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Author Topic: Trade Issues / Freedom to Trade  (Read 1506 times)
DougMacG
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« on: October 12, 2011, 10:49:49 AM »

The article below is based in current events today, aimed at our hemisphere, but also summarizes nicely the main benefits of free trade, what I call freedom to trade - a basic economic freedom.  Key points:

1) "There are a billion new consumers that are going to join the middle class in Asia over the next 10 years. We have to have access to them."  In other words, with free trade, whatever you invent or innovate or design or build or just source and sell, the larger the market you can sell into the more return you can earn for your effort.

2) 'access to imports is a key contributor to high U.S. living standards'.  Freedom to buy from far away means the freedom to make the best possible purchase transactions available.  Besides standard of living, this is a key component in competitiveness.  

3) Trade war escalations: "If the U.S. puts up new trade barriers to China and attaches "buy American" provisions to federal spending—as the Obama administration did in 2009 and now wants to do again—other countries are likely to feel justified in moving to protect their own domestic markets."  As with the leadup to the Great Depression, protectionism at home leads to other countries doing the same, and trade wars destroy economies, commerce and wealth.
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http://online.wsj.com/article/SB10001424052970203476804576616760650005304.html?mod=WSJ_Opinion_LEADTop

The Case for Free-Trade Leadership   WSJ
Mexico's growth in investment and trade, both imports and exports, shows the benefits of open borders.

      By MARY ANASTASIA O'GRADY

'There are a billion new consumers that are going to join the middle class in Asia over the next 10 years. We have to have access to them."

That was General Electric CEO Jeff Immelt on CNBC Thursday responding to a question about the Senate's 79-19 vote last week to advance a bill that would punish China with antidumping duties if it does not strengthen the yuan.

Bipartisan Washington, as indicated by that vote, is itching to launch a trade war with China. Mr. Immelt warned against it: "Make no mistake. The U.S. will do better if we have a good strong positive engagement with China. I was there last week. It is still growing eight to ten percent. We need to have access to China for our exports."

Too bad President Obama didn't say that.

There is no such thing as a good moment to close markets, but this would seem to be an especially inauspicious time, just as Asians are climbing up the economic ladder, to introduce a policy that is likely to generate reciprocal penalties against U.S. exporters.

But that is only one reason the Senate bill is dumb. The chief reason is that access to imports is a key contributor to high U.S. living standards and American export competitiveness.

A third factor, less often recognized, has to do with the need for U.S. leadership in reaching wider geopolitical goals. If the U.S. puts up new trade barriers to China and attaches "buy American" provisions to federal spending—as the Obama administration did in 2009 and now wants to do again—other countries are likely to feel justified in moving to protect their own domestic markets.

The unintended consequences of a U.S. shift toward protectionism are not hard to predict. Brazil is already loudly complaining about pressure on local industry due to currency weakness abroad—meaning the U.S. dollar. In September it raised duties on some auto imports by 30 percentage points.

Closer to home, Mexico remains vulnerable to internal protectionist forces. Amazingly, the country has stuck to a liberal trade agenda in recent years despite the impact on exports from the 2009 U.S. recession and strong competition from China. But a World Trade Organization commitment it made in 2008 to lift all antidumping duties on some 1,500 Chinese goods this December is stirring up protectionist sentiment. Presidential and legislative elections slated for July will give nationalist populists an opportunity to strike.

The Bombardier manufacturing facility in Queretaro, Mexico

Sensational press coverage of Mexico's narco-violence has obscured the exciting story of the changing economic landscape brought on by openness. In an October economic analysis of the economy, the Spanish bank BBVA says that in 2010 Mexico was among the top 10 destinations in the world for foreign direct investment, which grew almost 22%.

BBVA found that the "main attraction" for that capital was Mexico's "platform" as an exporter of manufactured goods (over $246 billion in 2010) but also as an importer of manufactured goods ($250 billion). Those figures, BBVA said, "place Mexico as one of the economies most open to foreign trade and with the greatest trade activity internationally."

This has allowed Mexico to move up the food chain as a producer. One fascinating development is its evolving role in the global aerospace industry. Using data from the Boston Consulting Group, BBVA found that "in the aerospace category, [Mexico] is the main recipient [in the world] of FDI."

