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Trump and Sanders are both right: 'Free trade' is killing U.S.

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Trade has been central to the 2016 presidential political debate, from Donald Trump threatening 45% tariffs on Chinese imports to Senator Bernie Sanders (I-Vt) pressuring former Secretary of State Hillary Clinton to oppose President Barack Obama's Trans-Pacific Partnership deal, the pact she earlier celebrated as the "gold standard" for trade accords.

It is becoming clear how ruinous U.S. global trade and tax policies have been. Yes, Americans have benefited from the lower prices and increasing variety of imported goods. But the nation has been running unprecedented trade deficits, now at about $500 billion a year, or 3% of gross domestic product.

The United States lost an estimated 2.4 million jobs to China trade alone from 1990 to 2010 while running the largest trade deficits with that country in recorded history. As companies moved good jobs to countries like China, with low wages and scant environmental or consumer protections, entire communities in the United States were savaged. Economists estimate trade with low-wage countries has lowered blue-collar workers' wages about $1,800 a year. Displaced workers lose incomes, homes, marriages, hope - and suffer through stunningly slow adjustments, often to lower-income jobs.

The benefits of trade accords have flowed largely to corporate balance sheets, to investors and to high-level executives. Workers, meanwhile, have suffered a loss of wages, security and power.

So what would a new U.S. trade policy look like? First, it would break with the current template of trade accords by abandoning the Trans-Pacific Partnership, which is pending ratification, and suspending negotiations on the Trans-Atlantic Trade and Investment Partnership, or TTIP, now underway.

The new trade policy would be based on a different set of principles. Trade should be seen as a means, not an end, as Dani Rodrik, a professor of international political economy at Harvard's John F Kennedy School, argues. Washington should seek a trading system that would enable the United States, and other nations, to pursue their own values.

A sensible system would allow countries to protect their social arrangements, including workers' rights and environmental laws. Congress would regain authority to set clear objectives for trade accords, to decide what could be included in negotiations and to have access to the negotiations while they are underway. Fast-track trade authority, which allows the president to negotiate in secret and forces Congress to vote up or down without the ability to amend, would be repealed.

The substance of trade discussions would also change radically. Instead of detailed negotiations about enforcing drug companies' patents, for example, a new focus would be on pressing issues that affect working people. Raising and harmonizing taxation of global corporations, while shutting down tax havens and coordinating enforcement efforts, would be a centerpiece, as the Panama Papers tax-dodging scandal justifies. Pushing to place a global price on carbon emissions to counter climate change would be a first priority. Empowering countries to retaliate against currency manipulation would be central.

One initiative, suggested by Dean Baker, director of the Center for Economic Policy Research, would remove barriers that protect the inflated earnings of doctors, dentists and lawyers. If trained doctors and dentists from abroad were allowed to practice in the United States, he estimates savings of about $90 billion a year, or roughly $300 a person annually.

International negotiations might also create a global fund to pay for public, direct financing of medical research, with the results staying in the public domain. In the United States, Baker estimates, lower drug costs would likely save $360 billion a year, or 2% of GDP, about $1,100 a person a year. That is a far higher benefit than even advocates say would be produced from the TPP deal.

A thoughtful and comprehensive alternative trade policy has been put forth by the Congressional Progressive Caucus, the largest caucus in the House of Representatives with more than 70 members. The plan calls for a goal of more - but balanced - trade. The president could announce that the United States plans to move to roughly balanced trade by the end of five years. That would put countries with a trade surplus on notice that they must increase domestic demand and decrease reliance on export-led growth. It would also put global corporations on notice that if they want access to U.S. markets, they had better invest in the United States.

The call for more balanced trade was embraced by the world's 20 leading economies (the G20) after the financial collapse in 2009. But the consensus didn't survive efforts by Germany and China to export their way out of the crisis.

Balanced trade could be produced, as Warren Buffet once proposed, with a system of trade vouchers that would give companies the right to import a stated amount of goods, with that amount adjusted to get closer and closer to projected export totals each year. Or each major county that Washington trades with could be given a limit on the deficits the United States will abide. That would put pressure on these trading partners to increase imports, reduce exports or pay fines that can serve as de facto tariffs.

