International Trade Policy Changes Need to Make “Free” Trade —“Fair”
What does this really mean in the modern world?
The political rhetoric on what constitutes Free Trade is obscuring the issue. Why are US politicians satisfied with our current trade agreements? It’s really not hard to understand or fix. One needs only to understand the reality over rhetoric.
At the end of World War II, the United States had the only functioning economy in the devastated, bankrupted world. The US economy, untouched by war, was completely controlled by the Federal bureaucracy. Americans sacrificed fair wages and blood to defeat tyranny as the industrial and financial elites made billions during the war and now were without any global competition. American economic supremacy, challenged only by Stalin’s imperialistic drives was answered again by Americans who provided more blood and treasure in rebuilding the devastated world. It wasn’t until the Soviet Union collapsed under the weight of its own bureaucracy in 1989 that Americans were promised a “Peace Dividend.” Twenty eight years later, Americans are still asking: Who benefited from the peace dividend?
Certainly not the American People. The US economic distribution in the 1950s was approximately 86% to the rich and the remaining 14% to the rest of us. By 2005, the American people were confronting an economic distribution of approximately 99% to the elite and 1% to the rest. This economic issue was exacerbated by the flight of American industry overseas as our manufacturing infrastructure collapsed, resulting in US poverty rates increasing faster than any time in our history.
A hot topic of both the left and right is free trade, but what does that mean in the modern world? An example is found in the demise of the US textile industry, which free trade promoters claim was lost because they couldn’t compete. Let’s check that premise:
The big US retailers could buy a US made shirt for $5, then sell it for $20 (an ROI of 400%). Or they can buy a foreign made shirt for 50 cents, add in transportation costs of $1.00 and then sell it for $12 (an ROI of over 800%. I won’t address the quality). Simultaneously, Americans experience tax increases for the unemployed (not just the textiles workers, but the truck drivers, grocery stores, mechanics and repair personnel supporting the textile industry), while our Social Security system deteriorates without the contributions of employed workers. This example is indicative of every industry, from steel manufacturing to appliances; from software to automobiles.
Who benefits from free trade? The term “free trade” has come to mean a financial transaction. The current free trade agreements in place or in negotiations are not really about what the politicians are telling you. China for example defines free trade as demanding US capital to build the factories and the technology intellectual property rights to enable their product’s export to the US. However, for this “access” to their markets, US companies are prohibited from selling American made products in China. Trade, as the Chinese define it, means they take our industrial capacity to trade for our capital. Free trade is defined as American consumption of foreign production. We trade our wealth, but are prohibited to trade our production which would create future wealth for US families.
And why would the US politicians be satisfied with this arrangement? They are the beneficiaries of the big banks and retailers PAC contributions. Their former staffs are now at the law firms negotiating these trade deals, paid by the financial entities to ensure this “free trade” is expanding. The investment banking industry collects millions for arranging multi-billion dollar loans to the developing nation’s governments. And of course the international banking system is making money on the interest of the international loans while they charge you 18+% per year on your credit cards to buy that $12.00 shirt. The capital for these foreign loans was “borrowed” from the Federal Reserve System which Americans pay the interest on.
What is to be done:
-Demand the politicians make “free” trade, “fair” trade. Nations importing to the US cannot tariff or restrict exports from the US to protect their national monopolies.
-Prohibit subsidization of foreign industry through “dumping” (export subsidies) in the US and full protection of Intellectual Property rights including data exclusivity, digital copyright laws, and restrictions on counterfeit food and drug products.
-US companies selling their manufactured foreign products, should pay the same US FICA tax as if the product was manufactured in this country. Prohibit US companies exploitation of foreign labor to avoid contribution into our Social Security system. Future trade agreements must have all signatories adopt the International Labor Organization (ILO) standards.
-As the United States Government is the world’s largest buyer of technology products and services, Congress should pass legislation requiring all future purchases be 100% made in the USA. This would include all data processing, call centers and “help desks” that the federal bureaucracies regularly bid out to foreign nations.
Once you understand the issues, the solutions become obvious.