The Dangers of Free Trade Agreements
January 23, 2013 - 6:00 PM
A Free Economic Seminar
Featuring Renowned Economist Thea Lee
“Free trade” sounds like a great idea, theoretically. Producers outsource their production to foreign countries with the lowest labor rates and consumers get the benefit of low prices for their purchases.
Unfortunately, there are fundamental real-world flaws that exist with free trade that have led to a most massive depletion of our wealth in record time. The United States has not witnessed a trade surplus since 1975, and since then trillions have been lost through trade deficits caused by “free trade” with the elimination of tariffs.
The consequence of our “free trade” agreements has lead to American companies increasingly closing up, selling out or going bankrupt. “Free trade” is uncontrolled, unrestricted access to our economy by foreign producers whose wage rates may be as low as $4 per hour, tariff free, about which we can’t compete. We are thus forced to outsource our manufacturing to these foreign producers who flood our markets with these low priced products and in the process, the outsourcers importing the low cost products become millionaires and billionaires while our whole middle class collapses - and our own production facilities are forced to shut down.
Learn more January 23, 2013, 6pm at
The Washington Plaza Hotel, in the Monroe Room
10 Thomas Circle Northwest
Washington, DC 20005
Thea Lee is Deputy Chief of Staff at the AFL-CIO, where she has also served as Policy Director and Chief International Economist. Previously, she worked as an international trade economist at the Economic Policy Institute in Washington, D.C. and as an editor at Dollars & Sense magazine in Boston. She received a Bachelor’s degree from Smith College and a Master’s degree in economics from the University of Michigan.
Ms. Lee is co-author of A Field Guide to the Global Economy, published by the New Press. Her research projects include reports on the North American Free Trade Agreement, on the impact of international trade on U.S. wage inequality, and on the domestic steel and textile industries.
She has testified before several committees of the U.S. House of Representatives and the Senate on various economic policy topics. She serves on several advisory committees, including the State Department Advisory Committee on International Economic Policy and the Export-Import Bank Advisory Committee. She is also on the Board of Directors of the National Bureau of Economic Research.
Light refreshments will be served. Seating is limited, please RSVP to [email protected]
This is a free, non-partition event. It is not a solicitation for the sale of any goods or services, nor will there be a request for donations.
I am well aware of the dangers of free trade agreements. What I don’t see is a consensus among the anti-free trade group of what should be done about it.
Seems “Balanced Trade” is emerging as the substitute goal instead of free trade.
But we have not seen enough hard arguments about the pluses and minuses of alternative solutions. What can be done that would ultimately place a permanent floor on the size of the trade deficit and that would not be countered by actions in other countries?
Someone please ask Mrs. Lee to focus on what should be done instead of what is wrong?
She has a pretty strong stance for several things, PNTR with China should be overturned, economic actions against currency manipulation and how the Red China/US government collusion is wiping out America’s middle class.
She points that what we export to China does not look right; I think it looks like a colony shipping raw materials to it’s master.
A mention of import tariffs quoted at the beginning and a good analysis of the ridiculous notion that Red China would become more like what the US was before this deal, instead of us becoming them.
http://www.goiam.org/images/articles/news/economic-trends/aflcio%20thea%20lee%20on%20china%20_jun%202010_.pdf
Confusion is widespread about “what we want” in trade policy. Partly this is built into the conventional framing over trade, which is: either you accept free trade or you are a protectionist.”
Since NAFTA in 1993, civil society has been united on “what we want.” As Mr Mills points out, we have not effectively communicated what we want.
As an image of what we want, I point to our domestic economy. We make domestic policy in a robust political environment, where stakeholders advocate in a transparent and open forum, where we express values focused on raising standards of living, improving the quality of life, and reaching for broad-based prosperity. at least ideally.
Translated into trade, this would mean that environmental goals would be written into the trade agreements. Labor rights, human rights, public health and financial controls would be written into the agreements. Enforcement mechanisms in the agreements would ensure that the interests of civil society are honored. That’s (sort of) the way we run our domestic economy.
We just want what investors are already getting - their interests are written into the agreements.
“Translated into trade, this would mean that environmental goals would be written into the trade agreements. Labor rights, human rights, public health and financial controls would be written into the agreements.”
We were certainly told the above points were written into these agreements, Sorscher. They clearly are not enforced.
http://world.time.com/2013/01/14/beijing-chokes-on-record-pollution-and-even-the-government-admits-theres-a-problem/
Thanks to Joe Brooks and Sorscher for positive contributions to a better understanding of our way forward. I have started reading the Brooks reference to a speech by Lee - impressive so far.
Sorscher says: “Confusion is widespread about “what we want” in trade policy. Partly this is built into the conventional framing over trade, which is: either you accept free trade or you are a protectionist.”
I agree. We are trapped by what he calls “conventional framing”. My local newspaper (Columbus Dispatch) always ends any discussion of foreign trade by warning that we must avoid protectionism. Maybe we should talk more about protectionism.
