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Foreign Trade

Return to Common Sense

May 4, 2011

Section: Foreign – Trade

“Global free trade is essential for American economic growth and it rewards those partner countries that embrace free markets with economic and job growth.”

“No nation was ever ruined by trade.” Benjamin Franklin.

 

Philosophy (Background, Issues, Objectives):

Commerce Department International Trade Administration (ITA) promotes trade and investment.

• ITA represents in trade negotiations, bilateral and multilateral discussions, and the rulemaking process.
• ITA stimulates innovation and investment, enhances economic growth, and supports U.S. industries.
• Bureau of Economic Analysis (BEA) tracks imports and exports by date, type, and country.

U.S. is the world’s largest trading nation, and a clear beneficiary of free trade.

• World Trade Organization (WTO) global trade talks seek consensus on transnational trade issues.

o   WTO and bilateral Free Trade Agreements (FTA) increase access.

o   Globalization and free trade undermines the economic basis of terrorism.

o   Trade barriers and agricultural subsidies are key discussion issues.

• American security is enhanced by free trade as countries with trade relationships likely to cooperate.
• A growing trade deficit is generally a sign of a healthy, expanding economy.
• Countries that have liberalized trade have seen growth rates rise, while closed economies lagged.

United States has had great success expanding Free Trade in this hemisphere.

• NAFTA includes Canada and Mexico.

o   The trade deficit with NAFTA countries grew from $70 billion in 2000 to $140 billion in 2008.

§  $58 billion of deficit increase has been in energy imports from Mexico and Canada.

§  Agricultural and manufactured goods sales to NAFTA countries have basically kept pace with imports.

o   Mexico is benefiting greatly from NAFTA.

§  Mexico is America’s second largest trading partner.

§  U.S. imports from Mexico increased from $48 billion to $216 billion from 1993 to 2006.

§  U.S. exports to Mexico increased from $52 billion to $156 billion from 1993 to 2006.

§  Mexico is #1 source of U.S. illegal immigration.

o   Customs Union may be appropriate for Canada FTA for common external trade policy.

§  Canada is America’s #1 customer and energy supplier.

§  Canada’s industries enjoy no currency advantage.

§  Canadiens are not flooding the U.S. marketplace with cheap labor or social disruption.

• CAFTA includes Dominican Republic, Costa Rica, El Salvador, Guatamala, Honduras, and Nicaragua.

There is some trepidation about Security and Prosperity Partnership of North America (SPP):

·         Breadth and depth of agreement seems more like a Treaty, requiring Senate approval.

·         “North American Union” and “NAFTA Superhighway” are both urban legends.

o   Fear of replacing American dollar with worthless new currency “The Amero.”

o   Closer economic integration could lead to lowered immigration barriers.

Seven FTAs with 11 countries have dramatically improved trade from 1999 to 2007:

·         US merchandise exports to these countries increased by 75.1%.

·         US merchandise exports to Chile increased by 170%.

·         US merchandise exports to CAFTA increased by 78.5%.

·         US trade balance with CAFTA improved from $2.8 billion deficit to $3.7 billion surplus.

·         US merchandise exports increased to Singapore by 61.8%; to Jordan by 211%; to Australia by 62.5%; to Morocco by 137.3%; to Bahrain by 69.9%.

 

Principles:

The less government intervention translates into a better economy.

• Free trade allows the flow of jobs and revenues freely across international borders.
• Strong currencies encourage investments overseas, while weak currency encourage investments here.

The United States requires export licenses for only a bare minimum of nationalsecurity concerns:

• Denied Party Restrictions (non-governmental entities).
• Country Restrictions (governments contrary to our national interests).
• Product Restrictions (national security leadership).

 

Recommendations:

Integrate all agency opinions (State, Intelligence, Defense, UN, USAID) into a unified foreign policy.

• Reduce U.S. agricultural trade barriers to promote greater efficiency in U.S. industry and agriculture.

Seek additional partners in bilateral Free Trade Agreements, including labor standards requirements.

• Extend President’s Trade Promotion Authority (TPA).
• Require swift vote on Free Trade Agreement approval.
• Sign Free Trade Agreements with Panama, Columbia, Ecuador, Peru, and Bolivia.
• Sign Free Trade Agreements with New Zealand, Switzerland, Malaysia, South African Customs Union, South Korea, Thailand, Oman, and United Arab Republics.
• Ratify Permanent Normal Trading Relations (PNTR) with Russia.

