Question concerning free trade.

[aldian159]

I'm putting this here because I want to use the names of the candidates running, mods, so don't get alarmed.

If we were to revoke NAFTA, and throw up protectionist tariffs, like Cong. Kucinich and the Rev. Al Sharpton want to do, what prevents other nations from doing the exact same thing to us, making US products less attractive in foreign nations?

Forget the argument that a Barbie doll made in China will cost more because of import duties. I'm worried that steel made here will cost more in Europe or Asia, making Europe and Asia less likely to buy our steel, or textile, or whatever.

Anyway, if less of our manufactured goods are bought overseas, that leads to less sales, which could lead to less jobs as workers get laid off to cover overhead because of the protectionist tariffs other nations levied on the US in some trade war.

That's my take, comments are more than welcome.

Thanks.

[2004Donkeys]

1. We'd invade them

Seriously though, protectionists don't have a goddamn clue.

[idlisambar]

13. Clue me in

Where are you coming from with this assessment? Can you never see a scenario in which protecting a domestic industry might be desirable?

[Virginian]

2. Isn't it odd

That we don't need the rest of the world in order to wage a war on Iraq, but when it comes to finding cheap products or labor, we are all for keeping a good relationship with other countries?

In answer to your question, IMHO we need a trade agreement that is less free and more fair.

There is another Thread tonight where India doesn't want to buy any of our agricultural products because our prices are less than theirs. That doesn't sound like free trade to me. NAFTA isn't working fairly.

[DenverDem]

5. Of course, NAFTA isn't fair.

"Our" agricultural prices are lower than India's because our "farmers" are giant agribusinesses that have put family farmers out of business and are subsidized massively by the chump taxpayers. Now the corporate globalist agribusinesses are assiduously creating Genetically Modified crops, not to make agriculture more productive (their lie) but so they can patent the actual plants and monopolize the seeds, thereby super-sizing their profits.

Save the world, garden heirloom plants! They taste better and are more nutritious.

[Taeger]

7. Not really

Our agriculture is cheaper because we have a better climate for growing crops.

I don't think that foreign countries should be dependent on the United States for food. They shouldn't have to take it if they don't want to. I'd be happy to break up the Mega-farms and put them BACK into the hands of family farmers. I would be happy to create a domestic food susidization program that only affected the products when sold within the US.

[DenverDem]

8. So you are saying agribusiness subsidies DON'T affect prices?

Massive corporate welfare that broke the back of the family farmer by facilitating agribusiness' Walmartization of the market by loss pricing them (sustainable farmers) out of profitability?

Globalist agribusiness is all about breaking the back of all farmers world wide and patenting all the seeds through GM so that only big agribusiness can grow crops. This is your tax dollars at work thanks to neo-liberal treason. This is not some benign climate related advantage.

[idlisambar]

14. Actually, India has a superb climate for agriculture

It is a fertile tropical country. Any price-point advantages the US has are not due to climate. In fact, they are self-sufficient in food production for their 1.1 billion citizens with a land area much smaller than ours.

[mac2]

37. Self-sufficient?

Aren't there starving people in India?

50,000 die of stravation in the world. It is coming here soon.

Bush cut off family planning, birth control pills, etc to the third world..instead they strave.

[idlisambar]

43. That's right, self-sufficient

You don't have mass famines in India like you see in the poorest countries of Africa.

[DenverDem]

3. You are talking about fair trade.

Free trade means that capital is freed up to move anywhere in the world to exploit the most desperate workers wherever they are, causing a free fall of wages world wide. This is what corporate globalism is all about, smashing labor everywhere and maximizing profit for fewer and fewer capital holders.

I don't know if you've noticed, but there are very few manufactured goods actually made in America any more, for this reason. The problem is less that fewer of our goods are bought overseas than it is that fewer of our goods are bought in America. Have you ever tried to find something manufactured in America in a Walmart (largest company in the world, now)?

