Policy Solutions to Shipping Jobs Overseas
Remove Incentives to Ship Jobs Overseas
Taxes: Current law allows companies to defer paying taxes on their overseas income indefinitely while deducting many of the expenses associated with moving offshore – this provides a double subsidy to U.S. companies that ship work overseas, effectively penalizing those companies that keep jobs in the U.S. Ending overseas tax breaks would generate an additional $7 to 12 billion a year in tax revenue and eliminate the perverse incentive to move work abroad to avoid paying taxes.
Public Contracts and Subsidies: Many companies that ship work overseas receive billions of dollars worth of government procurement contracts, subsidies and state and local tax abatements. These taxpayer-financed benefits usually come with very few strings attached, allowing companies to skim additional profits by performing publicly funded work overseas. Laws at the local, state and federal level should be reformed to ensure our taxpayer dollars are not subsidizing the destruction of American jobs.
Currency: A number of U.S. trading partners – China in particular – manipulate the value of their currency relative to the dollar to give their exports to the U.S. an artificial cost advantage, while making American products more expensive. This puts American producers and workers at an impossible cost disadvantage, effectively shutting them out of export markets and undermining their competitiveness at home. The U.S. must take immediate and aggressive action to ensure that the dollar is appropriately valued and withdraw trade benefits from countries that insist on manipulating their currency to unfair advantage, in violation of international trade rules.
Trade Laws: Domestic trade laws enable the government to redress unfair trade practices that give an illegitimate advantage to overseas production. These laws were intended to provide the first line of defense for American producers and workers, yet they are very poorly enforced. The World Trade Organization has weakened our ability to use these laws, and on-going trade negotiations may undermine these laws even further. We must vigorously enforce our domestic trade laws, defend them from challenge, and work to strengthen them in the future.
Trade Agreements: Trade deals such as the North American Free Trade Agreement (NAFTA) create new rights, but no responsibilities, for companies that ship jobs overseas. NAFTA contains strong legal protections for companies investing abroad and guaranteed access for their products into the U.S. market. But NAFTA provides no comparable protections for the rights of workers and the environment, allowing companies to escape their international obligations by shipping work overseas. We must fundamentally reform flawed trade rules to hold companies accountable for respecting workers’ rights no matter where they produce.