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Both Obama & Clinton want to renegotiate NAFTA. Why?

Discussion in 'Sports and News' started by JR, Feb 27, 2008.

  1. amraeder

    amraeder Well-Known Member

    OK, this seemed like the logical place to put this. It's it's D_B, well, I'd say I'm sorry but I'm not.

    http://www.time-blog.com/swampland/2008/03/the_nafta_debate.html

    Just wondered what people's takes on this were.
     
  2. I posted this on another thread.
    http://talkingpointsmemo.com/archives/181206.php

    This could be the first real gaffe.
     
  3. amraeder

    amraeder Well-Known Member

    That's why I said I'm not really sorry if it's D_B, b/c there's so many damn poli threads, looked around and didn't see it. What thread is it on?
     
  4. The Big Ragu

    The Big Ragu Moderator Staff Member

    How about actual free trade instead of managed trade?

    Different countries have different opportunity costs of production of various goods and services. Comparative advantage is a real phenomenon, and if we ever had anything REALLY approaching free trade, without the protectionism, the tariffs, the export subsidies, the favorable treatment given to various industries and the government meddling, it would benefit both parties--as uninhibited trade ALWAYS does. People who haggle with each other without interference always work out the best deal possible for each side.

    Also, free trade does not have to mean balanced trade, which is what people ignorantly pine for. Trade deficits are not a bad thing by their very nature and can actually be a very good thing. Cheap imports have kept inflation in check for 25 years in this country.

    Contrary to popular belief, trade deficits are not caused by unfair trade practices or our inability to compete. They are a function of the flow of capital across borders and that has a lot more to do with country's savings and investment rates than unfair trade practices (whatever defines "unfair."). It's why "trade policy," which is really just people fucking things up, has been proven over and over again to be ineffective at managing a trade deficit--which doesn't have to be managed, anyhow.

    At the same time the U.S. Trade deficit has skyrocketed--and we have run them every year since the mid 70s, U.S. industrial and manufacturing output has increased significantly. You'd never realize this by listening to bullshitting politicians or protectionists with lousy ideas.

    Our industrial and manufacturing output has seen gains in the 20 to 30 percent range just since the early 90s, which is proof that there has been no such "sucking sound." It's actually possible to have managed trade, as NAFTA gave us, and for our economy to prosper. Imagine that. Our economy has grown quite nicely, despite the disregard for what is right under people's noses.

    Whenever there is an announcement of a rising, or record deficit, it is immediately presented as bad news. Throughout the 90s and early part of the 2000s, those announcements were usually accompanied by positive inflation, employment and growth news. The hysteria over trade deficits and the attention they receive defies logic. You'd think people would look at our economic growth and conclude that we have done fairly well. We can be prospering like all hell and it's almost like some kind of reflexive jingoism kicks in.

    Wrong ideas about trade are simplistic and appeal to ignorant protectionist ideas. Trade has to do with investment flows and ultimately a country's attitudes about saving and investment, not trade policy or competitiveness. Look at our relationship with any of our trading partners and this is easy to follow.

    In any case, restricting imports to the U.S. market hurts us--it's a formula for inflation and hurting consumers in their pocketbooks. I wish people would realize that you can't reduce a trade deficit by bullying other governments or through some kind of government-run policy, managed trade or export subsidies, which often fly under the euphemism of boosting "competitiveness." As if you can make things competitive by putting restrictions on people.

    Screw NAFTA. But even if it is managed trade, with ridiculous terms and conditions, and not free trade, it's hardly been a problem for our economy.

    Worst of all is the hypocrisy. Rather than explaining to people that their ideas are ignorant, politicians play to the ignorance. Hillary Clinton could support NAFTA, vote for it unequivocally every chance she got... but now she is against it because blue collar workers in Ohio don't understand that protectionism hurts them, it doesn't help. And rather than point that out, she's all too happy to play the populist. Just what we need.
     
  5. JR

    JR Well-Known Member

    All trade is "managed", so I'm not sure what Ragu's point is about "free" trade other than some ideological wish list that has never existed and never will. Countries have "managed" trade since Moses wore short pants.