Baja California is home to 52 of the 232 aerospace companies in Mexico today and 40% of the industry's work force. Honeywell and Gulfstream are two household names that have facilities there. In Chihuahua, Cessna manufactures aircraft wiring sets (called harnesses) and ships them to Kansas for airplane assembly while Bell Helicopter manufactures cabins for commercial units. Jalisco is also an aerospace hotspot, with projects "in place," according to the Mexican-government publication Negocios, for "producing engine components, wiring harnesses, cables, landing system components and heat exchangers." By attracting the Canadian firm Bombardier in 2006, the state of Queretaro has pulled in a host of suppliers. A total of 50 local and foreign firms employ 4,800 workers in what is now "recognized as the strongest Mexican aerospace cluster," Negocios reports.

Increasing labor costs in China, and Mexico's low transportation and logistic costs for the Western Hemisphere, its available human capital, and its respect for intellectual-property rights are all conspiring to attract investors. But none of it would be happening without the opening to foreign trade and investment.

It is true that Mexico has not grown fast enough to satisfy its young population. But that's because Mexican competitiveness needs work. Crucial sectors like telecommunications, electricity and oil have to be deregulated to lower costs; and further opening to competitors like China is necessary.

This will entail tough domestic political battles which, if won, will make Mexico a stronger, wealthier democracy and a better U.S. neighbor. A new wave of protectionist thinking out of Washington is not going to be helpful to market liberals who are trying to stay the course.
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Crafty_Dog
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« Reply #1 on: October 12, 2011, 12:04:10 PM »

I agree with the benefits of free trade.   Free trade also includes capital flows, and China's currency is strongly controlled.  Its exchange rate policies are exceeding mercantilist and deeply unfair to many Americans productive efforts.

Immelt is not someone whose words carry much weight with me.  Amongst the various reason is that IIRC he has been quite a scumbag with regard to trading with Iran.  Is that we he means by free trade?  Certainly not directly responsive to the question presented here, but still a point that gets on my nerves with regard to him.
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DougMacG
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« Reply #2 on: October 12, 2011, 12:53:23 PM »

True.  I agree the article and I agree with the quote within from the GE chairman only for the substance inside the quotation marks, not for his slimy acceptance of crony, public-private anti-equal-protection leadership.

For the question posed, reasonable exceptions to free trade make perfect sense to me in situations such as transactions that empower or enrich our enemies, or transactions to lower costs by manufacturing with coerced labor.

Isolating a regime like Iran economically is a legitimate foreign policy tool.  Probably not effective, certainly legitimate and distinct from our approach to trade policies in general.
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DougMacG
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« Reply #3 on: December 01, 2013, 09:41:30 AM »

This anti-NAFTA article, 'not necessarily the view of mises.org', makes a couple of valid points:
"genuine free trade doesn’t require a treaty"
"The worst aspects of Nafta are the Clintonian side agreements"

At the time, I was in the international trade business and believed that a true, free trade agreement could be written on the back of a cocktail napkin, not in a 2000 page document.  It is the rest of the Obamacare-like details of NAFTA that were harmful, not the free trade aspect.

On the other hand, the real alternative to free trade agreements is the continuation of trade barriers mostly designed to keep US goods out of other countries.

http://mises.org/daily/6585/The-NAFTA-Myth
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DougMacG
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« Reply #4 on: May 15, 2014, 08:41:32 AM »

http://www.globalpost.com/dispatch/news/business/global-economy/140502/world-commodities-exports-map
This map shows which export makes your country the most money
Australia makes the most money from coal. Who knew?

Using data from the CIA Factbook, we labeled every country in the world by its highest valued export, a.k.a. the commodity that makes the country the most money in the global market. Click on any of the maps below (at the link)to see an enlarged version.



http://thumbnails.visually.netdna-cdn.com/world-commodities-map_536bebb20436a_w1112.png
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ccp
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« Reply #5 on: May 22, 2015, 09:36:54 AM »

I can't imagine Obama would push for a trade deal unless it helps his party.  Our legislators expect us to just trust them?    cheesy

No public disclosure.   Even some who voted for it don't even know what's in it.   And of course the Cans will go along.  Sell us out again.  No party represents me.

http://www.nytimes.com/2015/05/23/upshot/but-what-does-the-trade-deal-mean-if-youre-not-a-cheesemaker.html?_r=0&abt=0002&abg=0
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DougMacG
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« Reply #6 on: May 22, 2015, 05:37:07 PM »

Trade is good. (IMHO)   Having Pres. Barack Obama negotiate the details on our behalf is not.  Difficult situation for a Republican lawmaker.  Giving away sovereignty is a deal killer.  No one knows what is in this deal so it is hard to make sense of what is said.

It is funny to see Democrats squirm and split on this, including a falling out between Obama and Warren, and seeing Hillary afraid to take either side and piss off the other.

It is odd to have Obama on the pro-trade side.  Maybe he sees it the same way protectionists see it - that it hurts the American worker and the American economy - and that is why he supports it.

True free trade favors both sides of an agreement.  Consensual trade by definition benefits both sides.  99% of the words in these agreements spell out not-free trade terms.  I believe NAFTA was a 900 page document.  I don't want to brag but I could write a free trade on a single side of a cocktail napkin.
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Crafty_Dog
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« Reply #7 on: May 22, 2015, 09:03:21 PM »

Sometimes uneven source Dick Morris cheesy says that free flow of labor is in there and I have seen assertions that foreign companies will be able to challenge US environmental standards.
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DougMacG
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« Reply #8 on: May 23, 2015, 06:29:05 PM »

Sometimes uneven source Dick Morris cheesy says that free flow of labor is in there and I have seen assertions that foreign companies will be able to challenge US environmental standards.

These are things I've heard too.  I wonder what a "free flow of labor" looks like if it happens within our existing laws for foreign, legal, documented workers.  And I'm not sure that hurts us.  The key to our sovereignty is that these agreements do not supercede the US constitution and existing US laws.  All trade agreements tend to be opposed based on the threat to our labor and environmental laws.  Critics generally claim that international companies will just build the products elsewhere, if we let them, where the laws aren't as strict.  All things otherwise equal, they already do that.  

I don't see how anyone who builds a factory here thinks they will not be subject to EPA regulations.  All it takes is one sentence in the trade agreement:  "Nothing in this agreement shall be construed to change or weaken US environmental laws, or labor laws, or immigration laws."  It shouldn't even take that.

The WSJ (years ago) made a point that global trade is both a) beneficial and b) inevitable.  If you don't agree with a), then see b).

If the US cannot compete on an even playing field with Asia or Mexico or whoever, then we have bigger problems than a trade agreement.  Global competition might be the only motivator left to correct our  over-taxation and over-regulation problems.  If we right-size all of that, I don't know anyone who believes the US cannot compete successfully in the global marketplace.

We are down to the fact that this President will negotiate a bad agreement.  In that case, vote it it down and let these countries know we are trying to get a better President.
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ccp
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« Reply #9 on: June 01, 2015, 11:32:13 AM »

Incredibly complex, no one seems to be upfront as to what's in it, or understand what is in it, and all in secret.   It is probably giving away our sovereignty away to a multination trade agreement.   Of course big companies probably had a say in its' formulation and the rest of Americans get it handed to us whether we like it or not.   So what else is new?   


****Julian Assange On TPP: Only 5 Of 29 Sections Are About "Traditional Trade," Covers "Essentially Every Aspect Of A Modern Economy"

Speaking from his 'prison' in the Ecuadorian embassy in London, Wikileaks founder Julian Assange explains the Trans-Pacific Partnership treaty, which would link his home country of Australia with the U.S. economically. "It is mostly not about trade," Assange says. "Only 5 of the 29 Chapters are about traditional trade."

JULIAN ASSANGE, WIKILEAKS: First of all, it is the largest ever international economic treaty that has ever been negotiated, very considerably larger than NAFTA. It is mostly not about trade, only 5 of the 29 Chapters are about traditional trade.

 The others are about regulating the internet, and what information internet service providers have to collect, they have to hand it over to companies under certain circumstances, the regulation of labor conditions, regulating the way you can favor local industry, regulating the hospital, health care system, privatization of hospitals, so essentially every aspect of a modern economy, even banking services are in the TPP.

 So that is erecting and embedding new ultramodern neoliberal structure over U.S. law and the laws of other countries. And putting it in treaty form.

 By putting it in a treaty form, there are 14 countries involved, that means it is very hard to overturn, so if there is a desire, a democratic desire to do it on a different path. For example, to introduce more public transport. Then you can't easily change the TPP treaty, because you have to go back to the other nations involved.

 Now looking at that example, what if the government or a state government decides it wants to build a hospital somewhere, and there is a private hospital has been erected nearby.

Well the TPP gives the constructor of the private hospital the right to sue the government over the expect loss, the loss in expected future profits. This is an expected future loss, this is not an actual loss that has been sustained, this is a claim about the future.

 We know from similar instruments where governments can be sued over free trade treaties, that that is used to construct a chilling effect on environmental and health regulation laws. For example, Togo, Australia, Uruguay are all being sued by tobacco company Phillip Morris to prevent them from introducing health warnings on cigarette packaging...

 It is not even an even playing field, lets say you were going to let companies, make it easier for companies to sue governments, maybe that is right, maybe the government is too powerful and companies should have the right to sue them in certain circumstances.

 But it is only multinationals that get this right. U.S. companies that operate in the U.S. in relation to investments that happen in the U.S. will not have this right.


Julian Assange's Wikileaks website is the only place where you can read one of the 29 secret chapters of this treaty. Current TPP negotiation member states are the United States, Japan, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru, Vietnam, New Zealand and Brunei. The TPP is the largest economic treaty in history, including countries that represent more than 40 per cent of the world´s GDP.
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DougMacG
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« Reply #10 on: June 01, 2015, 12:01:57 PM »

Good points ccp.

The debate so far was about fast track trade negotiating authority.  Of course we don't want President O negotiating on our behalf, but we also don't want that precedent to be lost on his successors.  536 people can't negotiate.

On the question of what we can do about it if it comes out as a bad agreement:  The majority of Dems already oppose it without the defects speculated.  A letter signed by half the Republicans would put the President on notice that if it contains the 'other 24 sections', it will be voted down.  But say that only if you mean it, not to paint Obama-like red lines.

I am SO tired of bills, laws and treaties not being what they are named.  If they put something into a trade agreement that is not in his trade authorization, then amend it anyway, down to its authorized and constitutional sections, and vote it up or down.

Let's make sure US sovereignty versus consenting to world government is on the issues list in the next campaign.  That is NOT opposition to trade.  And don't give away whatever control of the internet that we still have.
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Crafty_Dog
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« Reply #11 on: June 01, 2015, 12:09:59 PM »

In that only 5 our of 29 parts are about Trade, perhaps it would make more sense for our discussions to be the Sovereignty thread?

http://www.dickmorris.com/the-trade-agreement-fraud-dick-morris-tv-lunch-alert/?utm_source=dmreports&utm_medium=dmreports&utm_campaign=dmreports
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ccp
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« Reply #12 on: June 04, 2015, 08:01:02 PM »

The fact that McConnell is saying the trade deal is about the country and not Obama just shows how corrupt he is.  There can be no other explanation that he is for this for pork and for his lobby business cronies.

Just despicable how our own party just washes us down the drain.  I expect it from the crats but not from Republican leaders.

Just despicable.

Doug, I take it you go to Repub conventions?

I for one am with the millions who will not vote for the likes of Bush (unless he really changes his tune), Graham, Kasich, Christy, and the like.   I will sit home and if Hillary wins she wins.  These guys are a loss anyway so no point in voting for them.

McConnell and the other fraud from the other House are corrupt.  Just no other explanation folks.

Give Obama fast track?  There not crazy - just corrupt.

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DougMacG
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« Reply #13 on: June 04, 2015, 10:07:52 PM »

The fact that McConnell is saying the trade deal is about the country and not Obama just shows how corrupt he is.  There can be no other explanation that he is for this for pork and for his lobby business cronies.
Just despicable how our own party just washes us down the drain.  I expect it from the crats but not from Republican

Doug, I take it you go to Repub conventions?

I for one am with the millions who will not vote for the likes of Bush (unless he really changes his tune), Graham, Kasich, Christy, and the like.   I will sit home and if Hillary wins she wins.  These guys are a loss anyway so no point in voting for them.
McConnell and the other fraud from the other House are corrupt.  Just no other explanation folks.
Give Obama fast track?  There not crazy - just corrupt.

Doc,  You have this about right.  The fast track opposition is really about distrust of the Congress to vote down a bad deal, not the obvious - that this President can't be trusted to negotiate in our best interests.

Bush won't be the nominee IMO, but I have already been wrong on one of these picks.

If it really came down to Bush v. Clinton ...     well let's deal with that only if we have to.  He isn't going to change, but we aren't going to sit still and let her win either.

Remember the author of the latest Clinton corruption book also has a follow-the-money book coming out about Jeb.   So far, Jeb is under-performing in terms of both fund raising and poll numbers, even if he is almost in first place.  He hasn't won an election in a long time and doesn't seem to get the framework of this one.

All I can say about trade bills that aren't about trade is vote them down and vote in a better President.  We are the United States of America, very recently the largest economy in the world.  People should want to trade with us!
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ccp
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« Reply #14 on: June 05, 2015, 05:31:38 PM »

One more thought.  I guess one other explanation is someone dug up dirt on McConnell or Boehner and is extorting them to push for a deal.  Perhaps it is the stick not the carrot.    Mark Levin questioned brought up this point. 

Perhaps the DOJ caught them at the local DC brothel.  ?

 undecided
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