Trump Spent A Lot Of Time Last Night Talking About International Trade. Well . . . .
There are several important arguments against free trade:
1) Many “trade partner” nations treat their workers as little better than slaves.
2) Many of these nations develop their economies with little respect for the environment.
3) Developed nations that sign such agreements end up losing jobs to poorer nations.
4) Trade partners could, theoretically, be unable to block undesirable products, for example, USA tobacco companies have attempted to sue North American trade partners for not allowing all their citizens free access to tobacco.
5) Worldwide drug companies can (and have) stopped smaller companies from offering generic versions of life-saving drugs at lower prices to developing nations. This means nations such as India are forced to pay exorbitant prices for drugs that Western nations can purchase cheaply.
Here are the arguments for free trade agreements:
1) Improved workflow: nations who share a trade agreement can manage production of key components for their products in an efficient manner. For example, certain elements of manufacturing a product can take place in Mexico, while other components can take place in Singapore, which can then be assembled and marketed in the USA. If this seems abstract to you, ask yourself why your Iphone doesn’t cost thousands of dollars.
2) America, for example, cannot possibly consume all the raw food products grown in our country. USA agricultural land is hugely productive and plenteous. Without unfettered access to foreign markets, American farmers, big and small, would be in quite a pickle. Here’s a related tidbit of information: What branch of USA government manages Food Stamps. If you listen to conservative talk show hosts, you’d think the answer is The Ministry of Helping Poor People. But Food Stamp and related programs are managed by the Department of Agriculture, because food stamps are a necessary outlet for food growers in America. Without Food Stamps, American farmers, great and small, would be forced to sell their products at below cost-of-production prices, which would be bad.
3) The USA has a trade surplus with 20 of its FTA partners. Although the USA has a huge trade deficit with others, this is an exception, not the norm. Measured country by country, the USA is ahead, not behind.
4) If developed countries like the USA really want to go it alone and sell only to their own people, one must remember that 80% of the world’s purchasing power is outside the USA borders, and 92% of all economic growth occurs outside the USA, and 95% of the world’s consumers are outside the USA. Going off the grid would create a major impact on all developed economies, including the USA’s.
5) Anti-trade agreement advocates envision that trade agreements stop the USA from making better deals with individual countries. In fact, the real trend in Europe and other big trade partners is to stick it to the USA with tariffs whenever possible. When the government of countries like France and Spain and other USA trade partners make big speeches about stopping the flow of USA goods, and slap big tariffs on USA goods, those governments become very popular with the people. Who hates broad, multi-country trade agreements? Many people in Europe do, because their manufacturers can’t compete with the influx of cheap American goods. This is why Trump’s claim that he can force potential trade partners to offer the USA great terms — is a fairy tale. In the absence of trade agreements, most national leaders will chose to add huge tariffs to goods coming from America, because doing so is very popular with voters.
6) Just as the USA heavily subsidizes our farming industry, most nations have multiple industries that they shield from the cost of true competition by helping pay the bills. Trade agreements limit this practice, and make it easier for participating nations to both buy and sell at steady, predictable prices. And predictability is a big deal. Who wants a hundred tons of apples rotting on the dock because a nation suddenly decided it will pay very little for USA food products? Who wants to pay a thousand dollars for a new phone because suddenly, the USA has gotten into a nasty tiff with China over pricing?
7) Each country has contradictory positions in trade agreements. All nations want to sell their specialized, niche products to foreign markets (Italian shoes, Asian electronics, American food products, processed or unprocessed). But just the same, each country has industries that they want to protect from cheap goods from elsewhere. This is why most politicians all over the world scream and rant against trade agreements, because it’s popular to appear as though you’re protective native industries. But when you look at the numbers, real world leaders are not so fast to walk away from multi-country trade agreements.
8) Since the beginning of multi-country trade agreements (1994), USA factories have nearly doubled their output, generating 1.3 trillion dollars in exports. And now, one in four USA manufacturing jobs depends on exports.
9) One-third of all American farm acreage is planted for export.
