Thread: Backlash grows against free trade

http://www.csmonitor.com/2007/0216/p01s02-usec.html

from the February 16, 2007 edition

Backlash grows against free trade
A record US trade deficit is rekindling the globalization debate.
By Mark Trumbull | Staff writer of The Christian Science Monitor
Worries about the dark side of free trade are surfacing in the United States in ways that could affect the course of globalization worldwide.

Don't expect an outright retreat from global commerce just yet, but it is becoming more likely that the US will act to temper and manage its impact. The reason: Free-trade brush fires have recently erupted on economic and political fronts:

In the Monitor
Thursday, 02/15/07

• This week, the Commerce Department said America's trade deficit rose to $764 billion in 2006, as imports outstripped exports by a record amount for a fifth straight year.

• Democrats are in control of Congress, with new lawmakers in their ranks who are especially eager to do something about what they see as unfair trade practices by China. Bipartisan bills introduced this week could result in retaliatory tariffs or revocation of China's trade status with the US.

"There was a time 10 years ago when it seemed like globalization was consensual, and there were very few remaining questions about whether it was ... a good thing," says Jeffry Frieden, an expert on global economics at Harvard University. The reality, he says, includes a caveat: Trade "can make everyone better off, so long as you compensate the losers."

Concern about globalization is hardly limited to the US. From Europe to Latin America to China, the pattern is the same: Not everyone feels better off, and in those regions, political consequences can include riots or the rise of nationalist governments.

But America, which as the world's largest economy has led the march toward expanding trade for decades, remains an important influence on the world.

Most trade experts don't foresee an outright reversal of the trend. The world's biggest economies are now heavily reliant on trade. Exports account for about 40 percent of Germany's economic activity and a similar share in China, according to Joseph Quinlan, a Banc of America investment strategist in New York.

But the tenor in the halls of power has changed. Supporters of globalization are expending more energy to defend the concept – often calling for new policies to help compensate workers whose jobs migrate abroad.

"[To] retain support for policies of free trade ... we need to make sure that the gains and benefits from these powerful, growth-producing forces are broadly shared," Federal Reserve Chairman Ben Bernanke said this week in response to a question during congressional testimony.

Trade has always been always destabilizing for the workers in affected industries. What's new is the unprecedented scale and pace of change worldwide. In the 1980s and '90s, China, along with former communist nations and former post-colonial regimes on several continents, joined a global market for labor and goods. Communications technology has been a force of acceleration.

This has been hugely beneficial overall, most economists say. But it comes with strains on jobs and wages that are increasingly apparent. In a USA Today/Gallup poll last year, nearly two-thirds of respondents said trade "mostly hurts" US workers.

One idea under review on Capitol Hill is wage insurance, which provides income as displaced workers transition toward new careers.

The bills this week focus on trying to level what many lawmakers see as a tilted playing field – especially with export powerhouse China.

A bipartisan bill introduced Tuesday would rescind China's Permanent Normal Trade Relations (PNTR) status. It is sponsored by Sens. Byron Dorgan (D) of North Dakota, Lindsey Graham (R) of South Carolina, and Sherrod Brown (D) of Ohio.

Another new bill, the Fair Currency Act of 2007, classified China as a currency manipulator in violation of US trade law. A tariff boost is threatened under this bill backed by Reps. Duncan Hunter (R) of California and Tim Ryan (D) of Ohio.

Meanwhile, the Bush administration and trade advocates in both parties are scrambling to build support for so-called "fast track" authority to negotiate new agreements to expand trade.

Skeptics abound.

"We need to declare a moratorium on new trade agreements until we figure out how to do this right," says Alan Tonelson of the US Business and Industry Council, which represents companies concerned about the erosion of US manufacturing.

It remains unclear whether the advocates of a harder line on trade will gain traction. Some economists believe this will be a better year for US exports – and a narrowing in the trade deficit.

And that deficit, they say, is not in itself a sign of economic decline. But it could be unsustainable if other nations grow less willing to finance that deficit by lending to the US.

"The real key is to take advantage of our educational system to acquire higher-value skills" and the jobs that go with them, says Paul Kasriel, an economist at the Northern Trust Co. in Chicago.

sorry guys but what are we going to do a nation (china) that owns us. We have borrowed so much from them that if they decide to collect our country is bankrupt and the only people that can cover it is the legal taxpayers. Our social security and medicare will be used to pay for it and we will have nothing.

You need to put saving under your bed not in banks so that you will have something to life off. Prices will be sky high so save alot.

Originally Posted by Beckyal

sorry guys but what are we going to do a nation (china) that owns us. We have borrowed so much from them that if they decide to collect our country is bankrupt and the only people that can cover it is the legal taxpayers. Our social security and medicare will be used to pay for it and we will have nothing.

