnak commented, “This may be a good PR move for the WTO and its agenda, but it doesn’t change the facts: trade still picks winners and losers, and the United States consistently finds itself in the “losers” column…This new initiative takes the same ill effects that have been occurring from free trade and attempts to reframe them in a more positive light…Trade deficits lead to bad results, but ultimately it is the bad results we need to look at, not the nominal number that represents the trade deficit. If the numbers had shown that the United States was running a trade deficit but maintaining strong job growth, the WTO’s new calculation method might be something worth looking at. Instead, we have lost millions of jobs as a result of free trade. Whether you calculate our trade deficit as $100 billion or $600 billion, those job losses can still be directly attributed to our failed free trade agreements.”

This Initiative could have dire consequences for America’s manufacturers and consumers. For manufacturers, it could eliminate one of the options allowed by the WTO — filing a charge for product “dumping” against another country to have countervailing duties applied against that country. For consumers, “Made in the World” labels wouldn’t allow you to protect your family from the tainted, harmful, and even life threatening products coming from China. You wouldn’t be able to support saving and creating jobs for other Americans by buying “Made in USA.”

Alan Uke, founder of Underwater Kinetics, a company that manufactures high intensity lighting and other products, believes that “country of origin” labels could change consumer behavior and revive U.S. manufacturing. He wants the government to require a detailed country-of-origin label on every product sold in America. The label would include sourcing information on all of the product’s parts and components along with the trade balance the U.S. maintains with each of those countries. Uke outlines his proposal in his book, Buying America Back, a Real-Deal Blueprint for Restoring American Prosperity.

The labels would be similar
to those
that have been successfully implemented in the U.S. food industry, describing such things as fat content, calories and nutritional values. Those labels have changed consumer behavior, forced producers to change ingredients, and motivated retailers to stock items that are demanded by customers.

“I am trying to start a movement of American consumers,” says Uke. “We need a home-team preference.” Uke is convinced that only the American consumer, whose spending represents 70 percent of the economy, will change the international trade dynamic in favor of U.S. manufacturing. Knowledgeable consumers demanding products made in the United States or in countries that have employ ethical business practices could motivate companies to change their sourcing practices. 

Uke said, “The ‘Made in the World’ label is the antithesis of my proposal. This initiative was probably promoted by those who profit from environmental abuse and child labor. It makes countries that rape our environment and support child labor unaccountable to the world. Knowing the sources for products is the only way that people can make countries accountable for their actions. Consumers can’t determine their own destiny if they have no idea of the sources. If we want a better world, consumers need to be able to send their money to countries whose policies they support. This isn’t free trade, it is slave trade.”

Peter Navarro and Greg Autry, the authors of Death by China — Confronting the Dragon, A Global Call to Action, also recommend that “country of origin” information be provided for all products sold on the Internet by online retailers and that “Congress should require all food and drug producers to clearly label the countries of origin for all major ingredients that go into a product — and do so in a standardized and legible manner” in order to protect American consumers from tainted and poisonous products coming from China.

Greg Autry said, “The ‘Made in the World’ label is an obvious attempt to disguise the political differences between countries and normalize despotic regimes like China. This initiative can only result in the reduction of critical information to consumers. I agree that we don’t have full information provided on the sources for products today, but this is the exact opposite direction to go.”

The authors believe that if 10 percent or more of Chinese products were boycotted by Americans, it could be enough to destabilize the Chinese economy and topple the Communist regime. Converting to “Made in the World” labels would eliminate this possibility.

I urge everyone to contact your current representative to urge them to oppose this initiative and ask all candidates for federal office if they support our current “country of origin” labeling laws and oppose “Made in the World” labeling.

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Reposted from the Huffington Post
Michele Nash-Hoff  |  Huffington Post  |  May 23, 2012

Follow Michele Nash-Hoff on Twitter: www.twitter.com/saveusmfg