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  • 16

    Foreigners' $327 Billion Trading Advantage
    Economy; Posted on: 2007-04-26 08:25:12 [ Printer friendly / Instant flyer ]
    The cost to U.S. producers increased to a whopping $327 billion in 2006.

    by Phyllis Schlafly

    Daniel Drew, the legendary 19th century Wall Street insider, reputedly said that all he wanted in any deal was "a little unfair advantage." Most of America's trade competitors seem to want the same thing.

    Imagine how it would help the competitiveness of American exporters if U.S. companies could cut their prices an average of 19 percent in Europe and 17 percent in Asia. Imagine what it would also mean if foreign imports into the United States from overseas were raised by the same percentages.

    U.S. financial generosity to our allies after World War II included giving them special trade advantages to help them speed up their post-war recovery. We agreed that they could rebate to their producers any indirect taxes they paid on goods they exported to us, and they could also impose an equal charge on any U.S. products they imported.

    Those nations recovered from World War II many years ago, but they still cling to what started out as a little advantage but has steadily increased to become a massively unfair advantage. The cost to U.S. producers increased to a whopping $327 billion in 2006.

    In practical terms, this means that the German manufacturer of a car exported to the United States gets a rebate from the German government equal to the indirect taxes paid in Germany, a type of tax called the Value Added Tax (VAT). Since the VAT rate in Germany is 19 percent, the German carmaker gets a 19 percent tax rebate on every vehicle exported to the United States.

    That's a significant subsidy to German auto manufacturers which enables them to sell cars in America for much less than they sell for in Germany. But what about American cars exported to Germany?

    News Source: Eagle Forum


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