Skip to content

TRADE, UNEMPLOYMENT AND SOVEREIGNTY (PART I)

December 22, 2012

TRADE, UNEMPLOYMENT AND SOVEREIGNTY (PART I)

This first essay will be in the nature of an overview.

I will be writing more than one piece on the above topics, especially as to how they relate to domestic unemployment in our economy and who the true beneficiaries of current trade policies are. Such an undertaking is daunting, as there is a well-funded propaganda machine in favor of the status quo which churns out daily lies and half-truths, propaganda which, I believe, is doing its share to keep the poor poor and the unemployed unemployed in America. We need to speak truth to power on behalf of America. I see no virtue in pursuing policies (trade or otherwise) which keep America on the edge of penury in favor of huge profits for the trade and finance sectors of our economy, Wall Street and its multinational corporations.

Trade isn’t what it used to be with its simple bilateral agreements, protocols and conventions. We are now involved in complicated multilateral trade agreements all over the globe and are told such new arrangements are in keeping with globalization and are good for America. Are they? For whom are they “good” in America other than the balance sheets of multinational corporations? Are we being sold that unemployment is good for America? Good for revenues to our government? Who is writing the rules of trade? Why are we giving up our sovereignty to trade councils composed, in part, by foreigners?  Why isn’t there more transparency in promulgating and amending trade rules? Why the secrecy? What’s the record? More questions will develop during the course of writing these essays as some unpleasant truths come to light with further research and syntheses.

My followers know that I am in favor of scrapping all such multilateral trade treaties in favor of bilateral trade agreements. Defense treaties such as NATO where there can be coordination of military power among several nation states is desirable; there is strength in numbers. However, trade, unlike military coordination, does not necessarily redound to our benefit with numbers, and, also unlike military coordination, involves considerable loss of our sovereignty (and I here note parenthetically that sovereignty rests in the people, not American international corporations). How is this happening – and why?

First of all, let’s look at bilateral trade agreements. They are called FTAs (Free-Trade agreements) among trade representatives and I favor them for a variety of reasons. Not everyone agrees with me. We recently signed an FTA with Korea which, according to the Economic Policy Institute (EPI), resulted in the loss of nearly 160,000 American jobs, a result I certainly would not approve. Obama signed such an agreement and said that the implementation of such agreement would help create jobs in manufacturing, but he ignored the impact of imports, which tend to increase under FTAs and cause trade deficits that send jobs overseas, according to the EPI. The EPI admits that some manufacturing jobs have come back from overseas since the recession, but attributes this almost entirely to the increase in domestic demand as the economy improves rather than to the Obama Administration’s trade policies. I disagree.

I think there are better reasons. I think we are on the cusp of reindustrialization for a number of other good reasons, including proximity of the market, new markets from emerging market countries, robotization of routine tasks in manufacturing processes, less likelihood of disruptive disaster problems in the supply chain (see Japanese tsunami), rising wages and better working conditions abroad which would tend to level the playing field for American companies etc. I think that any such claim that we have lost American jobs under this new FTA with Korea, if true, can be attributed to the terms of the agreement itself.

I do not agree with the Obama Administration that such agreements as negotiated which cut tariffs and other barriers to the trading of goods and services are a key path to job growth. As a protectionist I believe the opposite – that the judicious application of tariffs can help domestic job growth, and I believe that we need to retain the potent power of the tariff in any trade agreement we negotiate so that we can adjust its terms as we go along and see how it is working.

I also do not agree with the EPI that an increase in domestic demand is related to a return of overseas jobs since such an increase could be met by increased overseas production. I think it is related to what I have set out in the preceding paragraph, among other reasons. The EPI says that it is trade deficits that send jobs overseas. I think they have it turned around; I say it is sending the jobs overseas that cause trade deficits. I therefore do not understand their argument that bringing jobs home increases deficits. It seems clear to me that bringing jobs home decreases exposure to deficits since there is no foreign component involved.

Multilateral trade treaties such as NAFTA have been friendly to business but unfriendly to labor. The treaty is with Canada and Mexico. Some of my followers may recall the 1992 election in this country in which candidate Perot described the jobs that left this country for Mexico as “that giant sucking sound.” He was and is right. Our trade representatives gave away the store and Obama did not keep his 2008 campaign promise to amend the treaty. He rather reaffirmed the treaty’s outdated principles when signing new trade agreements with Panama and Columbia.

Our poor performance in negotiating trade treaties has been bipartisan. With the biggest market in the world (which should give us the whip hand in negotiations), it’s as though we are using trade negotiations as an avenue to channel foreign aid to our trade partners. We back off tariffs, we allow currency manipulation as a pricing mechanism, we countenance all sort of other barriers to our exports that we do not reciprocally employ on imports. Why? This is a trade treaty, not a Marshall Plan.

Part II of this essay will be published soon.  GERALD  E

From → Uncategorized

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: