Trade Obstructionism
From last week, but alas timeless: Robert Samuelson in the Washington Post on the continued strength of ignorant and frightened protectionism. The nut:
Just last week Democratic congressional leaders signaled that they may oppose new trade agreements with Colombia and Peru. Who, if anyone, would benefit is unclear. As The Post reported, the agreements' darkened prospects have already led to layoffs in Colombia. In the United States, manufacturers believe the agreements would expand their exports. Peru's tariffs average about 10 percent, Colombia's about 11 percent, says Frank Vargo of the National Association of Manufacturers. Most of these would go to zero under the agreements.We are dealing with something new here. It transcends traditional protectionism, which tries to shield specific industries and workers from imports. It's trade obstructionism: a reflexive reaction against almost any trade agreement. The idea is that much trade is inherently "unfair."
While I'm not sure how "new" this attitude is–it's pretty classic, timeless protectionism–Samuelson brings some data to the table to counter it:
American trade deficits haven't destroyed U.S. job creation by sending work abroad. Consider: From 1980 to 2006, the trade deficit jumped from $19 billion to an estimated $786 billion, or from less than 1 percent of gross domestic product to about 6 percent. Still, employment in the same period rose from 99 million to 145 million. Job creation defies the trade deficits, whose causes lie largely beyond our control and have little to do with "unfair" trade practices.Faster economic growth in the United States than in many of our major trading partners has stunted our exports and increased our imports. Likewise, the dollar's role as the main global currency—used for trade and international investment—has kept its exchange rate high. Companies, individuals and governments hold on to dollars rather than selling. This makes U.S. exports more expensive and imports cheaper.
Link via Sheldon Richman at Foundation for Economic Education.