Trade Wars: Return of the Protectionists

(Not that they ever left.)

President Obama is reportedly finally ready to send trade deals with Panama, South Korea, and Columbia to Congress:

President Barack Obama said on Monday that the White House will have an announcement on the long-delayed trade deals with South Korea, Colombia and Panama to Congress “in the next day or so.”

Passage of the South Korea pact before President Lee Myung-bak’s Oct. 13 state visit is a major goal, and a congressional source told the paper it would be “tough, but close.”

Committee hearings could begin as early as Wednesday, and Congress has 90 days to approve the deals.

As many supporters of free trade like to say, I oppose free trade deals because I support free trade. The “deal” in “free trade deal” is nothing more than a set of mutually agreeable government impediments to the free flow of goods and services. The Obama administration is making no secrets about the fact that these pacts do not constitute free trade:

Asked what the “hold up” has been in sending the trade bills to Congress, White House press secretary Jay Carney said in Monday’s press briefing that the administration prioritized ensuring the pacts were “balanced and fair,” and that it wanted to increase trade opportunities for Americans “but do it in a way that protected American workers and made sure that our obligations…were upheld.”

I wrote about the South Korean deal roughly a year ago (yes, it’s been sitting on someone’s desk that long), and shortly after I posited a few questions about “fair trade” to a U. S. Senate candidate in Virginia endorsing a trade war with China:

…Is it “fair” that China subsidizes its exports via its monetary policy and I voluntarily choose to buy them? Should the government tell me that I am not allowed to buy these cheap Chinese goods, despite the fact that they benefit both the Chinese seller and me, the American buyer? Is it fair that millions of Americans benefit from cheaper goods because of China’s allegedly unfair trade policies?

Furthermore, if…higher tariffs were placed on Chinese (or other) imports to the US, would it then be any more “fair” that millions of Americans would have to pay higher prices for Chinese goods? Or, in the cases in which American goods then become cheaper than their Chinese alternative due to increased tariffs, would it be fair for the United States to partake in the same allegedly unfair subsidization of domestic goods as China? Should we then encourage China to increase its tariffs on and reduce imports of American goods and services because we would have unequal and unfair trade policies of our own?

Protectionism is not free, fair, nor effective. Naturally, then, folks in Washington will make every attempt at incorporating such a practice into a law. And that is just what they are doing, as NetRight Daily’s Adam Bitely notes:

S. 1619, the Currency Exchange Rate Oversight Reform Act…would seek to punish China and other economies that manipulate their currency by placing tariffs on their goods.

While the intended effect will be to punish foreign governments that implement inflationary policies that are designed to reduce the cost of their exports — strange thing to object to since the U.S. government is guilty of doing this as well — the outcome of punishing foreign economies for following the lead of the U.S. will only result in harm for the U.S. economy and U.S. consumers.

Attempts at this sort of protectionism are borne of two major factors: plain economic ignorance, and an eagerness to find a scapegoat for the U.S.’s economic woes. In a desperate attempt to deflect fault instead of accepting responsibility for their own financial profligacy, Washington is playing on the economic antipathy toward China.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s