Free trade is another cynical oxymoron meant to obfuscate its true nature, which is to continue to transfer larger and larger percentages of the world's wealth to fewer and fewer power elite megalomaniacs.

Fair trade (i.e. a fair price distributed fairly for a fair quality product) is not the same as free trade (i.e. corporatists are free to exploit without regulation.)

[aldian159]

11. Thanks

Really helpful.

[Tinoire]

4. There's an excellent very good low-Propaganda thread here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=315065#316097

On edit:
and there's another one here by the same author that I haven't read yet: http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=315065

[Taeger]

6. Smoot-Harley tariff act ... anyone ... anyone ....

Forget the argument that a Barbie doll made in China will cost more because of import duties. I'm worried that steel made here will cost more in Europe or Asia, making Europe and Asia less likely to buy our steel, or textile, or whatever.

Anyway, if less of our manufactured goods are bought overseas, that leads to less sales, which could lead to less jobs as workers get laid off to cover overhead because of the protectionist tariffs other nations levied on the US in some trade war.

In brief, my answer is ... WHATEVER.

The fact is that our steel industry is getting raped by foreign competition using captive labor forces. If we were exporting steel, you would be RIGHT to be worried. As it is, we are IMPORTING MONDO amounts of steel.

In this case, protectionist tariffs would make for more jobs. It also makes for a more independent nation overall.

We really don't export textiles or ANYTHING that requires significant labor. Well, we ARE exporting are factories to these countries. Why the fuck would they want to buy that stuff from the US when we're sending them the god damm factories.

Our trade deficits with foreign nations is pretty bad. We are the customers in the relationship. We hold the bargaining chips. People fail to realize that. We're just TOO STUPID to use them.

Our biggest exports are agricultural products. I'm not worried about the health of agribusiness that exploits illegal immigrant labor.

Personally, I believe that trade wars are VERY good for a country that imports stuff. It forces a nation to be independent and stand on it's own two feet.

We should NOT be dependent on China for manufactured goods. It's a recipe for disaster. When Beijing can cut us off and send our society into crisis, we will have effectively lost our freedom.

The notion of LESS competition is quite frankly .... DUMB!!!! It assumes that there is no competition WITHIN the United States. It's .... REALLY FUCKING IGNORANT DUMB!!!

The fact is that the only "competition" going on is the willingness of oppressed workers to bid each other into poverty. I say we should opt out of the auction. We should keep our high living standards and form tight trading bonds with countries of like kind and standards, Euros, Japan, Taiwan, Aussies, Israel.

We can help workers in these countries by insisting on a foreign minimum wage in return for reduced tariffs. We can help them doubly so by stripping the IMF of it's totally corrupt management and transferring loan balances from 3rd world populations to the tyrants who stole the money. We can also help by insisting that all those public utilities that were given to Bechtel and other colonial ass-hole corporations are GIVEN back to the people they were stolen from.

We can have a perfectly happy and healthy society that functions largely within it's own confines and the sphere of trade with our close allies. Truly, we should only engage in NATURAL trade. Things we CANNOT obtain locally, certain produce and raw materials.

Free traders want nothing less than the dissolution of the United States and the institution of a new world order ruled by corporate feudalists. They have enslaved your mind. Pray they don't succeed in enslaving your person.

[doc03]

9. excellent

Didn't this country do just fine before NAFTA. The steel company I work for had 17000 employees in 1970, now after all of this free trade we have less than 3000. Take the steel industry, we become more efficient, cut our capacity and have taken concessions for the last 25 years in order to compete with 25c an hour wages. Last year we were
selling steel at $250 a ton that costs $350 a ton to produce. Steel
prices are lower now than they were 30 years ago. I bought my first new car in 1971 for $3400 now a similar car runs at least $20000. The auto industry has the balls to complain about the high price of steel! The price of that car didn't increase over 500% from the price of steel.

