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A European Trade Pact Without a Strategy? Not again.

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There is now a push for a trade agreement between the U.S. and Europe.  Both the NY Times and the International Herald Tribune are reporting on this.

A free-trade agreement between the United States and Europe, elusive for more than a decade but with a potentially huge economic effect, is gaining momentum and may finally be attainable, business and political leaders say.

They engage in fact-free, Pollyanna thinking.  “Trade agreement” is equated with a (1) rise in living standards or (2)  economic growth.  But there is no mathematical correlation, in the U.S., between trade agreements and bettered living standards or growth.  They merely assume the connection, which does not exist.  Because we give up more domestic market share than we gain abroad, thus reducing demand for U.S. goods rather than increasing demand.

So basically, the U.S. is again faced with the prospect of cheerleading a trade agreement without a national strategy.  How can you negotiate without a strategy?  What should the strategy be?

First we need a national goal of a manageable balance of trade, which means persistent trade deficits must be eradicated.  This really is the core of it.  Our trade policy results in persistent trade deficits.  That is the core failure.  It puts the lie to the promotional rhetoric of “increased exports” or “increased two-way trade.”  Trade deficits suck vast amounts of aggregate demand from our economy, and then we debate fiscal stimuli to replace/ increase aggregate demand for those goods and services.

Second, we need a strategy to produce more in the U.S. … capturing a larger share of major supply chains.  China does this.  Japan does too.  The U.S. did this in the past.  But now we have no strategy.  That is why we did not move from low tech to high tech and services successfully, as the free traders predicted.  Other countries with a strategy are capturing/have captured robotics, electronics, computers, alternative energy, and a host of other high tech industries.  So we are a net importer of advanced tech.  And we lost all that intellectual property to build upon for future product generations.

Third through thirteenth… well… you can read our 21st Century Trade Agreement Principles to find out.  Over 150 organizations and companies have agreed upon those thirteen principles for a successful national trade strategy that actually benefits us.

16 Responses to “A European Trade Pact Without a Strategy? Not again.”

  1. Dan DiFabio says:

    A Trans-Pacific Partnership FTA or a Trans-Atlantic Partnership FTA is unlikely to be approved by Congress. The American people are keeping a watchful eye on Congress. The New York Times is in favor of more free trade agreements,but that is no surprise. Only Thomas Friedman and his free trade cheerleaders would believe such nonsense.

  2. Will Wilkin says:

    “A Trans-Pacific Partnership FTA or a Trans-Atlantic Partnership FTA is unlikely to be approved by Congress. The American people are keeping a watchful eye on Congress.”

    Hi Dan, I wish you were right, I want to be wrong on this, but I don’t see what you see. In my CT 4th Congressional district, the Dem, Jim Himes (former Goldman Sachs VP and still a champion of Wall Street) and the Repub (Steve Obsitnik) were both in favor of more FTAs. From what I can see, virtually the entire Republican party ans well as the leadership and majority of the Democratic Party are both in favor of even more FTAs. In the 4th district, the candidates argue over who will prostrate our foreign policy more to the Israelis, who will fight harder for free trade, who will fight harder to cut SS and Medicare and reach the “grand Compromise” between the 2 parties of the 1% who agree that now that our jobs and prosperity have been exported there is no economic basis for our retirements or health care either.

    As the author of the article states, our country BADLY needs an economic STRATEGY, we need Industrial Policy aimed at ONshoring high-value-added industries (especially manufacturing), we need a FULL EMPLOYMENT POLICY and a MADE IN USA TRADE POLICY aimed at, as the author says, balanced trade.

    But apparently before we can get our country out of the gutter we will have to figure out how to replace the 2 parties that together betray the American people, that together trumpet “free market” mythologies that lead only to funneling wealth mostly out of the country but more than ever before to the top of this country as the administrators and profiteers of that offshoring our economy and future.

    • China Watcher says:

      Will, you’re right about FTA politics. That deck is stacked against us. But Himes is a serious, thoughtful guy who listens to our points He needs to hear from more constituents like you.