Maintain U.S. leadership in WTO round of multinational trade negotiations.

• Push for the elimination of trade barriers, subsidies, and other impediments to free trade.
• Enact legislation to offset VAT imbalances, despite WTO disapproval.

 

References:

“Does free trade breed poverty and pollution?” by Steve Chapman dated March 24, 2002 published by Chicago Tribune.

“North American Union: Deconstructing the U.S.” by Diane Alden dated June 16, 2006 published by News Max at http://www.newsmax.com/archives/articles/2006/6/15/132429.shtml .

“On the Road Again: Four Goals for the New U.S. Trade Representative” by Tim Kane dated June 16, 2006 published by The Heritage Foundation on http://www.heritage.org/Research/TradeandForeignAid/wm1130.cfm .

“North American Union: Coup d’etat American Style” by Diane Alden dated June 17, 2006 published by News Max at http://www.newsmax.com/archives/articles/2006/6/16/141829.shtml .

“North American Union: Remaking Three Nations” by Diane Alden dated July 4, 2006 published by News Max at http://www.newsmax.com/archives/articles/2006/7/3/181336.shtml .

“U.S. Trade Policy Tracker” by Anthony Kim and Daniella Markheim dated July 7, 2006 published by The Heritage Foundation on http://www.heritage.org/Research/TradeandForeignAid/bg1949.cfm .

“Security and Prosperity Partnership a Constitutional Override” by Geoff Metcalf dated October 30, 2006 published by News Max at http://www.newsmax.com/archives/articles/2006/10/30/85705.shtml .

“Permanent Normal Trade Relations for Russia Would Benefit the U.S. and Russia” by Daniella Markheim and Ariel Cohen dated December 13, 2006 published by The Heritage Foundation at http://author.heritage.org/Research/RussiaandEurasia/wm1286.cfm .

“Michael Medved Loses His Cool Over North American Union” by Jerome R. Corsi dated January 2, 2007 published by Human Events Online at http://www.humanevents.com/article.php?id=18721 .

“There Isn’t Going to Be a North American Union” by John Hawkins dated January 10, 2007 published by Free Republic at http://www.freerepublic.com/focus/f-news/1765258/posts?page=9 .

“Reauthorize Trade Promotion Authority Without New Restrictions” by Danielle Markheim dated January 12, 2007 published by The Heritage Foundation at http://www.heritage.org/Research/TradeandForeignAid/wm1307.cfm .

“Plan for superhighway ripped as ‘urban legend’” by Jerome R. Corsi dated January 26, 2007 published by World Net Daily at http://www.wnd.com/news/article.asp?ARTICLE_ID=53950 .

“Free Trade and Funny Math” by Patrick J. Buchanan dated February 27, 2007 published by Human Events Online at http://www.humanevents.com/article.php?id=19590 .

“Free Trade is Dead, Long Live Free Trade” by Tim Kane dated March 27, 2007 published by The Heritage Foundation at http://www.heritage.org/Research/TradeandForeignAid/wm1409.cfm .

“Free-Trade Hypocrisy” by Tom Brewton dated March 30, 2007 published by American Daily at http://www.americandaily.com/article/18190 .

“Globalization in a Nutshell” by Mark W. Hendrickson dated April 4, 2007 published by Front Page Magazine at http://www.frontpagemagazine.com/Articles/ReadArticle.asp?ID=27630 .

“Why Free Trade Works for America” by Daniella Markheim dated April 16, 2007 published by The Heritage Foundation at http://www.heritage.org/Research/TradeandForeignAid/bg2024.cfm .

“Value-added taxes put U.S. manufacturers at disadvantage” by Phyllis Schlafly dated April 23, 2007 published by Town Hall at http://www.townhall.com/columnists/PhyllisSchlafly/2007/04/23/value-added_taxes_put_us_manufacturers_at_disadvantage .

“Free-Trade Hypocrisy” by Thomas E. Brewton dated April 30, 2007 published by Intellectual Conservative at http://www.intellectualconservative.com/2007/04/30/free-trade-hypocrisy/ .

