As Thomas Friedman pointed out in his best-selling book "The Lexus and The Olive Tree," we live in a rapidly changing world, one that is relentlessly moving toward further globalization and interdependence. There are, of course, those who protest at the World Economic Forum, others who bemoan the loss of "American" jobs and some who yearn for an earlier, simpler world but, collectively, they cannot stop a global economy that is on an irreversible course toward the production of goods in the lowest cost environment possible. In and of themselves, foreign products do not pose unfair competition. Foreign producers, however, sometimes with the assistance of foreign governments, can and do compete unfairly. Nonetheless, it is my belief that American manufacturers are prepared to compete successfully as long as the playing field remains level. Many U.S. manufacturing companies, Gessner Products included, have committed resources to automating their manufacturing in order to minimize the advantage of low-labor-cost venues. In developing our product line, we have focused on items that can be made competitively in the United States and have discontinued high-labor-content items that can be produced at a much lower cost overseas.

Regarding a level playing field, there are numerous examples where American manufacturers must now compete with foreign factories that are introducing mis-labeled and even dangerous products into the American marketplace. These products are passed off to the customer as being equal to domestically produced merchandise. Frankly, even if we chose to compete with these inferior goods, we would be constrained by the potential for warranty and/or product liability claims.

For example, our company produces an extensive line of plastic ashtrays that we manufacture from melamine and phenolic. Both molding materials have a proven track record of producing safe, serviceable and economical plastic ashtrays. We can, however, document numerous examples of products imported into this country, labeled as melamine that were actually made of an inferior look-alike, urea, a material used largely in the electrical industry that has lower heat resistance and, consequently, burn resistance. The introduction of these foreign-made products into our marketplace harms domestic manufacturers and domestic users in several ways.

Foreign products do not pose unfair competition. Foreign producers, sometimes with the assistance of foreign governments, can and do compete unfairly.

First is the initial loss of business because the inferior products are priced at a lower cost to customers. Second, the reputation of products produced by domestic manufacturers is harmed because customers identify generic products as being undesirable, which affects domestic, quality producers, as well as fly-by-night foreign factories. And third, potentially dangerous products are being introduced into venues where the public at large is at risk.

We are aware of similar circumstances where foreign-made kitchen utensils labeled as being made of "melamine" are, in fact, molded from urea. Once again this look-alike product poses a safety risk to American consumers. Whereas melamine has long been approved for and used in the manufacturing of foodservice supplies, urea is an industrial material that is excellent for many applications but is not approved for food contact use. Despite this, on occasion, we have observed foreign products labeled as being made of melamine that are actually comprised of urea with a thin skin of melamine glaze. This glaze, however, is easily subject to cut marks, delamination and other defects that would cause a food product to be exposed to urea.

We are also aware of instances when molded plastic products have been sold to U.S. customers at prices below the domestic cost of production. There is a worldwide market price for most commodity plastics resins that does not vary significantly from region to region. We are told by our molding materials suppliers that foreign governments often subsidize their national processors when they acquire raw materials. Demonstrating governmental objectives that go beyond simply making a profit, foreign authorities have apparently made a decision that it is more important to create jobs and earn hard currency than making an industry profitable during its early stages in a foreign country.

I want to emphasize that I am not criticizing U.S.-based importers and end-users. I believe that foreign manufacturers often initially provide samples of first-quality products to customers and only later, in order to lower costs and increase margin, substitute inferior materials such as those I mentioned above. Domestic foodservice operators need to be certain that they are getting what they pay for. In short, a hidden cost associated with buying foreign-made goods is that an aggressive testing regimen should be put in place to ensure that a foreign vendor is supplying an agreed-upon product.

Unfortunately, with the massive volume of imports flooding into the country, our government seems to be ill-equipped to identify and exclude dangerous products and to see that standards imposed by the World Trade Organization are enforced. In protecting the American public, not to mention U.S. manufacturers and workers, our government often seems to be "a day late and a dollar short." I was traveling in the Carolinas recently when it was announced that the United States was imposing tariffs on Chinese-made wooden bedroom furniture that was allegedly being "dumped" on the American market. In that center for furniture manufacturing, there was great enthusiasm for this government action, but it was mitigated by concerns that this industry may have already been destroyed by unfair competition.

While I can only speak from my first-hand experiences, nevertheless, it seems reasonable to assume that manufacturers of metal products have seen cheap, substandard stainless steel enter the U.S. marketplace; manufacturers of glass products have seen improperly tempered glass enter their sector; and manufacturers of ceramics have seen poorly fired merchandise competing against their products.

Getting back to globalization and interdependence, as American manufacturers we recognize that it is important for us to seek out foreign markets aggressively and we expect to be held to high standards by our foreign customers. We welcome the opportunity to compete in the global arena and are prepared to go head-to-head with any mill in the world. We only ask for the opportunity to compete both at home and abroad on a level playing field.

