Theoretically, “free trade” sounds like a great idea. Consumers get the benefit of increased competition for their buying dollars, manufacturers get to take advantage of the lowest cost labor pool, and exporters have the opportunity to sell into new markets with no tariffs. Unfortunately, there are fundamental, real-world flaws that exist with “free trade” that have led to the most massive wealth transfer in the history of the world. The United States has not witnessed a trade surplus since 1975.
The most significant flaw with “free trade” agreements is that they are impossible to enforce, making competition impossible. “Free trade” depends on the premise that all countries play by the same rules. However, in the real world, ensuring this occurs is incredibly expensive, time-consuming, and inefficient. The reality is, tariffs are not the only barrier to fair trade. Trade is impacted by much more intangible state-sponsored “trade weapons” such as currency manipulation, technology transfer requirements, joint-venture policies, other methods of taxation, selective customs policies, underhanded government subsidies and countless other tools. Under “free trade” agreements, the U.S. essentially relies on faith-based economic policy with other countries.
Without the presence of tariffs, a “free trade” agreement places our country, with higher overall wage rates, in an inferior position. When two countries with huge differences in labor costs engage in “free trade,” eventually all the production that benefits the country with higher wage rates will be transferred to the country with lower wage rates. The transfer is supposed to be offset with lower prices being enjoyed by the outsourcing country, but in the long run it leads to the destruction of their manufacturing capabilities and a wider spread in income among the citizens. This is exactly what has happened to the United States.
Why the lack of attention to this issue? There has actually been a great deal of attention, despite persistent “free trade” mantras. In the 1980’s there was tremendous concern among Reagan administration officials that the U.S. was losing its competitive position in the world. Reagan enacted numerous protectionist policies in an effort to stem the hemorrhaging trade deficit. Media attention was centered on a doomsday scenario whereby Japanese and Arab interests would come to own and control everything in this country. Now, a frightening amount of formerly American companies are in the hands of foreign interests.
Seventy percent of the American population sees “free trade” as harmful to the economy. Given all this insurmountable evidence to the contrary, why is it that “free” traders continue to sell out the country at the expense of national security and our future generations? The answer is that every person, corporation, and politician tends to do what is in its own short-term best interest, be they motivated by pure profit or reelection.
Countries like Japan, Germany and China take great pride in protecting their industries from foreign purchasers. They have government agencies devoted entirely to doing just that. In the U.S., we seemingly do everything to encourage foreign takeovers. Of course, no politician likes being the bearer of bad news. Most are not willing to risk their political careers by saying we must take drastic action to the short-term detriment of many Americans, even though that is precisely what they are charged with doing.
No rational argument exists to continue policy that leads to “free trade” agreements. FTAs are damaging America’s ability to compete, even as the results of “free trade” continue to provide cheap goods to American consumers. If we do not reverse this path of selling our assets and borrowing from foreign sources to finance our lifestyle of imports, we will eventually receive a call on our debt and will find that prices at Walmart will look like they are priced at Neiman Marcus.
The most significant flaw with “free trade” agreements is that they are impossible to enforce, making competition impossible. “Free trade” depends on the premise that all countries play by the same rules. However, in the real world, ensuring this occurs is incredibly expensive, time-consuming, and inefficient. The reality is, tariffs are not the only barrier to fair trade. Trade is impacted by much more intangible state-sponsored “trade weapons” such as currency manipulation, technology transfer requirements, joint-venture policies, other methods of taxation, selective customs policies, underhanded government subsidies and countless other tools. Under “free trade” agreements, the U.S. essentially relies on faith-based economic policy with other countries.
Without the presence of tariffs, a “free trade” agreement places our country, with higher overall wage rates, in an inferior position. When two countries with huge differences in labor costs engage in “free trade,” eventually all the production that benefits the country with higher wage rates will be transferred to the country with lower wage rates. The transfer is supposed to be offset with lower prices being enjoyed by the outsourcing country, but in the long run it leads to the destruction of their manufacturing capabilities and a wider spread in income among the citizens. This is exactly what has happened to the United States.
Why the lack of attention to this issue? There has actually been a great deal of attention, despite persistent “free trade” mantras. In the 1980’s there was tremendous concern among Reagan administration officials that the U.S. was losing its competitive position in the world. Reagan enacted numerous protectionist policies in an effort to stem the hemorrhaging trade deficit. Media attention was centered on a doomsday scenario whereby Japanese and Arab interests would come to own and control everything in this country. Now, a frightening amount of formerly American companies are in the hands of foreign interests.