“Canada’s Problem: Domestic Trade Barriers” by Christopher Sands dated May 22, 2007 published by American Magazine at http://www.american.com/archive/2007/may-0507/canada2019s-problem-domestic-trade-barriers .

“The Freedom Connection” by Susan Ariel Aaronson dated June 11, 2007 published by American Magazine at http://www.american.com/archive/2007/june-0607/the-freedom-connection .

“In Global Trade, Labor Standards Have a Long History” by Robert Rogowsky and Eric Chyn dated July 18, 2007 published by American Magazine at http://www.american.com/archive/2007/july-0707/in-global-trade-labor-standards-have-a-long-history .

“The NAFTA Superhighway” by Christopher Hayes dated August 27, 2007 published by The Nation at http://www.thenation.com/docprint.mhtml?i=20070827&s=hayes .

“The Non-Existent North American Union” by John Hawkins dated September 14, 2007 published by Town Hall at http://www.townhall.com/columnists/JohnHawkins/2007/09/14/the_non-existent_north_american_union .

“Does SPP + TTC + NAFTA = NAU?” by William D. Bailey dated October 19, 2007 published by American Daily at http://www.americandaily.com/article/20653 .

“Globalization Is A Reality – Deal With It” by Robert Samuelson dated October 23, 2007 published by Investors Business Daily at http://www.ibdeditorials.com/IBDArticles.aspx?id=278028687267492 .

“US will retake economic superpower crown” by Ambrose Evans-Pritchard dated November 11, 2007 published by UK Telegraph at http://www.telegraph.co.uk/core/Content/displayPrintable.jhtml;jsessionid=4PQHLOYRFAZNRQFIQMFCFGGAVCBQYIV0?xml=/money/2007/11/12/ccview112.xml&site=1&page=0 .

“Productivity Growth, Not Trade, Is Cutting Manufacturing Jobs” by Terry Miller dated November 27, 2007 published by The Heritage Foundation at http://www.heritage.org/Research/Economy/wm1709.cfm .

“Decoupling Myths Expose Trade Deficit Myths” by John Tamny dated January 31, 2008 published by Real Clear Politics at http://www.realclearmarkets.com/printpage/?url=http://www.realclearmarkets.com/articles/2008/01/decoupling_myths_expose_trade.html .

“Free Trade: The Real Economic Stimulus” by James M. Roberts dated February 29, 2008 published by Front Page Magazine at http://www.frontpagemagazine.com/Articles/Read.aspx?GUID=5B0F6C53-5D17-4ADA-B847-37D705FF9777 .

“It’s time to rethink NAFTA” by Diane Francis dated March 4, 2008 published by National Post at http://www.nationalpost.com/opinion/columnists/story.html?id=072f3c08-c971-46ec-86a8-ae0842f1a037&k=94917 .

“NAFTA Nonsense” by Daniel Gross dated March 4, 2008 published by Slate Magazine at http://www.slate.com/id/2185739/ .

“What NAFTA Trade Deficit?” by John Engler dated April 21, 2008 published by The Wall Street Journal at http://online.wsj.com/article/SB120873451908929781.html?mod=opinion_main_commentaries .

“Free Trade Agreements: Promoting Prosperity in 2008” by Daniella Markheim dated May 2, 2008 published by The Heritage Foundation at http://www.heritage.org/Research/TradeandForeignAid/bg2132.cfm .

“The Fast-Track Trade War” by Claude Barfield dated May 7, 2008 published by The American Magazine at http://www.american.com/archive/2008/may-05-08/the-fast-track-trade-war .

“An Act to End Trade” by Daniella Markheim dated July 6, 2009 published by The Heritage Foundation at http://www.heritage.org/Research/tradeandeconomicfreedom/wm2524.cfm .

“Global Trade Liberalization Continues, But Risks Abound” by Daniella Markheim and Terry Miller dated September 28, 2009 published by The Heritage Foundation at http://www.heritage.org/Research/tradeandeconomicfreedom/bg2320.cfm .

“Obama’s Dangerous Export Initiative” by John F. Di Leo dated January 27, 2011 published by American Thinker at http://www.americanthinker.com/2011/01/obamas_dangerous_export_initia.html .

“’No Nation Was Ever Ruined by Trade’” by Ronald Bailey dated May 3, 2011 published by Reason Magazine at http://reason.com/archives/2011/05/03/no-nation-was-ever-ruined-by-t .