    • Jim Schollaert says:

      Will has captured the essence of our entire broken political system, which has been effectively captured by powerful special interests bent on single-mindedly pursuing their own selfish agendas with no regard to our true national interests. The situation he describes in his Connecticut Congressional District is the rule, rather than the exception all across the country. The disconnect between what our politicians in both parties are saying and doing, and what they should be saying and doing, is getting worse, not better. Yet there is no sign that the electorate is acting to correct this disastrous situation. I’d say that the system, which now depends on money and media, has been effectively gamed.

    • Dan DiFabio says:

      Hi Will,
      I try to optimistic about the current state of our economy and the current ineptitude of Congress. We are lucky to have gridlock at this juncture,because the Republicans and the Democrats in Congress probably would not be able to agree on what should be in the Trans-Pacific Partnership agreement and the Trans-Atlantic Partnership agreement. We do need another major political party. We do need a national industrial policy. I agree with all your ideological points,but I think Congress is so fractured in terms of partisanship and different types of Democrats and Republicans that we have reason for hope. The Clinton Democrats and the Rockefeller Republicans in Congress will be allied against fair trade Democrats and a small number of fair trade Republicans. The result is gridlock. More and more people in Congress will start thinking like Buddy Roemer and Dennis Kucinich in regards to trade. I am optimistic,because we have truth on our side. The other side has Wall Street money,but we have truth.

      • Dan DiFabio says:

        Will,
        The last post should have said”I try to be optimistic about the current state of our economy and the current ineptitude of Congress.”

  3. Robert says:

    Let us not forget that trade agreements are often a substitute for “foreign aid” and “diplomacy.” It is a whole lot easier to knowingly give the country away via this route than contested aid giveaways. Current Secretary of State Hillary Clinton extolled the virtues of fair/balanced trade some time ago at a town hall meeting in Auburn, NY. Check the rhetoric now….. All too many in congress are clueless as to trade realities and the damage created – which is why they pass. Those who “get it” are in the minority at this time. Those who knowingly give the country away, well, call them what you wish but the notion of acting in the interests of all Americans doesn’t come to mind.

  4. Will Wilkin says:

    Hello China Watcher, I used to write Jim Himes letters but all his responses were form letters that promote all the things I am criticizing about him. I am determined he needs to be replaced, and a suitable replacement is unlikely to be a Republican or Democrat, given the records of both parties.

    When Jim Himes won re-election a few weeks ago, Wall Street too was celebrating, as they should, being his biggest campaign funders and due to Mr Himes as an Old Hand in hedge funds at Golsman Cachs, “one of them.” Wall Street and the biggest bondholders and corporate shareholders celebrated because they know Mr Himes will be there to push friendly bills exempting them from regulation, he’ll be there to cut Social Security and Medicare, he’ll be there to push more “free trade” export of our jobs and industries for the quick profits and bonuses of his wealthy constituency. In other words, the vast majority of the American people will be sold out for 2 more years, thanks to Jim Himes and most of the rest of Congress.

    Free Trade policies exported almost 6 million mfg jobs and 42,000 factories in the first 10 years of this decade, fully 1/3 of our mfg, and average 10,000 to 20,000 more mfg jobs every month since. This is public information, yet since coming to Congress, Mr Himes has voted in support of every additional Free Trade treaty: Panama, Colombia, and South Korea. These deals bring great profits and bonuses to the investors and corporate executives Himes serves, but at the expense of the long-term prosperity of the people of the USA.

    Every FTA Himes approves exports MORE of America’s jobs, wages, GDP, tax base. Free Trade also destroys the multiplier jobs that offshored mfg would have created, destroying our country’s industrial ecosystem, our opportunities and prosperity.

    The latest example:

    http://www.arirang.co.kr/News/News_View.asp?code=Ne4&nseq=137964

    EXCERPT:

    According to a report by the U.S. Congress’ Joint Economic Committee the U.S.’ trade deficit with Korea has grown by even a larger margin since the implementation of the FTA from just 600-million dollars in March to a staggering 2-billion dollars in May.

