Ti9mothy Birdnow

Here is an excellent explanation of so-called Free Trade and how it shafts America.

From Illinois Review: "All that being said, however, a number of cracks have been surfacing in that shiny image over the years of implementation. We have noticed some FTA partners disregard the FTA completely, as with Canada’s aforementioned dairy duties. We have noticed many trading partners establish non-tariff barriers, such as onerous inspection/approval rules and draconian documentation requirements, making it difficult or impossible to export to them, despite the removal of duties.

And perhaps most importantly, we have begun to really think about the difference in how countries tax, in general. For the most part (alcohol and a few other imports are an exception), the USA only assesses duties and less than half a percent in Customs fees on import shipments. We don’t assess a broad VAT or GST on imported goods.

But Europe, Canada, Mexico, and many other countries assess VATs or GSTs of 15, 20, even 25 percent or more on imports, in addition to the duties. So what does that really mean? It means that perhaps we should have been viewing FTAs from a different perspective all along.

If we gave up a 3% duty and Mexico gave up a 6% duty, we thought we were getting the better end of the deal. But when you factor in Mexico’s 16% VAT on that same import, we realize that we gave up 3% and Mexico only gave up 6% out of what had been 22%. So our goods are still severely taxed upon importation abroad, even after an FTA is in place"

End excerpt.

See, those countries with whom we entered into these trade agreements were not going to just let us take over their markets - which is what would have happened had we had a truly free trade situation. They knew what was going to happen and they planned to get a deal that would put us at a disadvantage. You can't blame them, but you have to wonder what the people who promoted and negotiated these deals thought WE would get out of it. Clearly the author of the piece saw it as a big win back the:

"Most of us "Free Traders” – when the USA entered the world of FTAs in the 1980s – thought of this as a win-win. It would encourage American manufacturers to source more of their raw materials and components domestically, and we would give up less in duties than the partners would, while gaining greater access to their markets. Think about it: the Mexican product that would otherwise get hit with a 3% duty in the USA now gets zero duty… but the USA product that would otherwise get hit with a 6% duty in Mexico now gets zero duty too! FTAs lowered the duties on our exports a lot more than they lowered the duties on our imports. Viewed from this perspective, FTAs are wonderful for American manufacturing."

End excerpt.

See, the fundamental error in the thinking of the Free Trade crowd was that our trading partners were negotiating in good faith. They were negotiating primarily in their own interests. You can't fault them for that, but you certainly can fault our geniuses at the State Department who negotiated a loser deal.

Call me paranoid, but I rather suspect these deals were always a tool of the globalists, who wanted to put the U.S. into a position of losing money and draining economic power. What we have created is a defacto redistribution program, where American wealth is moved out of the country and goes to our poorer trading partners, like Mexico. (Is it any wonder Mexico and the rest of Latin America is flooding our country with their poor at this same time? The agreements were supposed to make them wealthy enough to not need to send their surplus population to this country.) To a globalist, every nation needs to be on an equal footing, and that means the really wealthy and powerful have to be brought down several pegs and their wealth and power transferred to the poor and weak.

That's how you build a world government.

The author goes on to bemoan the dangers of trade warfare. I've always thought the dangers were overblown. Yes, a trade war helped facilitate the Great Depression but it only exacerbated a serious problem in the economy that was already there. That problem was the imposition of new taxes, of heavy regulatory schemes (contrary to liberal shibboleths, Hoover was a huge interventionist and in fact Roosevelt ran to the right of him on economic issues), and a gross mismanagement of the money supply by the Federal Reserve. Read Milton Freidman's explanation of the causes of the Great Depression.

The Smoot Hawley Act didn't help, for certain, but it was hardly the cause of the Depression. What I find hard to swallow is this claim that somehow China or Russia or Mexico or even Canada is going to get into a full blown trade war with us that will last a long time and lead to a worldwide economic collapse. Look; these countries can't compete with us. We produce most everything we need right here, and our foreign trade is only a convenience. But places like China will be squeezed into collapse and perhaps revolution if it comes to that. They know it, too, which is why they have to stop this from happening. And Europe? Is it really going to hurt us to not buy Volvos or French wine? It WILL kill them to not buy American microchips or computer technology. We have the upper hand.

And now we have oil - lots and lots of oil.

I believe any trade war will be short and ultimately inconsequential.

We have a right to fair deal and to look out for our own national interest. We are not indebted to the "world economy" or to some notion of societal guilt. We should have truly free trade, not some asymmetrical arrangement that hurts us and benefits our trading partners. If they want to tax our goods that is fine, but they can't complain when we tax theirs. Those taxes are a large part of why they are not competitive with us anyway.

Posted by: Timothy Birdnow at 08:36 AM | No Comments | Add Comment
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