Second, the proposed plan details steps to enforce labor rights, human rights, and consumer and environmental protections. It would also protect countries' right to promulgate higher standards, if desired. It would require that trade accords secure affordable access to essential medicines, which would curb drug companies' efforts to extend patent protections.

Third, the progressive plan mandates that trade accords respect "nationhood rights." To do this, it would repeal the Investor State Dispute Settlement system, which would force global investors to rely on national legal systems. If global corporations are concerned about corrupt local systems, they can self-insure or invest elsewhere. It would also expand and defend "Buy America" government procurement policies. Taxpayers should be able to demand that their taxes go to support jobs in America - not jobs across the world.

Fourth, the plan would work to accomplish in fact what free traders argue for in theory: That the winners from global trade compensate the losers. Displaced American workers would gain assistance under an expanded Trade Adjustment Assistance Act; they would receive extended unemployment benefits and wage insurance if they were forced to take lower-paying jobs. New initiatives would provide targeted assistance to communities hit by plant closings. In Denmark and Germany, where workers earn higher wages than in the United States, far more resources are devoted to sophisticated training and placement programs to ensure that workers are not victimized by the trading system.

More balanced trade would also benefit from a clear industrial strategy, one focused on capturing the lead in inventing, building and marketing the essential products of the green industrial revolution, which has already begun to sweep the world.

Proponents of Washington's current system paint the choice as one between free trade and protectionism. But current trade accords aren't creating free trade; they are enforcing selective protection for special interests. Ruinous U.S. deficits aren't an inevitable result of globalization, but the intended result of corporate trade and tax policies.

Sanders and Trump have helped expose the folly of America's current course. Our trading policies are classic examples of rules rigged to benefit the few. Economists increasingly accept that they contribute directly to our increasingly extreme inequality, as workers lose ground and CEOs clean up. The Congressional Progressive Caucus proposal shows that sensible alternatives are possible.

America's current plight is a question of politics and power, not fate.

© (c) Copyright Thomson Reuters 2016.

©2019 GPlusMedia Inc.

22 Comments
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what a bunch of meandering, left-leaning rubbish!

-10 ( +3 / -14 )

Proponents of Washington’s current system paint the choice as one between free trade and protectionism.

BINGO!

There is a BIG reason why Bernie and Donald talk about trade and deals a lot, while Hillary and Cruz scream bigot and socialist.

Take the cattle ranchers for an example:

As the small ranches go under, their land is either picked up by agribusiness giants like J.R. Simplot or billionaires playing cowboy like David Packard, or subdivided for the dreary ranchettes that disfigure southern Colorado

Blame NAFTA. With the signing of the trade agreement came truckloads of Mexican calves, headed for the feedlots and slaughterhouses north of the border. The influx of these Mexican calves produced a meat glut in the United States, driving the prices down to levels disastrous for marginal operations on the arid grasslands of the Interior West.

Small family ranchers- 0 agribusiness- +100

So the bills for NAFTA are finally coming due. Under its stipulations polychlorinated biphenyls (PCBs) are now being trucked into the U.S. from Canada and Mexico for the first time. Imported Mexican tuna, caught with fishing techniques deadly to dolphins, will lead to the probable destruction of the dolphin-safe tuna labeling legislation passed in the U.S. in 1989. Canadian forests are being logged at a vicious pace at subsidized rates by multinational corporations such as James River, Champion International, and MacMillan Bloedel. This lumber is being dumped on already depressed U.S. markets, resulting in the loss of 35,000 mill jobs. Lead-spewing trucks from south of the border are now legal, thanks to a ruling from the GATT tribunal.

It should be obvious by now that many corporations don't care about the country of their birth. They are dangerous beasts that need to be caged, it seems, every once in awhile.