    END EXCERPT

    Not content to export our jobs, Himes also aims to weaken the American financial system on behalf of off-shored financial houses. He’s an old Goldman Sachs VP with the special distinction of leading the charge to gut the weak Dodd-Frank financial regulation “reform”:

    How Wall Street Killed Financial Reform

    http://www.rollingstone.com/politics/news/how-wall-street-killed-financial-reform-20120510?page=4

    EXCERPT:

    H.R. 3283… Sponsored by Connecticut Democrat and hedge-fund industry BFF Jim Himes, exempts foreign affiliates of U.S. swaps dealers from all Dodd-Frank oversight. The rule, if implemented, would make the next AIG possible, given that AIG was undone by half a trillion dollars in derivative bets produced by such a foreign affiliate – its London-based financial products outfit, AIGFP. If passed, says Rep. Brad Miller, a Democrat from North Carolina, H.R. 3283 would leave a “massive, gaping hole” in Dodd-Frank. “It would be very easy to move those trades to whatever the most indulgent country would be,” Miller explains.

    The bill also exempts from oversight any swaps deals between company affiliates – meaning that Goldman Hong Kong can sell swaps to Goldman New York without having to deal with Dodd-Frank. That sounds harmless, but when you combine it with the AIG-style exemption, a bank would basically be able to get around Dodd-Frank entirely by creating its swaps products at an overseas branch, or moving them back and forth between affiliates.

    END EXCERPT

    Jim Himes, like Erskine Bowles, is a favorite of the Wall Street billionaires because he so intimately understands their sophisticated financial needs, as shown in previous post. One of those billionaires is Peter Peterson.

    http://www.guardian.co.uk/commentisfree/cifamerica/2010/jan/04/washington-post-fiscal-times-peterson

    EXCERPT:

    Peter Peterson is a Wall Street billionaire and former Nixon administration cabinet member who has been trying to gut social security payments and Medicare for at least the last quarter of a century. He has written several books that warn of a demographic disaster when the baby boomers retire. These books often include nonsense arguments to make his case. For example….

    [snip]

    …Of course, what Peterson says matters because he uses his billions to make sure that his voice gets heard. In the case of his books, he would take out full-page ads in major newspapers to ensure that these otherwise very forgettable tracts got taken seriously.

    And he started organisations. First, he had the Concord Coalition….

    END EXCERPT

    Jim Himes is a hero of that Concord Coalition because he agrees that Social Security and Medicare should be cut rather than strengthened:

    http://www.concordcoalition.org/articles/2012/1023/impressed-himes-bipartisan-approach

    It is vital the American people come to understand how misleading the critics of Social Security have been, and soon, precisely because Congressmen Jim Himes is not wasting any time exploiting crisis and confusion to serve his real constituency, the super-wealthy he made his private sector career also serving.

    It is because Jim Himes helps lead the bipartisan legislative attack on Social Security that he earns the “awards” and praise of those leading the ideological attack on Social Security. Instead of educating the public about the false scare tactics used to attack Social Security, Himes uses the confusion as perfect circumstances to please the humbugs who don’t appreciate a program that has kept tens of millions of Americans out of poverty.

    http://www.cepr.net/documents/publications/ss-2010-11-1.pdf

    EXCERPT:

    Polls consistently show that a large majority of working age people does not expect to be able to collect Social Security benefits. They have been led to believe that the program is hugely out of balance and will soon run out of money. Of course this is clearly not the case. The projections that are derived from the Social Security Trustees’ intermediate assumptions show that the program could pay all scheduled benefits for the next 27 years even if nothing is done. After 2037, the projections show that Social Security would still be able pay a benefit that is larger in real terms than what current retirees receive, even though it would be just 75 percent of the scheduled benefit. The payable benefit would continue to rise through time, so that even if nothing is ever done to change the program, a retiree in 2100 could anticipate a benefit that is more than twice as high as what current retirees receive today.

    Presumably Congress will not allow the payable benefit to fall below the scheduled benefit. If a shortfall really was imminent, it is likely that Congress would make the necessary adjustments to keep the program paying full benefits. This is exactly what happened in 1982-83, when the program literally did run out of money. Congress took steps to ensure that benefits were paid each month. It then established the Greenspan Commission whose reforms laid the basis for another 54 years of solvency. Adjustments of the size put in place in 1983 could keep Social Security fully solvent into the 22nd century even if we waited until 2030 to act.
    These are the basic facts about the state of the program, yet only a small share of the public knows them. This matters hugely in terms of the willingness to accept cuts in the Social Security. People are far more likely to accept cuts in the program if they never expected to see their benefits anyhow. On the other hand, if there were widespread awareness of the fact that the program was fully funded for the near-term future and largely funded for the indefinite future then there would likely be more objections to proposals that substantially reduce benefits.