Imbedded in the question "Do Foreign Products Pose Unfair Competition?" is the argument about whether governments should be manipulating free trade to serve the interests of their citizens. Today, this topic is becoming ever more germane as the media daily recount stories of individuals losing their jobs to the "outsourcing"' phenomenon. Politicians are quick to get their face on that side of the issue, which plays well on the emotions of their constituents, and to leave aside the facts that show the tremendous benefits brought on by free trade.

To understand the big trade picture is to understand that the ultimate goal of economic activity is consumption. It is not to produce jobs or save companies who, through shifting market conditions, are unable or unwilling to react successfully to change. Consumption is the ultimate engine of the economy and the provider of jobs and satisfaction.

Robert Murphy, a Michigan-based economics professor and scholar, offers this perspective:

"If jobs were really all that counted, we could cure unemployment very quickly: Half the unemployed people could dig holes, and the other half could fill them up. But this 'solution' wouldn't increase the total amount of goods and services produced and so the only way to allow these newly employed people to go to restaurants, watch movies and buy cars would be to reduce the average level of consumption by everyone else (who were originally employed doing something productive). The problem of unemployment is to find an efficient way to channel unused labor resources into projects that at least some consumers will actually appreciate. (Incidentally, theory and history have shown that this is a problem best left to free markets, not central planners.)"

We can all agree that no one trades unless it is beneficial. And it is not beneficial unless it is efficient and increases the satisfaction (read "profitability") of the parties involved. But, of course, trade cannot be profitable unless it either lowers costs and/or allows for price increases. In the case of lower costs, the ultimate consumers, as well as importers, become beneficiaries. Moreover, the lower price also entices new buyers into a marketplace, thus increasing volume. It might also engender a higher level of satisfaction that can then result in an increased number of consumers being served. Obviously, this is a good thing for the economy.

If, on the other hand, a trade transaction allows importers to increase their prices to existing customers and these customers are willing to pay the higher prices, then either through enhanced quality or another form of product differentiation their satisfaction will have been increased. A good example of this is what happened to the U.S. car industry. Initially, Japanese cars were imported into this country during the heyday of U.S.-made automobiles.

Initially, these were lower-priced small cars heavily skewed toward quality. As Japanese cars earned their quality "stripes," they were able to export higher-end cars with price tags much steeper than local competition. All you have to do is ask Lexus, Mercedes and BMW owners why they would pay more for a foreign luxury car compared to one that can be purchased from GM, Ford or Chrysler.

Trade cannot be profitable unless it either lowers costs and/or allows for price increases.

Now lets examine what happens when free trade is restrained:

On the heels of the observation above is the axiom that beneficial trade (which by definition is efficient) can only be restricted through a government action. This action is usually not voluntary but coercive (duties, tariffs, restrictions, prohibitions, etc.). Where coercion exists, benefits are transferred from the "would be" consumers to others who would not otherwise benefit. Simply said, the benefit of any duty or tariff goes to a small community at the expense of the larger community. To illustrate, if the government were to restrict the importation of bagels into this country, then the benefactors are only the bagel makers in the United States who can price their bagels higher since foreign bagels are now more expensive to land. So who benefits from this? Not the millions of bagel consumers who now must subsidize the bagel industry manufacturers by paying higher prices.

But let's take this a step further. What about the extra money consumers are forced to spend on bagels? They now have that much less to spend on other goods .... such as cream cheese. Let us now suppose that a cream cheese manufacturer has been running a business in textbook fashion. He is profitable, as a result of reacting in synch to changing market conditions. But he now finds the demand for his products dropping because everyone is cutting back on buying cream cheese. In a case like this one, government actions help a small, less efficient group at the expense of a more efficient one.

Finally there is always the argument that free trade is not fair because of how cheap foreign labor replaces U.S. jobs. Here, the case is made that trade with countries with cheap labor will decrease domestic wages and jobs will be lost. Protection, on the other hand, will increase the price of imports and prevent this loss of jobs while propping up domestic wages. The problem with this argument is that it ignores which industries suffer from

trade. Yes, under a free trade regime, jobs will be lost in certain industries, industries where the country is at a competitive disadvantage. However, jobs will be gained in industries where the country has a comparative advantage.

Under free trade, workers tend to be in jobs where they have a comparative advantage. Marginal productivity increases. Wages increase. Therefore, workers, as a whole, have higher wages under free trade than they do with protectionist policies.

Also, the real value of workers' wage rates is determined by the prices of the goods they want to consume. Protection increases consumer prices, reducing real wages. Free trade keeps prices low, increasing real wage rates. Workers, as consumers, are the beneficiaries of free trade.

The government does have a role to play by providing help to those displaced by trade. However if they either directly tax in order to help those displaced by trade or tax indirectly by imposing duties and tariffs, then higher prices are the outcome. And it is these higher prices that have the greatest effect on those that the government is trying to help in the first place.