[_Jumper_]

31. "Countries of like kind"

Almost all of those countries are substantially behind us economically. They will still have cheaper labor and companies will move to countries like Greece, Israel, and New Zealand instead of Mexico and China. Do we simply end all trade?

[doc03]

10. Fair trade not free trade

You take a good middle class union job in this country with benefits
you are at a disadvantage from the start. Most civilized countries have a national health care system, even China. Our companies have to pay for our health care insurance, retirement benefits, environmental
costs, safety rules, workmen's compensation, unemployment benefits and
etc. Are we supposed to work for 25c an hour and live in corrugated
tin shanty?

[aldian159]

12. So, if we were to nationalisze health care

would that help reduce the trade balance and help end outsourcing?

[idlisambar]

15. It should help a little bit...

...I would think. It also depends on where we are getting the tax revenue to fund the universal healthcare.

Universal healthcare would help small businesses more than (likely to outsource) big businesses though because under the current private insurance system, small businesses have less bargaining power.

[doc03]

17. It's one of the things that make our labor costs higher

The steel industry was forced to cut our legacy costs (retiree health care & pensions), in order to compete with cheap imports. Also, it's not a fair playing field because of safety requirements, environmental
costs etc. Should we give up our environment and worker safety to compete or should we require our trading partners to follow our standards if they want our business?

[mac2]

34. Right!!

Good points.

[idlisambar]

16. kick

for the early day crowd

[IrateCitizen]

18. You've just tapped the surface of an exhaustive subject

But it's an incredibly important one nonetheless.

Here's my take on it, as a fair-trader (but not a protectionist).

Much of the theory of free traders is built on what is called "comparative advantage" -- a term coined by economist David Ricardo in the 19th century. Basically, it means that a country or region that excels at producing a certain type of good -- let's say, electronics -- should concentrate on producing that good. Other countries or areas who cannot compete should find other areas in which to concentrate. The overall aim is an economy of maximum efficiency and lowest cost.

Well, it's great in theory -- but like most theories, it holds a number of assumptions that do not translate well into the real world. Perhaps most glaring is the fact that Ricardo did not account for resources moving freely BETWEEN countries in question. Also, his theory did not account for the influence of modern-day corporations, and therefore, operated on the assumption that the benefit of comparative advantage was based on EFFICIENCY rather than simply minimizing labor costs.

In the real world, much of what is heralded as 'free trade' has resulted in little more than a race to the bottom in labor and environmental standards, while the profit margins of multinational corporations have grown. But this is not to say that trade between nations is a bad thing, or that protectionism is the answer.

Those who advocate for the imposition of tariffs to support established home industries to the exclusion of any foreign competition do not increase jobs, in the long run. While tariffs should be, IMHO, used against countries (and corporations) who flagrantly violate agreed-upon international labor and environmental standards, they are not a means of promoting fair trade in and of themselves.

In fact, it could be convincingly argued that one of the best ways to promote democracy and human rights around the world is to engage other countries in trade -- but to ensure that trade is firmly grounded in those goals in the first place. This is one area in which the current approach to corporate-led globalization falls flat on its face. The current approach often results in the discouraging of these ideals, rather than the promotion of them.

Industrialized nations also do a grave disservice to the developing world through the endless demands to "open up" their markets (particularly financial sectors) while keeping some of their key markets (most notably agriculture) closed to foreign competition. Such measures are just another example of how those talking of the wonders of 'free trade' are really not at all interested in truly free trade -- but rather only maintaining their own position of dominance.

Lastly, the entire idea of 'free trade' is really quite utopian. There will never be such a thing as 'free trade'. But there WILL always be 'trade'. The overriding question is, will trade be used as an engine for promoting real progress and respect for humanity that will benefit people all over the world, or will it be just a tool for those who would condemn populations to forced labor and/or starvation, along with wreck the environment, just for the purpose of turning a bigger short-term profit? That is the real debate of 'fair trade' vs. 'free trade' -- and it is one of the most important debates of the emerging century.