10) Although America suffers trade deficits with individual nations, US services exports top $700 billion annually, and overall, the USA has a trade surplus of $200 billion dollars.
11) USA trade partners include many small countries. In fact, current USA trade partners represent just 6% of the world population. But these countries purchase nearly half of all USA exports. This means that the United States is able to create big markets in even small countries.
Now, we have to take a closer look at all this happy talk about International Trade Agreements. The USA Chamber of Commerce loves trade agreements. The huge corporations love trade agreements. But are they good for the average USA worker? Probably not. While it’s true that you can’t put the genie back in the bottle and bring back USA traditional manufacturing jobs, trade agreements certainly sped along this heartbreaking process of shedding high-wage manufacturing jobs. There’s no doubt: trade agreements are better for the big companies than they are for regular wage-earners. As the President of Brazil once remarked about his own country: “Brazil is doing fine. The people are not.” Many of the positive statistics above are culled from the macro-economic “big picture” trend that looks at corporate bottom lines, and not at the shrinking earning power of individuals.
Now, I said many, but not all. Yes, the USA Chamber of Commerce does indeed, paint too rosy a picture of International Trade Agreements, but the USA economy will not be served by tending and nursing individual spats with the hundreds of nations we do business with. Big companies and little companies want the same thing: Smooth sailing. Predictability. No one’s gonna be too happy about a great profit boon this month if, the following month, our trade partners are likely to jack up tariffs and prices because of an upcoming election (yes, that happens all the time).
So, if international trade agreements are not entirely a good thing, here’s a very bad thing: Using trade war talk to win votes. Candidate Donald Trump has amassed an army of disciples who believe that China and trade imbalance in general — are responsible for the USA’s economic ills. Let’s look at each claim:
1) His claim: “Last quarter, it was just announced, our gross domestic product — a sign of strength, right? But not for us. It was below zero. Who ever heard of this? It’s never below zero.” In reality, the quarterly change in real GDP has been below zero 42 times since 1946.
2) Trump complains that there are no jobs, but the number of job openings at the end of April 2016 increased to 5.4 million, the most since the Bureau Of Labor Statistics began tracking them in December 2000. This new figure is 1.1 million higher than the number of job openings recorded in November 2007, which is one month before the world Great Recession began.
3) Trump says that politicians stand by and do nothing when subsidized foreign steel is dumped on our market. In reality, the US Department Of Commerce approved two separate tariffs against Chinese steelmakers, each amounting to more than a 400% increase on the cost of Chinese steel.
4) Trump frequently implies that trade deals are responsible for our trade deficit, stating “Today, we import nearly $800 billion more in goods than we export.” But trade deals like NAFTA have actually helped mitigate that number. The USA has an improved trade balance of goods with 13 out of the 17 countries involved. Since the FTA, USA exports grew by 52%, while imports grew 26%. Trade deals helped mitigate the trade deficit by putting more goods for sale on foreign shelves.
To summarize, International Free Trade agreements are kind of like an exotic, out-of-your-league girlfriend that you can’t really afford, but can’t bring yourself to let go of. Small businessmen who used to fall asleep at night dreaming of selling their products in New York and Los Angeles, can now add dozens of world-class cities to that target. American shelves are filled with goods from all over the world, and it would be quite tough to relegate those to expensive luxuries. We want to send students and business interns all over the world to learn all there is to know about how people buy and sell. We want to send scientists all over the world to learn what new science works, and what doesn’t . Such goals would be nearly out of reach, if the USA walked away from broad, international trade agreements.
There certainly is an argument for being small again. Like the Britons who decided that Merry Old England is quite enough, thank you. We don’t need Romania, we don’t need Poland, we have Liverpool and Leeds. And so, we here in the USA, can move ourselves off the grid, so to speak. Make our own goods for our own people, take care of our own, feed our own, and yes, watch our incomes plummet because international markets are either out of reach or too unpredictable. We can make our own phones, our own stereos, our own cars and software, and realize that the dear price we now pay for such things is well worth it, because we are helping only Americans. Wanna pay that price?
put as reference: http://www.policyalmanac.org/economic/archive/free_trade_agreements.shtml