Wednesday, January 12, 2011

Conservative Agenda - Free Trade

I want to start a series on various issues where I think conservatives ought to show leadership. Up first on the docket -- defending free trade.

As I was listening this morning to a very interesting Blogging Heads TV clip between Mickey Kaus and David Frum (they have a very good blurb about 2012), I was struck by a comment that Kaus, a Democrat, made. He admitted that the Democratic Party is dominated by large, special interest groups, like the labor union and the education union. Part of the conservative cause should be going Chris Christie on these folks.

Of course, labor unions are against free trade because they want to protect their labor interests. Actually, more precisely they want to protect their power. However, the great bulk of empirical research conducted by economists since the days of Adam Smith is so largely in favor of free trade that there is very little debate outside of Labor and socialists/left wing circles. In short, when President Obama obeys labor interests, it is not because he is intellectually convinced of their agenda. It is just politics plain and simple.

Several areas where Republicans should speak up:

1. Colombia and Panama: John McCain recently met with Colombian President Juan Manuel Santos and told him that the Republicans plan on pushing ratification of the free trade agreement with Colombia, as well as Panama. The deal with Colombia was signed by President Bush in 2006, before being stalled for 18 months in Congress. In 2008, the Democrats refused a vote on the treaty.

2. South Korea: President Obama has decided to renew attempts at ratifying an agreement with South Korea that has floundered in the Senate since 2007, when President Bush was behind it. Democrats refused to vote to ratify it then because of restrictions that South Korea placed on American beef imports. Now, it is likely that those same Democrats will change their minds and accept the restrictions. Republicans should point out the hypocrisy as they push to have this treaty ratified.

3. Mexico: In 2009, President Obama violated a long standing NAFTA agreement by refusing entry into the United States to Mexican truck drivers. Obama's decision flared up a minor trade war with Mexico, as our southern neighbor responded with retaliatory tariffs against 90 US agricultural and manufactured products worth more than $2 billion a year. Now, nearly two years later, the Obama administration has hinted that a new deal to allow Mexican trucks on American roads could be "up and running" in 4-6 weeks. Republicans should put pressure on the Obama administration to follow through on its most recent plan. The retaliatory tariffs, by the Obama administration's own admission has greatly impacted U.S. farmers and exporters.

4. Latin America and beyond: Republicans should lead the way in forming free trade agreements with the rest of Latin America and beyond. China and other Asian countries have for the past decade been showing more interest in our southern neighbors. If we don't act now, we can lose a golden opportunity. Even Canada is now focusing its attention more on Latin America.

Cross posted at The Cross Culturalist.


Bill589 said...

Free trade always sounds good to me. But I’ve read arguments about that it has to be ‘fair’ trade too. No lopsided trade rules.

But, other than that, this is way beyond me right now.

Pablo said...

Bill, you are right. A perfect example is China, which I probably should have addressed in this post. But free trade ought to be fair trade.

John said...

Free trade should be fair, but only in the sense that the rules should be the same: No quotas or tariffs from either side!

However, we should free trade even with countries were salaries are low. They are low, because productivity is low. Salaries more or less follow productivity.

There is simply no economic case to be made against free trade. I've read a lot about that issue, and I believe that those who are against free trade are mainly guided by emotionalism: "Think about the poor factory workers who are losing their jobs". Yes, I do feel sorry for them, but I don't let my emotions take overhand. I also feel sorry for all those who were producing typing machines whom became unemployed when computers became popular. The fact that they became unemployed is no excuse for banning computers. And the fact that factory workers in Michigan become unemployed is no excuse for protectionism.

I'll probably write a post on this myself soon :) I haven't had much time lately, I have had three exams this week. But now I'm free until wednesday, so I'll have time to do some fun stuff - like blogging :)

BOSMAN said...

I'm with Bill on this Free Trade as long as it's Fair Trade!

Ann said...

How do you feel about a solar Panel Co. that received all kinds of federal start up monies and expansion monies. They employed 800 people.

To stay competitive, they are leaving the U.S. and setting up in China. 800 people out of work. Gov't monies lost!

How's that for free and fair trade?

China sucks said...

What about Patent infringement? So one invents something here. Produces them here for $500.

China buys one. steals the technology and starts producing them to compete with the $500 item for $100.

Hows that for Fair and even playing field?

Pablo said...


You are right that there will be some people who will lose their jobs under free trade. But economist since Adam Smith and David Ricardo have all argued that the overall growth in the economy and the decrease in prices is beneficial to all. Government needs to help those who lose their jobs due to trade pacts, but it should not shy away from the overall benefits of free trade.

Pablo said...

China sucks,

I don't know anything about patent infringement. But it is my impression that China cheats with its currency.

China has been taking American military technology though. Their military is still a generation or more behind American standards, but it has made drastic improvements in the past decade. Just recently they showed off a stealth fighter plane.

Anonymous said...

In an ideological sense, I don't know which way i would choose regarding free trade. However, in a practical sense, we can't compete with these countries who pay their labor slave wages unless we either do the same to our workers(unacceptable), or impose trade restrictions(unfortunate but palatable). All of this bickering over the manufacturing scraps that the rest of the world(China) has not had a chance to scoop up is not going to help us as a COUNTRY. I am a Hoosier, but before that I am an American. Stealing jobs from neighboring states by decreasing our standard of living(right to work) does little good for my state, negatively impacts another, and does absolutely nothing for my country. There's no third world businessman that is gonna stop paying a 12-year-old a dollar a day to pay us $10 an hour, even if it is down from $12. "Buy American" is great in theory, but have you tried that? If I only bought American clothes, i'd be arrested for indecent exposure. If they do exist, I can't find them. The only true way to bring us back from the brink of economic disaster is through tariffs, trade sanctions, or trade certificates(Warren Buffet's plan to reverse our trade deficit). I see a lot on comparative advantage, and I do get the concept. I wonder sometimes, if anyone has thought about what happens when the world gets so efficient that it only requires 75% of the earth's population to generate 100% of it's usable goods. 25% worldwide unemployment? where will that be? probably centralized in the countries with the highest cost of! No thanks. End globalization(fat chance, the WTO is unstoppable). Buy American(good luck). Inhibit trade(maybe if we get some good honest politicians..... hahahahahahahahahahahahahahahahahahahahahahahahahaha!)