Topic Category: Trade & Finance

SPECIAL REPORT—Americans currently pay high taxes on food, clothing, automobiles, industrial inputs and other goods and services, and their own United States Trade Representative is vigorously fighting other countries to keep it that way. Even worse, the government’s efforts all but ensure that removing such taxes — and easing the artificial burdens they place on American families and businesses — will remain unnecessarily, and irrationally, difficult for years to come.

Earlier this year, the White House announced plans to begin negotiations with the European Union (EU) on a free trade agreement. If successfully concluded as currently envisioned, this deal would cover approximately 50 percent of global output, nearly 30 percent of world merchandise trade, and 20 percent of global foreign investment, according the OECD, an independent organization that promotes policies to improve global economic prosperity.

SPECIAL REPORT — Much attention recently has been paid to the Foreign Corrupt Practices Act (FCPA) in the wake of the high-profile investigation into the activities of Wal-Mart in Mexico, where it is alleged to have bribed foreign officials to expedite permits for its stores. Yet, the Wal-Mart situation is but one example of a long-term trend towards FCPA enforcement under novel theories of liability.

Since 2004, the World Bank has produced the annual “Doing Business” report, which ranks countries on 10 factors reflecting the ease with which entrepreneurs and businesses may conduct economic activity in a given country. At first glance, such a survey would hardly seem controversial. After all, with so much unreliable data published by official government offices, one would think an unbiased ranking would help businesses and governments.

As overall U.S. export growth decelerates, one sector of the economy continues to enjoy booming sales abroad — the thousands of companies operating in U.S. Foreign-Trade Zones. According to the just-released annual report from the U.S. Foreign-Trade Zones (FTZ) Board, exports by FTZ-based companies reached a record $70 billion in 2012. That is an exponential jump from 2009, when FTZ exports totaled less than $30 billion.

In my book, Conscientious Equity, I discuss that when nations have free trade agreements with each other, they historically have not gone to war. Once the road for negotiations is open to trade, it remains open for other serious considerations. Equally important is that free trade agreements not only benefit businesses, but a country's entire population as well. Trade leads to economic freedom, which helps reduce poverty and corruption.

Since the beginning of the Great Uncertainty — the period that began with the “stimulus,” the auto bailout, the push for another major entitlement program, Dodd-Frank, the regulatory dam burst, the subsidies for favored industries, and the proliferation of distinctly anti-business rhetoric from the White House — President Obama has appeared puzzled by the dearth of business investment and hiring. Go figure.

Although the number of deals increased, the value of mergers and acquisitions (M&As) in China in 2012 decreased in line with global trends. Chinese M&A volume remained small at approximately 5 percent of total global activity, while more than two thirds of the transactions were domestic. There were large differences across sectors, with important activity occurring in medical devices, auto components and food, and little or none in logistics, hospitals and travel services.

July 8th marked the official commencement of the much anticipated Transatlantic Trade and Investment Partnership negotiations in Washington, DC. An eventual agreement could eliminate tariffs and curb superfluous rules and regulations that impede commerce and raise costs for businesses and consumers in the world’s largest economies. Those prospects make the effort worthy of our attention and, possibly, our support. But one is clear: the negotiations are less about free trade than they are the latest rejection of its virtue.