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Thursday, May 22, 2008

Free trade agreements are not responsible for the economic slowdown in America

In the May 22, 2008 issue of The Beacon, the official newsletter of the Atlantic Institute for Market Studies (AIMS), Brian Lee Crowley brings our attention to his commentary “International trade and the US presidential elections.”

Here’s an excerpt:

Barack Obama and Hilary Rodham Clinton made a bit of a fetish of foreigner bashing in the lead-up to the Texas and Ohio primaries, and especially in the Buckeye state. Pennsylvania, with some significant rustbelt problems of its own and a looming primary, was next on the anti-trade rhetoric hit list. And recently Obama got into trouble with this remark, which suggested among other things that anti-trade sentiment is really just a sublimation of other, less politically palatable feelings:

"[I]t's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."

It is interesting that on trade Obama and Clinton were largely silent in Texas. Why might that be? Because Texas, one of the largest states in the union has been a huge beneficiary of open trade with Mexico. Anti-NAFTA rhetoric was noticeably absent in the Lone Star state. Surely, though, the two Democratic candidates (John McCain is a vociferous free trader) can’t be saying one thing to Texans and another to Ohioans? They wouldn’t!

You can read the complete commentary here.

As for John McCain, is he really a "vociferous" free trader? Absolutely. According to the website On The Issues, the only caveats McCain would put on free trade involve national security and human rights:

"I don’t believe in walls. I believe in freedom. If I were President, I would negotiate a free trade agreement with almost any country willing to negotiate fairly with us. Only risks to the security of our vital interests or egregious offenses to our most cherished political values should disqualify a nation from entering into a free trade agreement with us."

That's not bad for a government worker.

Posted by Matthew Johnston on May 22, 2008 | Permalink


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An interesting comment Matthew but as always a problem rears its ugly head. The expression "trading fairly" is used. Since when has the US traded fairly? Going back to the Reciprocity Treaty in the 1850's it is obvious that as soon as another company is more effective at competing than the US, Protectionist interests in the US start whining to Congress and Congress takes action to shut out the more effective competitor. We are in the position of having an abundance of natural resources and they want those resources. That, I would submit is not a healthy situation when it comes to finite resources.

Posted by: DML | 2008-05-22 11:58:51 PM

A free trade agreement describes the restrictions on free trade. In other words, if there truly is free trade, an agreement is not required.

DML says "That, I would submit is not a healthy situation when it comes to finite resources" I'm not sure what you mean. If you mean that the US might restrict trade with us because we have an abundance of what they want? In any case, let them do what they want, they only hurt themselves.

Trade restrictions/subsidies of any kind only hurt the country that practices them. The only exception to this might be national security issues.

Posted by: TM | 2008-05-23 10:00:08 AM

TM, I agree with you, of course. But McCain seems to support even unilateral free trade. Here's another quote:

"Yes, many American families will suffer from the inevitable dislocations caused by the imperatives of a global economy. But the answer to their suffering cannot be the adoption of policies that will sustain one industry by tariff or subsidy. Embracing protectionism here to retaliate for it elsewhere is akin to a murder-suicide pact, and we should resist the temptation whether the product in question is bananas or sugar or steel."

As for national security concerns, I think trade is the surest path to peace.

Posted by: Matthew Johnston | 2008-05-23 11:57:05 AM

Matthew, I agree. I know so little about national security issues so I did not include them in my opinion.

Not only is it the surest path to peace, it is the surest path to lifting millions out of poverty. It woudl be the surest path to protecting elephants and tigers. It would be the surest path to environmental sutainability...

Posted by: TM | 2008-05-23 12:21:59 PM

TM- I meant that a diverse economy is better than one that relies on selling a finite resource. Your resource runs out and you have nothing else to rely on. If the US is not a competitive producer and relies on protectionism as it has in the past and does now the resource depleted country will be in trouble. That is also why we would do well to develop strong trade ties with many different countries.

Posted by: DML | 2008-05-25 12:06:11 AM

Please; bananas, sugar and steel are the most protected (ie: subsidized) products in the U.S.

Other countries are laughing at our reluctance to protect our own markets and our own borders.

Posted by: miss_msry | 2008-05-25 1:19:06 AM

miss_msry, the country that does not subsidize ir more prosprous. Let them laugh.

Posted by: TM | 2008-05-25 8:21:12 PM

the country that does not subsidize ir more prosprous. Let them laugh.

Posted by: TM | 25-May-08 8:21:12 PM

Really? Name one country that doesn't subsidize / protect it's markets and has prospered. Don't use the US, they are one of the most protectionist places around. Just look at Softwood Lumber as one example.

Posted by: Snowrunner | 2008-05-26 5:37:44 PM

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