As Teddy Roosevelt said:

Our aim is not to do away with corporations; on the contrary, these big aggregations are an inevitable development of modern industrialism, and the effort to destroy them would be futile unless accomplished in ways that would work the utmost mischief to the entire body politic. We can do nothing of good in the way of regulating and supervising these corporations until we fix clearly in our minds that we are not attacking the corporations, but endeavoring to do away with any evil in them. We are not hostile to them; we are merely determined that they shall be so handled as to subserve the public good. We draw the line against misconduct, not against wealth.

http://www.counterpunch.org/2016/04/15/heres-the-beef-how-nafta-kissed-the-west-goodbye/

0 ( +3 / -3 )

It should be obvious by now that many corporations don't care about the country of their birth.

Like Trump. Look how many jobs he moved out of the country.

1 ( +6 / -5 )

Like Trump. Look how many jobs he moved out of the country.

How many? Got any #'s?

4 ( +7 / -3 )

How many? Got any #'s?

Not exact numbers, but the evidence is damning:

https://www.washingtonpost.com/politics/trump-decries-outsourced-labor-yet-he-didnt-seek-made-in-america-in-2004-deal/2016/03/13/4d65a43c-e63a-11e5-b0fd-073d5930a7b7_story.html

http://www.pbs.org/newshour/making-sense/column-trumps-outrage-over-outsourcing-doesnt-apply-to-his-own-merchandise/

Trump is impressive that even though he is a multi billionaire who outsources his own manufacturing, he has managed to convince people that he is one of and speaks for them.

Just goes to show you how stupid a lot of people are.

1 ( +6 / -5 )

"If trained doctors and dentists from abroad were allowed to practice in the United States, he estimates savings of about $90 billion a year, or roughly $300 a person annually." Yes, but the same could be said for importing electricians, plumbers, auto mechanics, construction workers, etc. I thought the point was to save jobs for Americans. And, in fact, many doctors trained abroad are practising in the States or coming to the US as students and staying to practise after attaining their credentials. Check the roster at any US hospital.

5 ( +5 / -0 )

Just goes to show you how stupid a lot of people are.

Now was that really necessary?

Anyway, a clothing line is not a high pay career manufacturing job, or a large sector of the economy like car manufacturing, and most likely uses illegal's if you stay in the States. Since you chose to be condescending, a junior high school student would be able to understand the difference between making shirts and making cars.

Next!

1 ( +5 / -4 )

Now was that really necessary?

Yes. The curse of stupidity is that most people being or doing something stupid don't realize they are (doing) something stupid.

Anyway, a clothing line is not a high pay career manufacturing job, or a large sector of the economy like car manufacturing, and most likely uses illegal's if you stay in the States.

Ahh, so it's ok as long as it falls into sectors of the economy that Trump is involved in. Gotcha.

0 ( +4 / -4 )

Nonsense. Everyone conveniently overlooks the value of service business revenues that are not included in good deficits.

And trade deficits are not important. If they were, the world economy would have exploded long ago.

1 ( +3 / -2 )

It's been a century since the US sold its soul to banks, pharma, chemical, oil and other large industries. The world followed suit and it's been a dog eat dog, winner take all world. It's also been history. It's time for a new model. Nationalism is rampant. Neither philosophies not religions nor others are bringing the world together. Trump and others are playing the game. Obama did little to change this. Which world leader has? Who has a transnational agenda not there for the big guys?

Yeah, I know, it's dreamy. It's not like we have a lot of time on our hands to turn things around though. Sigh!

6 ( +8 / -2 )

Yes. The curse of stupidity is that most people being or doing something stupid don't realize they are (doing) something stupid.

What, like watching the seasons of The Apprentice year after year? Haha

Never watched the show myself.

2 ( +3 / -1 )

It would also put global corporations on notice that if they want access to U.S. markets, they had better invest in the United States. and that can work both ways , if US companies want to sell in other countries theyd have to setup factories in those countries also, defeats the whole purpose of trade. 45% tarriff on Chinese made goods LOL id like to see the US try that, China would tax US companies in China in response. somehow the US thinks it can always get it way when it comes to International trade and there will be no retaliation.

3 ( +3 / -0 )

What, like watching the seasons of The Apprentice year after year? Haha

Never watched the show myself.

So you're criticizing me for watching a show that you have never actually seen.