Seventy percent of the American population sees “free trade” as harmful to the economy. Given all this insurmountable evidence to the contrary, why is it that “free” traders continue to sell out the country at the expense of national security and our future generations? The answer is that every person, corporation, and politician tends to do what is in its own short-term best interest, be they motivated by pure profit or reelection.
Countries like Japan, Germany and China take great pride in protecting their industries from foreign purchasers. They have government agencies devoted entirely to doing just that. In the U.S., we seemingly do everything to encourage foreign takeovers. Of course, no politician likes being the bearer of bad news. Most are not willing to risk their political careers by saying we must take drastic action to the short-term detriment of many Americans, even though that is precisely what they are charged with doing.
No rational argument exists to continue policy that leads to “free trade” agreements. FTAs are damaging America’s ability to compete, even as the results of “free trade” continue to provide cheap goods to American consumers. If we do not reverse this path of selling our assets and borrowing from foreign sources to finance our lifestyle of imports, we will eventually receive a call on our debt and will find that prices at Walmart will look like they are priced at Neiman Marcus.
The past couple of years, President Obama has been shoving down our throats the idea of more “free trade” agreements. He has been trying to sell Americans to the idea of joining the Trans Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), and the Trade in Services Agreement (TISA) claiming that it will help our economy as well as our trading partners. However, studies find the complete opposite occurs when “free trading.”
Obama is promising through these three trade deals an increase in jobs here at home because of the increasing amount of exports. However he fails to mention how imports exceed exports, resulting in our enormous trade deficit. The administration has given specific promises that the TPP will create 650,000 U.S. jobs. However, this “illusion” was debunked by a study done byThe Washington Post. The author of the study stated “the correct number is zero (in the long run), not 650,000.
The reality is that the TPP is actually more likely to cost us jobs and worsen inequality across America. The mere fact that we are considering to trade with Vietnam should raise red warning flags for us. Vietnam has a minimum wage of $0.56 cents cents an hour. What does trading with them do for America?The Center for Economic and Policy Research found that the TPP would force wages down even more, simply because Vietnam is involved in this deal.
Not to mention the fact that all of these “promises” from Obama can’t actually be justified because the TPP is strictly confidential and has not been made to the public. President Obama promised that the TPP has strong labor standards to protect Americans from having more jobs shipped overseas. How do we know he is telling the truth of we can’t read the TPP?
The president has finalized the TPP, and we will soon be able to read it. Many would argue that we specifically cannot trust President Obama since in his2008 campaign he said that he would re-negotiate NAFTA and instead he negotiates an even bigger NAFTA-style agreement. We will soon see just whom the president is really working for.
We must not believe what the media is trying to shove down our throats regarding these “free trade” agreements. We were promised very similar promises with NAFTA in 1994, with China in the 2000s, with CAFTA in 2006, and with KORUS in 2012. Absolutely all of these agreements, no exceptions, have worsened our economy. It is time that we stop negotiating agreements that are devastating our country.
Obama is promising through these three trade deals an increase in jobs here at home because of the increasing amount of exports. However he fails to mention how imports exceed exports, resulting in our enormous trade deficit. The administration has given specific promises that the TPP will create 650,000 U.S. jobs. However, this “illusion” was debunked by a study done byThe Washington Post. The author of the study stated “the correct number is zero (in the long run), not 650,000.
The reality is that the TPP is actually more likely to cost us jobs and worsen inequality across America. The mere fact that we are considering to trade with Vietnam should raise red warning flags for us. Vietnam has a minimum wage of $0.56 cents cents an hour. What does trading with them do for America?The Center for Economic and Policy Research found that the TPP would force wages down even more, simply because Vietnam is involved in this deal.
Not to mention the fact that all of these “promises” from Obama can’t actually be justified because the TPP is strictly confidential and has not been made to the public. President Obama promised that the TPP has strong labor standards to protect Americans from having more jobs shipped overseas. How do we know he is telling the truth of we can’t read the TPP?
The president has finalized the TPP, and we will soon be able to read it. Many would argue that we specifically cannot trust President Obama since in his2008 campaign he said that he would re-negotiate NAFTA and instead he negotiates an even bigger NAFTA-style agreement. We will soon see just whom the president is really working for.
We must not believe what the media is trying to shove down our throats regarding these “free trade” agreements. We were promised very similar promises with NAFTA in 1994, with China in the 2000s, with CAFTA in 2006, and with KORUS in 2012. Absolutely all of these agreements, no exceptions, have worsened our economy. It is time that we stop negotiating agreements that are devastating our country.
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