[aldian159]

19. thanks

I'm worried that if we repeal NAFTA and throw up protectionist tariffs, other nations will do the same, akin to the aforementioned Smoot-Hartley Act during the Depression. Then US goods won't be sold in other markets, which was originally the intention, to open up developing nations to US goods.

[IrateCitizen]

20. But Dennis Kucinich isn't calling for protectionist tariffs

If you listen to him on trade, while he says that his first steps will be withdrawl from NAFTA and WTO, you're missing his second step.

He always follows it up with "... and to pursue a trade policy of bilateral trade agreements based on labor rights and environmental standards."

Or something along those lines. While I'm no fan of NAFTA -- and think it's fixed beyond repair -- I think that withdrawing from the WTO right now would be a huge mistake, without at the very least attempting to force these kinds of issues on the international body.

[aldian159]

23. What does that mean?

"... and to pursue a trade policy of bilateral trade agreements based on labor rights and environmental standards."

Wouldn't that include tariffs for nations not complying, in order to encourage them to comply?

[IrateCitizen]

30. No. It would mean not trading with nations that don't comply.

Personally, I think that this falls short, because it doesn't recognize the real players who have been enablers in the violation of human rights and environmental standards -- and that is large corporations.

If a corporation is found to be complicit in dealing with a regime that routinely violates human rights or operates in an environmentally-irresponsible manner, that corporation should lose the right to operate in the US market. If this is the case, then those corporations would be certain to NOT violate this law -- and those regimes previously violating human rights and environmental standards would move to respect them, in order to attract business.

Tariffs have nothing to do with it. Sanctions is a better term.

[WhoCountsTheVotes]

41. yes, JUST like now, aldian159

"Wouldn't that include tariffs for nations not complying, in order to encourage them to comply?"

Under GATT, a WTO member nation CAN impose tariffs on nations that don't comply with the rules. So why is it okay for pro-"free trade" politicians to call for retalitory tariffs, but it's not okay for anti-"free trade" politicians to call for retalitory tariffs? Why the double standard?

[idlisambar]

25. what's your thinking here?

Those who advocate for the imposition of tariffs to support established home industries to the exclusion of any foreign competition do not increase jobs, in the long run.

You point out the irrelevence of the theory of comparative advantage, so by what justification do you make this statement? What is supposed to happen "in the long run" to compensate for the lost jobs if tariff protections are lifted?

Just curious actually. Love your avatar (literally). :loveya:

[IrateCitizen]

28. Perhaps I didn't frame that as well as I could have

Please permit me to restate...

The end goal of global trade should be to lift people out of poverty. Trade is just a means to that end.

The problem is that, in the current framing of trade, trade is not a means to that end. Trade has become an end in itself. And if you substitute "maximizing profit" for "trade" in this instance, you get a good idea of the real goal at hand.

When I spoke of the imposition of tariffs for the sole purpose of protecting domestic markets, what I meant was that it does nothing to help achieve what should be the end goal of international trade -- lifting people out of poverty (and promoting democratic process and human rights in the process).

Now, where the public sector can come in with regards to lessening the blow from the shifting of jobs and industries (which is guaranteed to happen under international trade) is to provide real programs to help people transition their careers. Of course, if you have a trade system in which pursuit of lower costs at the expense of labor rights and environmental standards was penalized rather than rewarded, I would think that you actually wouldn't need such programs quite as much as you do now.

The biggest problem with tariffs is that they do more to keep the "have-nots" down than they do to help the "haves". At least that's my take on it. I don't view trade from the perspective that it's an easy issue calling for one simple approach over another.

Of course, I'm also a big believer in reducing the scourge of consumerism that is wrecking our planet and instead recognizing the original intent of Marxist theory, which was not to provide more material possessions but rather to take advantage of productivity gains in order to improve the quality of our lives through more free time. But that's another discussion for another thread. ;-)

ON EDIT: Thanks for the comment on my avatar. I picked it because I consider her to be one of the most beautiful human beings on the planet, both inside and out. A truly remarkable soul.

