“If the agreement is no more than 2 pages long, it is FREE trade. If the deal is 20,000 pages long plus addendum, appendix and side agreements then what is it?”
Exactly. All of these modern free trade deals require thousands of pages. Then the bureaucracies to administer the agreements create tens of thousands of pages of rules. They also issue edicts governing transactions and relationships which violate the sovereignty of nations who are party to the agreements.
The founding fathers were both advocates of free trade and high tariffs. They resented the restrictions Great Britain put on commerce, particularly prohibitions on colonial ships visiting specified countries, requirements the colonies trade through government dictated British agents or companies (such as the infamous East India Company) and restrictions on enterprises permitted in the colonies.
To the founders, tariff policy had nothing to do with free trade. Tariffs were simply taxes levied on goods imported in the US. Tariffs did not restrict trade, the US market was open. If the importer paid the tariff, the importer was “free” to bring as much into the US as the importer desired.
Likewise, under the 18th and 19th century concept of free trade, US merchants were “free” to trade with any country under whatever terms the merchant (not the US government) could negotiate with merchants in the foreign country. It is noteworthy that despite very high tariffs in the US on imported goods in the 19th century, Yankee clippers plied the seven seas and US merchants were extremely successful buying, selling, and transporting goods around the globe. It is also noteworthy that the precipitous decline of the US merchant marine has coincided with the focus of the US government on eliminated tariffs since World War II.
In reviewing US economic history it is a fact that the most rapid periods of economic growth occurred during the 19th century when tariffs on imports were at their highest levels. From 1865 to 1900 the federal government imposed extremely high tariffs. During that period the domestic economy expanded rapidly and the United States became the strongest and largest industrial economy on the planet. The US government deliberately employed high tariffs to protect a developing US manufacturing base from dumping by European manufacturers in countries whose objective was to keep the US from developing a strong and diverse manufacturing base. Had the current “no tariffs” trade philosophy been in effect from 1865 to 1900 the US would not have developed into the economic powerhouse of the 20th century and we would not have developed a strong middle class.
In the 1990’s I worked in an industry targeted by the Chinese government. US trade “negotiators” agreed to eliminate quotas and tariffs on imports from China. At the time the Chinese had about a 15% cost advantage over US manufacturers in that industry when transportation costs were considered and tariffs were eliminated. With major capital upgrades to the aging 1960’s US manufacturing plants it would have been possible for the US manufacturers to reach parity with the cost of the Chinese products.
Instead of making the capital investments required to become competitive with import costs once tariffs were raised, US manufacturers made the decision to offshore manufacturing. Why?
The Chinese government did two things. First it made 20 year loans available at zero interest for construction of new manufacturing facilities in this industry if the output of the new facilities was exported. Second, it gave a 15% “rebate” to the new factories on the value of goods exported. These subsidies tilted the table in favor of making capital investments in China instead of the United States. These subsidies were permitted under the thousands of pages of rules and regulations negotiated between China and the US. When some companies in the industry complained to the US administration (Clinton and GW Bush) the complainers were told to get on board with “free trade”.
The results were predictable. Other than a few small volume specialty niche manufacturers, an entire industry that once employed hundreds of thousands of US workers is gone. The small towns in which the factories were located are decimated economically. The underlying supply chains supporting the industry have also disappeared, resulting in tens of thousands of lost jobs. The shopkeepers, equipment salespeople, equipment repair people, and other businesses that provided goods and services to the factories are also gone. Many of those who lost jobs were unable to find new employment. Opportunities for young people to enter the workforce disappeared. The demand for, and cost of, social services skyrocketed in the affected communities. American workers shifted from being productive contributors to the economy to wards of the state.
There are very few comprehensive studies of the impact of the zero tariffs free trade movement of the modern era. Likely because any honest evaluation of the impact would tell similar stories in many industries.
The proposed TPP agreement is 5544 pages. Any agreement requiring 5544 pages to document has nothing to do with freedom or free trade. It has everything to do with defining exemptions, special privileges, and benefits to individuals, companies, and countries. Pass the TPP and you will see Korea, Japan, and other signatories target remaining American manufacturing businesses for destruction.
My challenge to the zero tariff free traders. Name one free trade agreement signed in the past 30 years where 5 years after enactment US exports to the signatories exceeds imports. Ultimately if if a country doesn’t export as much or more than it imports, its economy will decline.
Is it better to tax foreign factories that enjoy access to one of the world’s largest markets and who are subsidized by foreign governments or is it better to tax American citizens to support displaced middle class workers who cannot find new full time employment paying a living wage? In the 19th and early 20th century we chose option #1 and prospered. Since 1990 we’ve chosen option #2. TPP is more of option #2.
Another great post in this thread. Trade agreements with individual countries I can support. But these ‘comprehensive’ trade packages are like any other piece of ‘comprehensive’ legislation. There’s simply too much...and the U.S. is put at a disadvantage every time.
I think you're overestimating the impact of tariffs in this case. The most rapid periods of economic growth occurred during the 19th century when this country was settling its frontier and adding new states at the rate of one every 43-44 months.
This is a good point, but I really find myself at a loss over how to figure this out. Whose interests are served when a foreign country -- whose citizens have a much lower standard of living than ours -- taxes those citizens to subsidize major industries ... that sell manufactured products that the workers who make them cannot afford ... to American consumers at a steep discount?
What am I missing here?