American Elephants

It’s Time to Move on Free Trade! by The Elephant's Child

President Obama has claimed to favor free trade. But as in so many cases, what he says doesn’t mean there will be any action.   The free-trade pacts with Columbia, Panama and South Korea have been “pending” for the last sixteen months.  Big Labor does not like free trade.  This one big interest group has driven much of Obama’s action or inaction on almost every administration program or policy.

This week there is some rumbling in the background.  Secretary of State Hillary Clinton made an impassioned plea at the Council of the Americas for Columbia  to hang on just a bit longer, assuring Bogota of  U.S. “commitment”.

John Kerry, Chairman of the Senate Foreign Relations committee, is focusing on South Korea and the increasingly dangerous situation on the peninsula.  He made a forceful plea to Obama along with GOP Sen. Richard Lugar, to use the trade pact to seal ties.  It is critical to secure the relationship.

U.S. Trade Representative Ron Kirk, and Defense Secretary have separately made pleas for action from Democrats.

Contrary to Union objections, these trade pacts mean job opportunities and markets for U.S. Companies.  The three countries are signing pacts with Europe and other countries while Obama dithers.  There are limits to how long pacts can languish before governments move on.

If this was Obama’s aim, it’s another job killer, and a legacy-killer for his presidency.  It does not serve American interests.

4 Comments so far
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[President Obama has claimed to favor free trade.]

That’s a lie. What we need are some protectionist policies, just like almost every other nation has. Now THAT would be in the interest of American interests.


Comment by Ben Hoffman

Ben, We have five decades of evidence that free trade promotes opportunity and prosperity. Free trade means that tariffs on American goods are removed, so we sell more goods and services overseas. Removing the tariffs on incoming goods means that Americans have more choices and less expensive goods — raising our standard of living. Free trade means more jobs here, and more economic growth.

People often confuse free trade with the idea that “jobs are moving overseas.” There are great advantages to American business to manufacture here, or do business here. Lower transportation costs, no dealing with the laws and languages of other countries. American productivity is usually higher. But when regulations, taxes, mandates become too difficult for companies here, when they cannot make a profit here, they will move their operations to somewhere where they can. The business of business is making a profit and growing the economy.

Capital will go where it is wanted and stay where it is well treated.

The flood of regulation and mandates from the Obama administration already has a number of companies looking to move much of their operations overseas. This is an administration that has almost no experience in the private sector, and they think profit is something bad.

“Moving jobs overseas” is unconnected to free trade pacts. Free trade is good for America, and would be good if we lowered protectionist barriers on their own regardless of what other countries do.


Comment by The Elephant's Child

[Free trade means that tariffs on American goods are removed, so we sell more goods and services overseas. ]

How can you say that? We have record high trade deficits!


Comment by Ben Hoffman

Free trade means that tariffs are removed on both ends. It benefits both countries! A trade deficit means an excess of imports over exports. A trade surplus means an excess of exports over imports. BUT: the Balance of Trade is made up of transactions in merchandise and other movable goods, and is only one factor comprising the larger “current account” which includes services and tourism, transportation and other invisible items, such as interest and profits earned abroad. It is not as simple as it seems.

The term “deficit”is confusing because we relate it to the budget “deficit” which IS bad. You have the strength or weakness of a country’s currency (which changes), its value in relation to the country with which we trade. for example–a strong US dollar makes goods produced in other countries with which we trade relatively cheap for Americans. A trade deficit — an excess of imported goods may be balanced off in the current account with a surplus in exported services — like software, for example.

In other words, a trade deficit isn’t as worrying as it sounds. And — is unrelated to free trade pacts — which are only about eliminating tariffs, which are a protectionist tax and lead to all sorts of arguments between nations, and don’t accomplish much. I think I’ve got this right, I had to check up on my definitions.


Comment by The Elephant's Child

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