In Adam Smith’s day (1770-1776)democratically elected legislators in England were very sympathetic to pleas from merchants and factory owners in England for tariffs and subsidies to protect them from “unfair” tactics used in France and other countries to undercut their markets. Legislators in France heard the same pleas from their merchants and factory owners. That is protectionism - mutually destructive reaction to the supposed actions of other nations. Elimination of all tariffs and subsidies was Smith’s answer to a very real problem. This problem reappeared in 1929-1930 when the U.S. Congress was debating what was to go in the Smoot-Harley Act. The original idea was to provide some relief for farmers. But other producers were also hurt by the recession so the bill provided “help” for everybody who had political clout.
Paul Krugman, in his 1993 textbook “International Trade” assumes that the future cannot be different from the past, that any attempt to restrain imports for the good of the nation as a whole “would probably be captured by in interest groups and converted into a device for redistributing income to potentially influential sectors”(p.230). This position, of course, brought forth the expected response - most current proposals for restricting imports into the U.S. require that all imports have the same restrictions.
We should shout to the roof tops that restrictions on imports that treat all imports the same is not protectionism that has produced bad results in the past. We can deviate from past behavior, the opinion of Paul Krugman not withstanding.
Good points, Sorscher. It seems as if nothing is really governed well unless the issue is front and center in the public debate. Even then, as it was in the last presidential election with trade, the obvious answers are not apparent to our politicians. If you don’t have talking points and mass media, it seems the politicians will follow those who continually keep a ring in their nose.
I have been personally amazed out how cheap it is to buy Congress.
I have now finished reading the speech identified by Joe Brooks. The speech is a very persuasive discussion of the past mistakes the U.S. Congress made in dealing with China. But her conclusion is a disappointment because it seems to say we must rely on the Congress and the WTO to take care of us.
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“In conclusion, while the AFL-CIO opposed China’s accession to the WTO, and was
clearly justified in doing so, it is important now to look forward and not back. We call on
our government to reassess our trade, diplomatic, and security relationship with China,
and to take concrete and timely action to put that relationship on a more balanced footing.
This is one of our most important – and valued – relationships, as well as one of our most
problematic. While we gave up valuable economic tools in granting PNTR to China a
decade ago, we should commit to using WTO mechanisms more effectively – and to
exploring the use of Section 301 to address chronic problems with respect to currency
manipulation and violations of workers’ rights. Millions of American jobs – and the
survival of thousands of American businesses — are at stake”.
I don’t like her conclusion. Ignore Section 301. Where is a gutsy call from the CIO to change U.S. laws to force trade to be more balanced? No more negotiations to try to persuade someone in WTO. We must reply on ourselves to correct our problem.
Agreed, Raymond. She has a reference to import tariffs, but most are so cowed by the free trade dogma that timidity seems to be the rule, when speaking before Congress or some other “free trade” entity.
Someone will jump up and yell “Protectionist” like a rattlesnake has appeared.
When the word “protectionist” comes up, I would ask that person to a boxing match with their hands tied behind their backs. When they say no way, then I would ask them who is being the protectionist?
We need to protect our economy. Some words don’t need to have connotations that are not grounded in the facts. We have enough facts to make that decision on trade with a history of trade deficits and a manufacturing economy that has left our shores.
It seems that our political leaders of past decades were much smarter when it came to trade issues. There is a time for tight trade policies and lenient ones. We have been in a prolonged time when we should have had tighter policies and the propaganda of the day has delayed those policies.
I say we need some boxing matches set up.
Tom T.
Tom T.
Tom, too old to box, but I could try talking so long they pass out. Worked at the local school!
So, Joe, what you are really saying is that you have no problem getting in a battle of wits (just not literal boxing) with an unarmed man.
I think Mark Twain said something about that.
Tom T.
Tom, armed with the knowledge of the last 20 years, the history of the US and the American System, the debate was surprisingly easy to win.
Who has the courage like Lincoln to call for sky-high tariffs? Things are going to get much worse, before they will get better. The intellectual spell cast over our nation is presently too strong. I see no one with the public voice strong enough to break it. Adam Smith was clueless when it came to wage formation. Britain was the land of subsistence wages on which all classical economics, including Marxism was built. Only American protectionists and Marx recognized that free trade would accelerate capitalism’s demise. See rescuingeconomics.wordpress.com
Protectionist,
I visited your website. The fly in your ointment is that Adam Smith’s “invisible hand,” was NOT “self interest,” but spontaneous order. Having millions of people all acting in their self interest in a closed system is what created this spontaneous order. Try that and let me know what you think.
Very concise, Protectionist. Straight on course.
Lincoln’s party supported internal improvements and other measures to increase the economic power of the nation. His view on tariffs was an expression of a general view as to what was important shared among “the north”. Took no courage at all - merely going with the flow.
I like your reference to an “intellectual spell cast over our nation”. True. Also there is no public voice strong enough to break it. That reality does not discourage me. If the economic profession has it wrong, their errors will become public knowledge some day, some how. So, I continue to try to speak to economists. See my contribution to this blog titled “Why economists support Free Trade rather than Balanced Trade”.
We hopefully will see restraints applied to some of the actions of financial experts but that is far from the demise of capitalism. China is too far down the road to cease using markets to create wealth.