It has been 18 years since the last round of successful multilateral trade negotiations concluded. The so-called Uruguay Round, which produced a number of comprehensive agreements to reduce trade barriers and established the World Trade Organization (WTO) as an arbiter of trade disputes, remains the high water mark in the annals of multilateral trade accomplishments. What can we expect in the future?
International trade has grown exponentially over the past half-century benefiting American companies, communities and workers. This primarily is the result of the spread of globalization, improvements in technology, finance and transportation, and importantly, reductions in country tariff levels. But, as tariff levels have declined, new forms of protectionism have emerged that could threaten global economic and U.S. corporate growth.
January was a busy month for international trade initiatives in Washington. The Obama Administration made proposals aimed at creating a special trade enforcement center and increasing supply chain security. The proposals contain minimal details. Nevertheless, each proposal gives some insight into the Administration’s trade priorities.
Customs is about to get new responsibilities in the antidumping and countervailing duty (“AD/CVD”) areas that will require the agency to undertake evasion investigations. This could lead to substantial additional liabilities for importers. However, companies that recognize the threat to their bottom line, and act to remove it, will be at a competitive advantage when Customs gains this responsibility.
Chinese officials have been highly critical of the U.S. debt buildup and the political wrangling in Washington that has failed to resolve the debt crisis. But China could well turn that leery eye inward to find policies that are preventing financial markets from functioning in a healthy manner—and which may yet spread the next serious malady to global financial markets.
If I were a member of Congress and a constituent asked me at a town-hall meeting why I support free trade, here’s what I would say in my policy-wonkish way:
Free trade empowers the individual and limits the state. The government should not be telling us where we can and can’t spend our money. We don’t need big government rigging markets to favor one producer over another at the expense of competition and the little guy.
If imitation is the sincerest form of flattery, then the U.S.-China relationship should be brimming with good will. By that standard, 2010 was a celebration of mutual admiration and respect. As Chinese leaders were trying to cultivate an American mainstay—home-grown innovation, U.S. policymakers were singing the praises of industrial policy. In this case, only one country can benefit from emulating the other’s policies—and it’s not the United States.
A primary economic problem poor countries typically incur is not too much global economic integration, but rather, their lack of it. This coupled with the absence of freedom is a recipe for poor growth prospects, high unemployment, hopelessness, and ultimately, revolution. History is replete with examples.
On spending, debt and health care, the tea party message on Election Day was loud and clear. But where dozens of newly elected tea party candidates stand on trade policy is a big question hanging over the next Congress.
While tea party members embrace free markets, limited government, and reduced federal meddling, some tea party leaders have openly questioned the benefits of free-trade agreements such as the North American Free Trade Agreement (NAFTA) and a recently reached deal between the United States and South Korea.
The U.S. House of Representatives recently passed the American Jobs and Closing Tax Loopholes Act (HR 4213). This bill will hurt American workers, reduce American exports, and make American companies less competitive in the international marketplace. Since the U.S. Senate has already passed companion legislation, the American Workers, State, and Business Relief Act (S 3336), these ill-considered bills could soon be reconciled in conference and become the law of the land. If so, American firms and workers will pay the price.
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