    END EXCERPT

  5. Will Wilkin says:

    Hello China Watcher, I used to write Jim Himes letters but all his responses were form letters that promote all the things I am criticizing about him. I am determined he needs to be replaced, and a suitable replacement is unlikely to be a Republican or Democrat, given the records of both parties.

    When Jim Himes won re-election a few weeks ago, Wall Street too was celebrating, as they should, being his biggest campaign funders and due to Mr Himes as an Old Hand in hedge funds at Golsman Cachs, “one of them.” Wall Street and the biggest bondholders and corporate shareholders celebrated because they know Mr Himes will be there to push friendly bills exempting them from regulation, he’ll be there to cut Social Security and Medicare, he’ll be there to push more “free trade” export of our jobs and industries for the quick profits and bonuses of his wealthy constituency. In other words, the vast majority of the American people will be sold out for 2 more years, thanks to Jim Himes and most of the rest of Congress.

    Free Trade policies exported almost 6 million mfg jobs and 42,000 factories in the first 10 years of this decade, fully 1/3 of our mfg, and average 10,000 to 20,000 more mfg jobs every month since. This is public information, yet since coming to Congress, Mr Himes has voted in support of every additional Free Trade treaty: Panama, Colombia, and South Korea. These deals bring great profits and bonuses to the investors and corporate executives Himes serves, but at the expense of the long-term prosperity of the people of the USA.

    Every FTA Himes approves exports MORE of America’s jobs, wages, GDP, tax base. Free Trade also destroys the multiplier jobs that offshored mfg would have created, destroying our country’s industrial ecosystem, our opportunities and prosperity.

    The latest example:

    http://www.arirang.co.kr/News/News_View.asp?code=Ne4&nseq=137964

    EXCERPT:

    According to a report by the U.S. Congress’ Joint Economic Committee the U.S.’ trade deficit with Korea has grown by even a larger margin since the implementation of the FTA from just 600-million dollars in March to a staggering 2-billion dollars in May.

    END EXCERPT

  6. Will Wilkin says:

    Not content to export our jobs, Himes also aims to weaken the American financial system on behalf of off-shored financial houses. He’s an old Goldman Sachs VP with the special distinction of leading the charge to gut the weak Dodd-Frank financial regulation “reform”:

    How Wall Street Killed Financial Reform

    http://www.rollingstone.com/politics/news/how-wall-street-killed-financial-reform-20120510?page=4

    EXCERPT:

    H.R. 3283… Sponsored by Connecticut Democrat and hedge-fund industry BFF Jim Himes, exempts foreign affiliates of U.S. swaps dealers from all Dodd-Frank oversight. The rule, if implemented, would make the next AIG possible, given that AIG was undone by half a trillion dollars in derivative bets produced by such a foreign affiliate – its London-based financial products outfit, AIGFP. If passed, says Rep. Brad Miller, a Democrat from North Carolina, H.R. 3283 would leave a “massive, gaping hole” in Dodd-Frank. “It would be very easy to move those trades to whatever the most indulgent country would be,” Miller explains.

    The bill also exempts from oversight any swaps deals between company affiliates – meaning that Goldman Hong Kong can sell swaps to Goldman New York without having to deal with Dodd-Frank. That sounds harmless, but when you combine it with the AIG-style exemption, a bank would basically be able to get around Dodd-Frank entirely by creating its swaps products at an overseas branch, or moving them back and forth between affiliates.

    END EXCERPT

  7. Will Wilkin says:

    Jim Himes, like Erskine Bowles, is a favorite of the Wall Street billionaires because he so intimately understands their sophisticated financial needs, as shown in previous post. One of those billionaires is Peter Peterson.

    http://www.guardian.co.uk/commentisfree/cifamerica/2010/jan/04/washington-post-fiscal-times-peterson

    EXCERPT:

    Peter Peterson is a Wall Street billionaire and former Nixon administration cabinet member who has been trying to gut social security payments and Medicare for at least the last quarter of a century. He has written several books that warn of a demographic disaster when the baby boomers retire. These books often include nonsense arguments to make his case. For example….

