Manufactured Crisis: "Deindustrialization," Free Markets, and National Security

Although U.S. manufacturing sector employment and share of national economic output have declined, these data are mostly irrelevant to national security and reflect macroeconomic trends affecting many other countries.

Today's security nationalists often emphasize two trends-declining U.S. manufacturing employment and the sector's declining share of U.S. economic output-when lamenting American industrial decline and proposing new policies to support domestic manufacturing and national security.

Finally, the president's baseless invocation of "National security" in this Section 232 cases has likely harmed U.S. national security in other important ways, including by antagonizing allies and thereby undermining U.S. credibility and complicating efforts to build international coalitions on other, more legitimate security threats; eroding the rule of law in the United States via the clear abuse of constitutional trade powers delegated to the executive branch by Congress; and undermining U.S. leadership at the WTO by exploiting the body's rarely invoked exceptions for the protection of "Essential security interests."

Where possible, the reforms discussed in this section incorporate current U.S. laws and policies related to national security and reflect the preceding sections' conclusions that using only domestic output to satisfy U.S. demand in times of emergency would be impractical and counterproductive; that U.S. industrial policies targeting specific companies or industries have a woeful track record; that simply removing government restrictions on trade, investment, and consumption would better achieve core national security objectives; and that domestic policies are a critical contributor to a nation's economic strength and resiliency.

The United States has established a four‐​country National Technology and Industrial Base specifically designed to bolster U.S. national security by expanding the country's industrial capacity beyond U.S. borders.

The NTIB, as established by 10 U.S.C. §2500, is intended to support national security objectives of the United States, including supplying military operations; conducting advanced R&D and systems development to ensure technological superiority of the U.S. Armed Forces; securing reliable sources of critical materials; and developing industrial preparedness to support operations in wartime or during a national emergency.

Participation in the NTIB allows member countries and their manufacturers several benefits: procurement preferences for conventional ammunition, uniforms, and other items; exemptions from some domestic sourcing restrictions on the U.S. government's acquisition of buses, chemical weapons antidotes, valves and machine tools, ball bearings and roller bearings, and certain components for naval ships;186 exemptions from foreign ownership requirements of the National Industrial Security Program; and preferences for contracts awarded under a national security program.

https://www.cato.org/publications/policy-analysis/manufactured-crisis-deindustrialization-free-markets-national-security