You need to put saving under your bed not in banks so that you will have something to life off. Prices will be sky high so save alot.

The amount of US debt held by China is miniscuule compared to that held by European banks.

We need to tell Congress we don't wanted this fast-track authority extended!!

Notice how they are devising ways of ameliorating the damaging effects of globalization and out-sourcing on American workers instead of just strengthening laws to make sure our workers are protected? Wage insurance...gimme a break.

How about we reduce the number of H1Bs and stop illegal immigration?????

I agree that all border crossings by criminal aliens should be stopped as well as a complete review of all visas. Other than vistors all foreignors need to be stopped from entering the USA. All jobs need to be reviewed to see if americans can do the jobs. Bet most jobs can be done by Americans who need the job. If not we could train an American to do the job. If someone is lazy and doesn't work out then hire another american. Americans are not lazy and untrainable.

Originally Posted by CrocketsGhost

Originally Posted by Beckyal

sorry guys but what are we going to do a nation (china) that owns us. We have borrowed so much from them that if they decide to collect our country is bankrupt and the only people that can cover it is the legal taxpayers. Our social security and medicare will be used to pay for it and we will have nothing.

You need to put saving under your bed not in banks so that you will have something to life off. Prices will be sky high so save alot.

The amount of US debt held by China is miniscuule compared to that held by European banks.

Our govt's latest visit to China resulted in little. I suspect we went there demanding change. China isn't going to change for us. All they need to do is stop financing our debt. The value of the dollar will drop like a rock.

However, oil is measured or sold in dollars. So, it the value of the dollar drops, the arabs also lose billions. Saudia Arabia has discussed this with the Chinese and asked them to be very careful. So look for oil deals between China and the Middle East.

I have read a few articles ( in the WSJ ) where some govt's plan to slowly move away from holding or financing dollars.

Our delegation came home with little to show for their effort. China did agree to purchase billions of dollars of nucleor technilogy from two companies located in the USA. One is the Shaw Group which is "linked" to this admin. and the other was Westighouse. I think it's now a Japanese company.

I look for the value of the dollar to slowly decrease. If a financial disaster occurs around 2010, we switch to the Amero.

Another option is to start a war with Iran.

Originally Posted by magyart

Originally Posted by CrocketsGhost

Originally Posted by Beckyal

sorry guys but what are we going to do a nation (china) that owns us. We have borrowed so much from them that if they decide to collect our country is bankrupt and the only people that can cover it is the legal taxpayers. Our social security and medicare will be used to pay for it and we will have nothing.

You need to put saving under your bed not in banks so that you will have something to life off. Prices will be sky high so save alot.

The amount of US debt held by China is miniscuule compared to that held by European banks.

Our govt's latest visit to China resulted in little. I suspect we went there demanding change. China isn't going to change for us. All they need to do is stop financing our debt. The value of the dollar will drop like a rock.

However, oil is measured or sold in dollars. So, it the value of the dollar drops, the arabs also lose billions. Saudia Arabia has discussed this with the Chinese and asked them to be very careful. So look for oil deals between China and the Middle East.

I have read a few articles ( in the WSJ ) where some govt's plan to slowly move away from holding or financing dollars.

Our delegation came home with little to show for their effort. China did agree to purchase billions of dollars of nucleor technilogy from two companies located in the USA. One is the Shaw Group which is "linked" to this admin. and the other was Westighouse. I think it's now a Japanese company.

I look for the value of the dollar to slowly decrease. If a financial disaster occurs around 2010, we switch to the Amero.

Another option is to start a war with Iran.

The value of the dollar won't slowly decrease. It will either hang in there or else it will drop like a rock. Here's why. The world is basically dollar-denominated. Yeah, there are other currencies trying to be significant but global trade is conducted in dollars. If there is a change from the dollar, it will be a sea change. If that happens, the dollar will fall so fast it will break the sound barrier.

What do you mean by "sea change" (as in over seas?) and why will it drop fast? What can our country do to recover?

Originally Posted by Neese

What do you mean by "sea change" (as in over seas?) and why will it drop fast? What can our country do to recover?

The dollar is a debt currency. IOUs. It has no value other than its perceived value. A global economy does not want to have to be based on numerous competing currencies, so it will settle out on one primary currency. That currency is the dollar, as it has been for the lifetime of this global economy. If the dollar ceases to be the currency of the global realm, it will lose its perceived value and become virtually worthless paper as global financial institutions dump it to buy into whatever takes its place.

"Sea change" is a term originally coined by Shakespeare (I believe it was in The Tempest) to describe a fundamental change in viewpoint on a subject. It's like a change in world view or group perception.

If the value of the dollar dropped, I would expect to see something close to the "depression".

Not changing the subject but,
I remember when jets broke the " sound barrier"