    International trade isn't some garage sale where people "haggle" with each other over the price of an old bike. It's slightly more complicated than that.

    And I'd be interested in knowing the "ridiculous terms and conditions" imposed by NAFTA?

    It's a trade treaty, agreed at through negotiation where each party (i.e. the governments) are interested in protecting their own interests and those of their constituents.

    The boondoggle in NAFTA (other than a complete disregard of labour and environmental proctections) is that the impetus for the US wasn't "free trade" but unfettered access to Canada's oil and water. Oh, and the U.S flaunts NAFTA whenver it sees fit.
     
  6. The Big Ragu

    The Big Ragu Moderator Staff Member

    Some of what you said is true. All trade is managed--in practice. It doesn't mean it has to be that way, certainly not to the extent it is. In fact, even if every trading partner we have put restrictions on trade with the U.S., we'd still benefit from cutting down the layers of barriers we have set up. We'd even end up with a competitive advantage as the end result.

    The real North American free trade agreement, as visualized by the founders of the country is in Article 1 of the Constitution:

    "No tax or duty shall be laid on articles exported from any state. No preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another: nor shall vessels bound to, or from, one State, be obliged to enter, clear, or pay duties in another."

    It's that simple. Compare those 50 or so words to NAFTA, which took 2,000 pages to come up with a "free trade" agreement. 900 of those pages are devoted to tarriff rates--yet it's a "free trade" agreement. The agreement created dozens of international bureaucracies, which are incompatible with free trade.

    Is managed trade preferable to outright bureaucracy and crony-inspired, or outright corrupt protectionist policies that line people's pockets? Sure. Is NAFTA anything approaching free trade -- even if we will always end up with some form of managed trade in reality? Not even close.
     
  7. JR

    JR Well-Known Member

    Well, actually, it's NOT that simple.

    First of all, I assume in the Constitution that the authors were talking about trade between States, not countries.

    Secondly, international trade is a tad more complicated than it was when the constitution was written.

    The objectives of NAFTA, as set out in the preamble are pretty straightforward even if one thinks it's window dressing:

    1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation treatment and transparency, are to:

    a) eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties;
    b) promote conditions of fair competition in the free trade area;

    c) increase substantially investment opportunities in the territories of the Parties;

    d) provide adequate and effective protection and enforcement of intellectual property rights in each Party's territory;

    e) create effective procedures for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes; and

    f) establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this Agreement.


    And I'm not sure what you're talking about when you talk about 900 pages of tariffs. Under NAFTA there are no duties for goods originating i.e manufactured in one of the NAFTA countries (Canada, US or Mexico) and shipped to one of the other NAFTA countries.

    What is laid out--in fair detail--is what constitutes an originating good under NAFTA. The treaty was never meant to include non NAFTA manufactured goods and the spirit and thrust of the treaty is to promote manufacturing within the three countries and resulting trade.

    So, if you produce a widget in the US. and ship it to Canada, it's automatically duty free; however, if you're an American wholesaler and purchase the same widget from a Chinese manufacturer and ship it to a Canadian company, there is no duty free status because it doesn't fall (as it shouldn't) under the spirit of NAFTA.

    You can call the document bureaucracy or you can call it an attempt to protect the interests of the member countries.

    The biggest problem with NAFTA between the US and Canada is that the US has frequently not lived up to its obligations as far as the dispute resolution is concerned i.e. softwood lumber.
     
  8. The Big Ragu

    The Big Ragu Moderator Staff Member

    JR, Of course the constitution just deals with the U.S. and the relationship between the states. I was referring to how simple it is to really spell out free trade, not imply that the U.S. constitution laid the groundwork for a global economy or international trade 225 years later.

    The preamble you cut and paste is window dressing when half of the document actually establishes barriers rather than eliminating them. Why does it take 2,000 pages to create open and free trade? And if the "free trade" in the name of the act isn't just somewhat empty rhetoric, why is so much of the document dedicated to laying out a system of tariffs and barriers--most of which were concessions to various industries that had the most powerful lobbying interests?