[idlisambar]

38. OK, I see

I agree with you in sentiment. Any trade should benefit all parties involved, and tariff protections structured around economic nationalism can hurt foreign producers from poor countries (I assume you are thinking of tariffs that hurt third-world farmers and the like).

Yet, I am wary about overstating the benefits/promise of trade. Trade should be treated as a "means" not an "end" like you say, and we are in desperate need of a correct and coherent framework in which to analyze the costs/benefits of trade in a particular situation. The current framework, rooted in neoclassical economics, is very coherent (all trade is good for everybody!), but incorrect.

Just to note though, the more prosperous nations of the world got that way through highly regulated trade, including high tariff barriers. The United States is a familiar case in point. I think it is a little sad that "protectionism" has become a dirty word. In truth, promoting domestic industry through investments and strategic protection is the historically proven model, and yet protectionists are on the defensive in the current political climate.

[WhoCountsTheVotes]

21. of course, neither Kucinich nor Sharpton has proposed this

"If we were to revoke NAFTA, and throw up protectionist tariffs, like Cong. Kucinich and the Rev. Al Sharpton want to do, what prevents other nations from doing the exact same thing to us, making US products less attractive in foreign nations?"

Of course, neither Sharpton nor Kucinich has suggested "throw up protectionist tariffs" so you question is a strawman.

[IrateCitizen]

22. But it IS a classic strawman, WCTV!

It's the trump card inevitably pulled by those who reflexively denounce anyone who questions the current rigged system of international trade.

[aldian159]

24. What?

I don't want to repeal NAFTA in an effort to save jobs only to find that the international markets this nation's industry needs to live on are closed off because of it.

Either way, jobs are lost.

[WhoCountsTheVotes]

39. and fortunately for you, no one is suggesting that

Yet, time and time again on DU, posters like to throw up this red herring. Why? NO ONE, least of all Kucinich and Sharpton, is trying to impose tarriffs. So what's the problem?

[morgan2]

26. the problem is

you can easily globalize the rights of capital, but it is very hard if not impossible to globalize the rights of workers. Capital can flow in and out of any corner of the world in seconds, it has no real allegience to anything or any place. Workers on the other hand, can not simply up and leave to find a better market. They never will be able to. Also workers always have to be actively employed to survive, whereas capital can sit in a bank or a matress. People who control capital exploit these facts in the so called "race to the bottom" in wages. They make workers bid against each other to see who will accept the lowest wages and least amount of rights.

[aldian159]

27. Ok, that helps

good perspective, morgan2.

However, if we repeal NAFTA and withdraw from the WTO, as your guy wants to, than what? In order to sell outsourced goods made in China to the US, it will cost more, due to tariffs. How will this help the workers of the developing nations?

[IrateCitizen]

29. It's designed to stop the race to the bottom

If you can bear to acknowledge the second point of DK's trade policy, you'll see this:

"I want to get back to negotiating bilateral trade deals founded on environmental standards and human rights."

It's actually quite simple -- operate in an environmentally-sustainable manner and respect human rights, and you can be a trading partner. Refuse, and you won't be able to access the world's largest market. It's an effort to use our position of negotiating power to improve human rights and environmental standards, rather than to weaken them as we have done in the past.

Tariffs have nothing to do with this.

[idlisambar]

32. It won't

If outsourcing is discouraged through protections here, a lot of middle-class Indians, Chinese, etc. will lose some opportunities, but you have to take in the entire picture.

For example, My cousin-in-law works in a call center in India. He comes from an English-speaking literate middle-class family. By Indian standards he is very privileged, top 5% perhaps, and he is representative of the type of person who benefits from outsourcing. but for every guy like him there are many more impoverished Indians working in the agriculture sector who could never benefit. A lot of these folks are moving into slums in the major metropolises, partly as a result of the policies of trade liberalization. The major reason why Indian labor is so cheap is because poor people like these will work for a pittance. Their cheap labor decreases the cost of living for everyone else, allowing my cousin to have a pretty good lifestyle on very little income.