Seems legit.

-5 ( +1 / -6 )

what a bunch of meandering, left-leaning rubbish!

"Better to remain silent and be thought a fool than to speak and to remove all doubt."

-1 ( +2 / -3 )

The US still does not get it. The core of the problem with US industry is the short term requirement to make profit to satisfy the share owners and the stupid amount paid to executives hitting those targets. They go hand in hand creating a vicious cycle requiring more short term profit placing more pressure on executive to reach those goals.

Business real needs a balance in short, mid term as well as long term goals which has there share of gain as well as loss but at the moment it's all about the short term profit making it impossible to train skilled workers for mid-term profit which is higher quality goods that can compete in the global market. The US business executive with it's self centered labor union effectively killed off generations of skilled workers which basically is the stem of US lack of competitively in the global market which is the real point that politicians needs to talk about but are not willing in fear of their campaign supporters namely the one who up hold the present system.

8 ( +8 / -1 )

The US still does not get it. The core of the problem with US industry is the short term requirement to make profit to satisfy the share owners and the stupid amount paid to executives hitting those targets. They go hand in hand creating a vicious cycle requiring more short term profit placing more pressure on executive to reach those goals.

Bingo! Well said.

1 ( +4 / -3 )

Good article, thank you. I think that while Mr. Trump speaks in platitudes, Sen. Sanders speaks in specifics.

3 ( +4 / -1 )

Trump and Sanders are both right: 'Free trade' is killing U.S.

Nope, Trump, Sanders, and the author of this article are wrong. Saying "free trade is killing us" is just another way of blaming others while refusing to accept any responsibility. The article mentioned about the 2009 crisis and sort of blamed China and Germany for keeping on exporting, but not one mention of the country that started this crisis in the first place. The US needs to stop thinking they're in the driver seat when it comes to trade nowadays. Other countries are now becoming economically stronger to be able to afford a trade war with them. The US can't honestly expect to put tariffs on a country's products while still being able to sell their own products to the said country without any sort of retaliation.

2 ( +3 / -1 )

Ironic when there the US does not have free trade in any meaningful form. Free trade does not protect jobs, wages, or anything else, it protects those companies which lobby for protections so they don't have to compete with other companies. This results in higher profits, but not necessarily higher wages.

Left alone, the world's economies are perfectly capable of providing profits, good wages, and steady growth. But politicians cannot get any graft if they can't grant any special favors, and companies cannot monopolize larger parts of their markets without special favors. And the favors don't mean just tariffs, currency manipulation and other practices are also designed to limit competition, and raise the prices of the goods made by competing companies.

When there are no tariffs, no restrictions, no currency manipulation, we end up with an even playing field for all countries. The prices of labor even out as imbalances in currency values are equalized in the currency trading markets. We end up with a balanced and energetic world economy which is efficient, and provides the lowest prices, highest quality, and most fair wages and profits.

But no company wants only fair profits, and no politician will enact any policy which reduces his power to buy votes, influence, and extract benefits for himself or his friends.

0 ( +1 / -1 )

Nope, Trump, Sanders, and the author of this article are wrong. Saying "free trade is killing us" is just another way of blaming others while refusing to accept any responsibility.

Maybe they meant it literately, as in Mexican made Takata air bags, or Chinese children's toys painted with lead paint, or Chinese Dry Wall emitting sulfurous gases like carbon disulfide, carbonyl sulfide, and hydrogen sulfide.

-2 ( +0 / -2 )

A sensible system would allow countries to protect their social arrangements, including workers’ rights and environmental laws.

Say's it all. Go to K-Mart and get a kettle for $5.00. Which is all you can afford on a minimum wage. When we have come to a situation where workers rights are seen as an impediment to trade it is time to take a step back and revaluate where you need to be as a country.

Yes we will have to pollute this river but we will create 200 (minimum wage) jobs. Fair deal or what?

Free trade is only free because others pay the cost of it.

2 ( +2 / -0 )

Can't understand the thumbs down. Unless there are some corporate pigs on here who feel guilty about bringing the human race down.

0 ( +0 / -0 )

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