    I am not being simplistic to imply that there aren't complexities when countries deal with each other. But this really should be about citizens dealing with each other, not governments dealing with each other.

    My point is that when you start setting up conditions to "protect the interests of the member countries," by definition you have set up conditions -- so it is no longer, free, unfettered trade, it is trade with lots of conditions. That is always to the detriment of the economies it simplistically is trying to protect.

    It really is simpler than you are representing it. I understood the concept when I was swapping baseball cards in my junior high school cafeteria. If I liked the trade, I made it. If I didn't, I held out for the deal I wanted. And eventually, me and my friend made a trade that we each were happy with. It's a concept most children understand; yet by adulthood, we have lots of people saying, "It's NOT that simple," when there is no reason for it to be as complicated as we make it.

    I am not against NAFTA, in so much as its brand of managed trade is better than the disorganized system of cronyism and politically-motivated protectionist policies we've had that were even worse than what NAFTA created. But from a rational standpoint, all economic evidence has taught us that people limit their wealth and spending power with restrictions and barriers, which NAFTA is chock full of... yet we (and just about everyone) still cling to protectionist ideas that fly in the face of reason.
     
  9. Not to disrespect the lessons of the grade-school cafeteria, but your trade policy is a recipe for longterm, systemic poverty for half the free world. The result of unregulated capitalism, in any form, is economic oligarchy destructive of political democracy.
     
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    FB, No disrespect taken. I'm sure I would have aced you out of your Mickey Mantle rookie card...

    Agree to disagree. In fact, most evidence suggests otherwise, but I know I can't appeal to you with economic reason, so I won't waste the words.

    Of course, we'll never know for sure because there will always be the labyrinth of regulations, bureaucracies and irrational policies set up for various reasons (totalitarian governments, socialist ideas that determine what is best for everyone rather than letting people decide for themselves, corrupt politicians, etc.) that has taken the reality of scarce resources that makes some poverty a given, and makes the systematic poverty that actually does exist throughout the world much worse than it needs to be.
     
  11. JR

    JR Well-Known Member

    I'm sorry Ragu, but comparing international trade agreements to swapping baseball cards is, well, idiotic.

    Your statement about NAFTA that "half of the document actually establishes barriers rather than eliminating them" is, um, wrong. You should actually acquaint yourself with the treaty instead of spouting off.

    NAFTA is about eliminating trade barriers, for better or worse.

    BTW, I deal with NAFTA every day and I can tell you categorically that you have no fucking idea what you're talking about.

    You're way out of your league here.
     
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    JR watches TV every day. He's an expert on the Neilsen Ratings, too. Can you possibly be more of a pompous know-nothing?

    You deal with NAFTA every day... Let me guess. You are a member of the Canadian Parliament and you chair a trade committee... Or is it that you run an international corporation that imports and exports millions of dollars worth of dozens of goods, so you don't have the time to post on here in response to all the dimwits who are not in your league?

    Yeah, I'll acquaint myself with a 2,000 page document that promises to eliminate hundreds of tariffs and trade barriers--most of which the document itself created--within 15 years. Of course, by the time I finish reading what your superior intellect has obviously memorized word-for-word, a bunch of orgasming lawyers and legislators flush with lobbyist money will have amended it for the zillionth time. So I'll get started on the 3,000 page appendix that promises to eliminate all of the new tariffs and restrictions within 15 years of the original 15 years. And then maybe I'll be in your league. ::)

    What I said remains true. That isn't free trade. Free trade can be summed up in 10 words. That is trade with a labrynth of rules and restrictions. It's not the worst thing in the world. We had even more insane trade policy throughout the 20th Century. But it still is unnecessarily complicated and perpetuates restrictions and nonsensical rules that ultimately hurt people economically relative to what we'd enjoy with something closer to actual free trade.

    Feel free to resume the condescension. It's kind of funny, knowing who it is coming from. I wish I could be that blissfully full of myself.
     
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