    [snip]

    …Of course, what Peterson says matters because he uses his billions to make sure that his voice gets heard. In the case of his books, he would take out full-page ads in major newspapers to ensure that these otherwise very forgettable tracts got taken seriously.

    And he started organisations. First, he had the Concord Coalition….

    END EXCERPT

  8. Will Wilkin says:

    Jim Himes is a hero of that Concord Coalition because he agrees that Social Security and Medicare should be cut rather than strengthened:

    http://www.concordcoalition.org/articles/2012/1023/impressed-himes-bipartisan-approach

    It is vital the American people come to understand how misleading the critics of Social Security have been, and soon, precisely because Congressmen Jim Himes is not wasting any time exploiting crisis and confusion to serve his real constituency, the super-wealthy he made his private sector career also serving.

    It is because Jim Himes helps lead the bipartisan legislative attack on Social Security that he earns the “awards” and praise of those leading the ideological attack on Social Security. Instead of educating the public about the false scare tactics used to attack Social Security, Himes uses the confusion as perfect circumstances to please the humbugs who don’t appreciate a program that has kept tens of millions of Americans out of poverty.

    http://www.cepr.net/documents/publications/ss-2010-11-1.pdf

    EXCERPT:

    Polls consistently show that a large majority of working age people does not expect to be able to collect Social Security benefits. They have been led to believe that the program is hugely out of balance and will soon run out of money. Of course this is clearly not the case. The projections that are derived from the Social Security Trustees’ intermediate assumptions show that the program could pay all scheduled benefits for the next 27 years even if nothing is done. After 2037, the projections show that Social Security would still be able pay a benefit that is larger in real terms than what current retirees receive, even though it would be just 75 percent of the scheduled benefit. The payable benefit would continue to rise through time, so that even if nothing is ever done to change the program, a retiree in 2100 could anticipate a benefit that is more than twice as high as what current retirees receive today.

    Presumably Congress will not allow the payable benefit to fall below the scheduled benefit. If a shortfall really was imminent, it is likely that Congress would make the necessary adjustments to keep the program paying full benefits. This is exactly what happened in 1982-83, when the program literally did run out of money. Congress took steps to ensure that benefits were paid each month. It then established the Greenspan Commission whose reforms laid the basis for another 54 years of solvency. Adjustments of the size put in place in 1983 could keep Social Security fully solvent into the 22nd century even if we waited until 2030 to act.
    These are the basic facts about the state of the program, yet only a small share of the public knows them. This matters hugely in terms of the willingness to accept cuts in the Social Security. People are far more likely to accept cuts in the program if they never expected to see their benefits anyhow. On the other hand, if there were widespread awareness of the fact that the program was fully funded for the near-term future and largely funded for the indefinite future then there would likely be more objections to proposals that substantially reduce benefits.

    END EXCERPT

  9. Will Wilkin says:

    Jim Himes is a hero of that Concord Coalition because he agrees that Social Security and Medicare should be cut rather than strengthened:

    http://www.concordcoalition.org/articles/2012/1023/impressed-himes-bipartisan-approach

    It is vital the American people come to understand how misleading the critics of Social Security have been, and soon, precisely because Congressmen Jim Himes is not wasting any time exploiting crisis and confusion to serve his real constituency, the super-wealthy he made his private sector career also serving.

