The United States must adopt a policy of "fair trade" not simply "free trade."
In recent years, the United States has incurred annual trade deficits approaching $1 trillion. Such deficits have contributed to loss of well over three million manufacturing jobs, and a burgeoning series of free trade arrangements has helped accelerate the rate of outsourcing. Too many efficient U.S. companies are being undermined by competition from countries that use illegal and unfair trade practices. In a downward spiral, trade deficits also tend to weaken the U.S. dollar, with consequential harmful effects on our economy.
This country cannot afford arrangements modeled on the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA) that harm both United States workers and the national and global environments. In particular, proceeding with trade promotion deals with Peru and Columbia would only further exacerbate an already bad situation.
Meanwhile United States keeps running record trade deficits with China, the shortfall having reached over $200 billion in 2005. Not only is China one of the worst offenders in terms of labor, human rights and environmental protections, but also its currency (the yuan) is undervalued by as much as 40% and China habitually violates World Trade Organization (WTO) subsidy rules. China also lacks adequate consumer protection laws, which has already caused grave harm in the United States and elsewhere. The situation is further complicated by the fact that it is very hard to argue with one's banker, and China is the second largest (after Japan) international holder of U.S. public debt. Nevertheless, the United States should consider imposing substantial import tariffs on Chinese goods unless the government in Beijing agrees to significant currency revaluation, contest Chinese violations before the WTO, and increase vigilance in imposing U.S. safety standards.
At this point, there may be a unique opportunity for bipartisan efforts in Congress to forge new alliances among traditionally-Republican manufacturers and Democratic-leaning labor unions and environmental groups. These groups share common "fair trade" interests, particularly with regard to China and its currency. This is not to advocate going overboard in inaugurating a new protectionist era, but rather to insist on transform concepts of free trade into a fair trade regime.
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For further information, see Fair Trade discussion paper.
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