Free Trade, not Obamatrade

In a world that is getting smaller with each passing day, it is of the utmost importance for a nation that wants to thrive to have a trade policy that will foster a thriving economy. Certain trade policies do that, others do not. Some even go beyond simply hampering free trade, and even threaten the legal system and sovereignty of hundreds of millions of people. The Trade Promotion Authority bill of 2015 does all of the above. In order to ensure the security and continuing stability of the American economy, the entire plan must be scrapped and a new trade deal must be proposed through the proper channels.

For clarity’s sake, several things must be addressed up front. There is a great deal of confusion regarding TAA, TPA, and TPP. These are all different issues, though they are intertwined, and they are respectively as follows:

TAA: Trade Adjustment Assistance (also known as “fast track.” Failed in the House 126-302.)

TPA: Trade Promotion Authority  (passed the House 219-211.)

TPP: Trans-Pacific Partnership

The above trade bills are highly complex issues which I will not claim to understand in their absolute totality, but the general principle of what is at stake is something that is very important to understand. TAA and TPA are prerequisites for TPP to become enacted. The two former bills will grant the President the authority to enter into the latter one. The issue here is that trade policy is an area where the authority is delegated to Congress under Article 1 section vii of the Constitution:

The Congress shall have Power…To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

The creation of trade agreements is an authority that is expressly delegated to the Congress, not the President. Why? Because it is easier to have transparency with 535 public officials debating a trade agreement than it is to have 1 public official and an unknown number of bureaucrats making trade deals in secret and keeping the details of such classified. When entering into foreign agreements that will greatly affect the domestic economy, keeping the details of such is highly concerning. Even if the merits of the agreement outweigh the costs, such secrecy cannot be tolerated in a government of the people.

Leading the charge against TPA is Senator Jeff Sessions of Alabama. In one of his recent Facebook posts, he went on a tear against the fast track.

The entire purpose of fast-track is for Congress to surrender its power to the Executive for six years. Legislative concessions include: control over the content of legislation, the power to fully consider that legislation on the floor, the power to keep debate open until Senate cloture is invoked, and the constitutional requirement that treaties receive a two-thirds vote. Legislation cannot even be amended.

By contrast, without fast-track, Congress retains all of its legislative powers, individual members retain all of their procedural tools, and every single line, jot, and tittle of trade text is publicly available before any congressional action is taken.

Sessions, among other members of Congress, have vehemently opposed the fast track because it does no one any good except the Washington elite establishment. Trade agreements are an area delegated to Congress. Deferring such a power to the executive, which is already inundated with Congressionally deferred powers, fundamentally violates separation of powers and places far too much economic authority in one office.

Trade is a vital aspect of a thriving economy, but secrecy in the composition of such agreements is unacceptable. Since when is there a compelling interest in keeping a trade deal classified? Unless there is some ulterior motive with the deal; which why knows, because it’s classified.

Now that we’ve got the negative of the fast track legislation out of the way, let’s shift gears. Let’s talk about how free trade, true free trade, helps everyone involved.

Free trade break barriers between nations, and allows exchange of the greatest aspects of each nation. If the United States has a thriving oil industry, while Japan has a thriving electronics industry, free trade policies allow the nations to exchange their excess goods and thus make profit. Free trade is a non zero-sum game. Everyone can be a winner in free trade, because each actor has something to gain.

Why is this such a radical concept for some? Many have succumbed to the notion that free trade sends jobs overseas, and that free trade just helps out foreign countries. That is far from the case in a healthy free trade policy. Why is that? Well I’m glad you asked.

Free trade does not send jobs overseas. High taxes and over-regulation do. When it is cheaper to have a factory in Indonesia or Malaysia, it just makes sense to have that factory in a place where profit can still be made, while making a product in desired quantities.

Oh, that’s allowing the corporate power structure to continue? Well unless you made your own computer out of parts that you made yourself, out of materials that you brought from the earth yourself, you should refrain from commenting because you would also be giving in to the corporate power structure by using their products.

Oh, you now have to think about that eh? And I will even bet that your computer was made by a foreign manufacturer as well, or at least some of the critical component came from a foreign manufacturer or corporation. And you know what, your computer would be even more expensive than it is now if barriers to trade were raised.

It’s a simple matter of economics. A barrier to trade is also known as a tariff or quota. A tariff is a tax, plain and simple. What do taxes do? Make goods more expensive. This is not an incentive to keep jobs here in the United States. The cost is simply passed on to the consumer. If the price of a consumer good rises due to a tax, perhaps consumers may not want to buy it any more. That hurts the economy because a business sells less of their product.

So, what incentivizes businesses to keep jobs here in the United States? Low tax rates, simple regulations, laissez-faire economics. Any other belief is economically false. A new tax will never create new jobs, except in the government. And yes, that includes a tax on foreign goods.

Free trade, an idea that labor unions despise, and that free marketers champion. Yet on the TPA legislation, both came together in an attempt to strike it down. Strange times create strange bedfellows. Though opposed for different reasons, it is a very good thing for America that TAA was not passed, even though TPA narrowly passed the House. However, this is not the end of the matter, for the original bill passed in the Senate combined TAA and TPA. Another vote on the trade legislation will come soon. Those of us who seek transparency and laissez-faire economics must continue to be vigilant in order to ensure our continuing economic prosperity, and Constitutional structure (at least, what’s left of it).

Advertisements

Comments

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

WordPress.com Logo

You are commenting using your WordPress.com 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