  10. Will Wilkin says:

    It is because Jim Himes helps lead the bipartisan legislative attack on Social Security that he earns the “awards” and praise of those leading the ideological attack on Social Security. Instead of educating the public about the false scare tactics used to attack Social Security, Himes uses the confusion as perfect circumstances to please the humbugs who don’t appreciate a program that has kept tens of millions of Americans out of poverty.

    http://www.cepr.net/documents/publications/ss-2010-11-1.pdf

    EXCERPT:

    Polls consistently show that a large majority of working age people does not expect to be able to collect Social Security benefits. They have been led to believe that the program is hugely out of balance and will soon run out of money. Of course this is clearly not the case. The projections that are derived from the Social Security Trustees’ intermediate assumptions show that the program could pay all scheduled benefits for the next 27 years even if nothing is done. After 2037, the projections show that Social Security would still be able pay a benefit that is larger in real terms than what current retirees receive, even though it would be just 75 percent of the scheduled benefit. The payable benefit would continue to rise through time, so that even if nothing is ever done to change the program, a retiree in 2100 could anticipate a benefit that is more than twice as high as what current retirees receive today.

    Presumably Congress will not allow the payable benefit to fall below the scheduled benefit. If a shortfall really was imminent, it is likely that Congress would make the necessary adjustments to keep the program paying full benefits. This is exactly what happened in 1982-83, when the program literally did run out of money. Congress took steps to ensure that benefits were paid each month. It then established the Greenspan Commission whose reforms laid the basis for another 54 years of solvency. Adjustments of the size put in place in 1983 could keep Social Security fully solvent into the 22nd century even if we waited until 2030 to act.
    These are the basic facts about the state of the program, yet only a small share of the public knows them. This matters hugely in terms of the willingness to accept cuts in the Social Security. People are far more likely to accept cuts in the program if they never expected to see their benefits anyhow. On the other hand, if there were widespread awareness of the fact that the program was fully funded for the near-term future and largely funded for the indefinite future then there would likely be more objections to proposals that substantially reduce benefits.

    END EXCERPT

  11. Maggie says:

    You would think that Europe would know better about free trade deals. They screwed up their own back yard pretty good with the European Union economic integration grand “project” fiasco. But no.

  12. Will Wilkin says:

    Need Advice from smart people, chose this thread to start….

    ——————

    I emailed this to a state senator in CT:

    ——————

    Dear State Senator [Name],

    Please consider initiating a Bill that requires all construction projects and materials procurements using CT tax dollars will use Made In USA materials. Here is an example:

    http://sundaygazettemail.com/News/Business/201210260228

    EXCERPT:

    The House of Delegates passed the West Virginia Buy American Act in February and the Senate passed it in March, before Gov. Earl Ray Tomblin signed it….

    The legislation itself pointed out, “The production of iron, steel, manufactured goods, coal and timber provides jobs and family income to many individuals in this state and, in turn, the jobs and family incomes of millions of persons in the United States.”

    END EXCERPT

    As you must understand, the cheap prices of imports are actually very expensive to our society, resulting in huge trade deficits representing the offshoring of our industries, jobs, wages, tax base, multiplier-effect jobs and opportunities. Our industrial ecosystem itself is being weakened and hollowed out by continuous trade deficits and export of our industries.

    Its time the government of the states and country take cognizance of our future and start protecting our industries and future.

    Will you lead?

    Sincerely, –Will Wilkin.

    —————————-

    I got this response:

    —————————-

    Will,

    Thanks for the email let’s talk when we go back into session in January, sounds interesting.

    (digital sig)

    Sent from my iPhone

    ————————–

    So where do I start in preparing for this discussion? I’d like to show him what other states have done but I will have to research that. I want to show him potential for positive results in CT not just USA generally, since CT is his constituency and we have a high unemployment (around 9% official, we know that really means 22% according to John Williams at shadowstats) and has lost a lot of manufacturing, like the rest of the country. I want to show him a model law or draft that could fly, meaning get passed and be enforced. I also want to anticipate the problems, for example certainly WTO member countries would contest it, would they not? If so, it would either get dumped as US govt officials prostrate themselves to foreign economic powers or geo-strategy clients, or it would become a flashpoint for any possible debate on USA trade policy if WTO ruled against it and USA politics start changing if Americans start waking up and rallying around a Made In USA Trade Policy.

    Please, smart people here, load me up with ideas and information that can prepare me to make best possible use of a discussion with a state senator regarding this. By chance, I also know a state Rep as a life-long friend of a close in-law –and I have NEVER asked him for a political audience yet, so I bet he’d hear me out, maybe even the 2 of them meet at same time to discuss it. Wish I had some fellow trade activist connections right here in CT to collaborate with….

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