The Washington Examiner, a conservative newspaper, agrees with President Trump on China’s “. . . destructive practices of forcing businesses to surrender their technology to the state and forcing them into joint ventures in exchange for market access.” and “. . . massive subsidizing of industries through colossal state-owned enterprises that put private competitors out of business.”
Then the WE proceeds to NAFTA and “Canada’s dairy cartel, but they operate on a similar protectionist principle. . . . Canada’s quasi-Soviet dairy policy is just one of the many thorny issues making agreement more complicated.”
How about the U.S.’s distorting trade policies? Agriculture receives billions in subsidies and regulatory protection. The same arguments WE makes about China and Canada can be made about the U.S.
From Daniel Hannan. . .
In Ricardo’s day [David Ricardo identified the idea of comparative advantage], protectionism was seen for what it was: a way to transfer wealth from the poor to the rich. Today, we have an extra 200 years of evidence proving that point. Would you rather be poor in North Korea or South Korea? And yet, against all apparent reason, free trade continues to be howled down as something exploitative.
Here is an example of comparative advantage:
She [Deirdre McCloskey] gave the example of 12-year-old Oliver helping his mother spring-clean the house. Mum can do everything better than Oliver: sweep the garage, polish the furniture, change the lightbulbs. But it still makes sense for Oliver to sweep the garage, freeing her up to do the tasks where she has greater comparative advantage.
Daniel Hannan’s new organization supporting free trade is here.
In post-round remarks, Lighthizer returned to a theme of his that a major problem with the current version of NAFTA is that it gives too much incentive to U.S. companies to locate production in Mexico.
Not so, judging by direct investment:
In fact, according to the U.S. Bureau of Economic Analysis, from 2011 to 2016, the annual outflow of direct manufacturing investment from the United States to Mexico averaged $3.1 billion. To put that number in perspective, during that same period, annual investment in domestic manufacturing plants and equipment in the United States averaged $217 billion. That means U.S. investment in manufacturing in Mexico has averaged a mere 1.4 percent of what companies invest in our domestic economy.
The number of manufacturing workers in Mexico that are employed by U.S. affiliates has indeed been trending up in recent years, but at a slow and uneven pace. In 2000, the majority-owned affiliates of U.S. multinational companies employed 641,900 manufacturing workers in Mexico. After declining for the next decade, that number rebounded to 706,200 in 2014.
Meanwhile, since 2000, the number of manufacturing workers in the United States has declined from 17.2 million to about 12 million — a decline of 5 million net manufacturing jobs. But here too the trend was downward from 2000 to 2010, followed by a modest recovery of jobs since then.
President Trump and his trade advisors routinely blame job losses in manufacturing on trade deals such as NAFTA and the outsourcing they supposedly encourage, but objective studies show otherwise. The biggest reason for the decline in manufacturing employment in the United States since 2000 has been dramatic productivity gains fueled by automation.
Check out this video of President Reagan delivering a speech about trade.
Matt Ridley writing in the UK Times:
. . . This would not have surprised Montesquieu, who spoke of “sweet commerce”, or Voltaire, who marvelled at the friendly collaboration of “the Jew, the Mahometan and the Christian” on the floor of the London stock exchange, or Adam Smith, David Ricardo and Richard Cobden, the radical champions of free trade in the early years of the industrial revolution.
Cobden said: “Free trade is God’s diplomacy and there is no other certain way of uniting people in the bonds of peace.” He was right. Recent studies have confirmed that commerce is the main cause of peace.
The Conservatives cannot compete with Labour by offering pale imitations of its patronising paternalism. They should offer the young something more revolutionary, liberating, egalitarian, disruptive, co-operative and democratic than stale statism. It’s called freedom.
The latest edition of the report of economic freedom of the world is out. The most recent year for all data is 2015.
The U.S. ranks 11th, moving up from 16th from the previous two years.
Contrary to current political winds, free trade across borders is very important for prosperity.