The big picture is that the Indian government is hurting its poor citizens to boost its educated middle-class and chasing the fantasy of an economy of 1.1 billion people anchored in high-tech. The worst damage this agenda that it does is distract the government from tackling the really tough problems in their economy, highest in the list is runaway population growth.

[morgan2]

35. developing countries do not benefit from free trade

Its fairly well known in economics that so called "infant industries" do the best with protectionism. Infant industries are a class of industry that takes a while to become competetive in. Protectionism is needed for these industries to have a market to themselves and give them time to develope. A country with no established industries needs some protectionism. Even industries that can compete with free trade have problems. In poor countries, rich people from other countries end up owning a large portion of the resources. The wealth of these nations is transfered out of the country because of this. With free trade developing countries end up becoming simply a source of cheap labor, with a few local collaborators making a killing.

[IrateCitizen]

36. Exactly right! It's how Japan and S. Korea did it...

... and it's how China is doing it now. Protection of emerging industries coupled with mandatory technology transfers for foreign firms who want to do business there.

Funny thing -- technology transfers, one of the policies that really facilitated the boom of the South Korean economy, were OUTLAWED under NAFTA. Mexico was essentially consigned to being a cheap labor pool for the US and Canada.

[WhoCountsTheVotes]

42. your assertion is false, aldian159

"However, if we repeal NAFTA and withdraw from the WTO, as your guy wants to, than what? In order to sell outsourced goods made in China to the US, it will cost more, due to tariffs."

False. Withdrawing from WTO and NAFTA does NOT mean that tariffs will automagically go up. So why are you insinuating (falsely) that they will?

[mac2]

33. What would happen?

It will be re-negotiated. We might gain trade instead of being at a historic loss. Right now, it is not our country that is getting any kind of trade deal but Intentional corporations for their profit.

The money has gone off-shore and not even benefiting our economy. Got it?

We've always been protective of our trade. It's not a new concept. That's how we have higher wages and a better standard of living. If you want to compete with child, prison, and free slave labor go ahead.

We gave away our middle class for a rich and poor one. Which way do you want to live? In a poor country with a few elite or in a country that has a large, middle, educated class...safe and healthy (like we had pre-Reagan). S.America or like we were?

It's lopsided and we are losing. The bottom line is, it's not fair or good. It has been a dismal failure since NAFTA ten years ago. Our trade deficit is out of control. Before NAFTA we had a surplus with Canada and Mexico..now it is a huge deficit. Good...no way.

Do the pro-WTO candidates have an answer to bringing down the trade deficit? No..they won't.

Unions have been telling Democratic candidates this for years but are bing ignored. These are the 60% who don't vote and feel betrayed. Right they are.

Link: Public Citizen..all about trade..http://www.citizen.org/trade/

[w4rma]

40. Way way way more American resources are going out than coming in.

The trade deficit is huge.

Now the other countries are building a base of scientists and engineers that will be more experienced than our own because we are now exporting these jobs to other countries. They already have the manufacturing base.

Also, our problem isn't with Canada or Britain or France or Germany or Spain or Australia or Japan. It's with India, Korea, China, Pakistan, Indonesia, and Mexico... all countries who spend very few resources on American products and treat their citizens like slaves.

[mac2]

44. Here's a link to the facts.....

PDF] The high price of 'free' trade: NAFTA's failure has cost the ...
File Format: PDF/Adobe Acrobat

THE HIGH PRICE OF ‘FREE’ TRADE
NAFTA’s failure has cost the ... In the decade after NAFTA, between 1993 ...
www.epinet.org/briefingpapers/147/epi_bp147.pdf - Similar pages

Also from their site: http://epinet.org/subjectpages/trade.cfm?CFID=1320147&CFTOKEN=16241681

What's good about any of it?