The Failed Expectations of U.S Trade Policy

[FreakinDJ]

The Failed Expectations of U.S Trade Policy

Robert Cassidy | June 4, 2008


As the principal negotiator for the landmark market access agreement that led to China’s accession to the World Trade Organization (WTO), I have reflected on whether the agreements we negotiated really lived up to our expectations. A sober reflection has led me to conclude that those trade agreements did not.

We failed to address the underlying fundamental market distortions that skew the benefits toward the few while leaving the rest of the economy less well off. As George Soros, in a Bloomberg News interview on the financial crisis, recently said, “…the system, as it currently operates, is built on false premises.” The premise on which our trade agreements are negotiated is at best flawed, if not broken.

The next administration has to take a hard look at the trade agreements currently on the table – especially with South Korea – and ask: who benefits? The answers should lead to a fundamental reassessment of what needs to be included in those trade agreements so that the benefits flow to broader and more equitable segments of the economy.

Failed Expectations

China’s agreement to enter the WTO is a perfect example of failed expectations. In order to join the WTO, China made unilateral concessions to reduce and, in some cases, eliminate barriers to entry for U.S. goods and services. While no one claimed that the bilateral deficit would be reduced, claims were made that U.S. exports of goods to China would increase thus creating jobs in the higher paying export sector.

U.S. exports to China have increased and, as the U.S. Trade Representative (USTR) often emphasizes, at a higher rate than to any other country. But such claims distort the real truth that exports grew faster because they grew from a very low level. In absolute terms, the increase in U.S. exports of goods to the EU was almost 70% greater than the increase in exports of goods to China and to Canada; the increase was 40% more than to China. Neither of those trading partners made any trade concessions to the United States during this period.

Conversely, on the U.S. import side, the United States made no concessions to China, yet U.S. imports from China were more than triple the pre-accession levels; to $321 billion in 2007, almost matching imports from the entire European Union. In contrast, increases in imports from Canada, our largest trading partner, rose by $82 billion and imports from the EU increased by $134 billion.

Who Benefits?

The beneficiaries of the agreement with China fall into two groups: multinational companies that moved to China and the financial institutions that financed those investments, trade flows, and deficits. Foreign direct investment (FDI) in China accelerated at a time when such investment to other parts of Asia was declining and, in 2001, even matched FDI to the United States. Sourcing from China, whether from direct investment or through licensing arrangements, has allowed companies to cut costs and increase profits, as reflected in increased corporate profits and the surge in the U.S. stock market.

http://www.fpif.org/fpiftxt/5274

Ask yourself 1 question : "What has a MultiNational Corporation or a Financial Institution done for you lately?"

[Deja Q]

1. Apart from getting a loan?

:evilgrin:

[FreakinDJ]

5. "Apart from getting a loan" - Now that is a Good Laugh !!

I have fair credit - (not perfect but certainly not bad) and a pretty good paying job +120K, and my debit to income ratio is way below 20% (including mortgage payment) and when I applied last month for a loan to finance a Harley Davidson the company came back with 21% interest - said the Harley was a "Non-essential item"

To add insult to injury, they wanted to hold the pinkslip on the Harley as well as the pinkslip on my truck.

These guys are banking on the economy falling even further

[jody]

2. U.S Trade Policy aka Free Trade is really a free-handout for China, India, Korea, Japan et al.

Sadly, corporatists who control our government courtesy of an electorate bitterly divided over partisan issues like god, gays, guns are primarily interested in finance not production and that particular goal is best achieved by producing goods where labor is cheapest.

Their golden rule is "he who has the gold makes the rule" and when a world bank is established and first-world countries bankrupt as seems inevitable, the corporatist will have established a New World Order and the people will shout:

"We the people are dead, long live the corporation."

And the high priests of Mammon laughed about how easy it was to destroy the world's longest running, most successful experiment in democracy.

And the thirsty and hungry and sick and imprisoned and naked prayed to Mammon to have mercy on their wretched. miserable bodies because the people had lost the very soul of democracy.

[FreakinDJ]

3. "Out of Work" is becoming America's motto

I often wonder how many people can focus their brain long enough to wrap it around what you just said

Sadly, corporatists who control our government courtesy of an electorate bitterly divided over partisan issues like god, gays, guns are primarily interested in finance not production and that particular goal is best achieved by producing goods where labor is cheapest.

Their golden rule is "he who has the gold makes the rule" and when a world bank is established and first-world countries bankrupt as seems inevitable, the corporatist will have established a New World Order and the people will shout:

and during that whole heated discussion of "God Guns and Gays" I was one of the very few (even here at DU) that was shouting "Hey the American Economy is For Sale and a crash is coming"

[jody]

4. It's pathetically humorous that topics like celebrities' deaths receive thousands of posts and death

of our economy is ignored.

[FarCenter]

6. It is in each US company's best interest to outsource as much work to low-cost countries as possible

While the free market's invisible hand cuts their collective throats.

And ours.