Wednesday, April 23, 2008

Sherrod Brown is a Protectionist

Sherrod Brown, Democratic Senator from Ohio, has an op-ed in the WSJ today titled, "Don't Call Me Protectionist". Sorry, Mr. Brown but you are a protectionist and I mean that in the most derogatory fashion. Mr. Brown says:

Our country deserves a real debate on trade, not a debate where labeling one side protectionist is game, set and match.

Well, I'm sorry Mr. Brown, but if the shoe fits....

The supporters of our trade policy rarely mention our exploding trade deficits. In just 15 years, our annual trade deficit has mushroomed to over $800 billion from $38 billion in 1993. With Mexico, our trade surplus evolved into a $90.7 billion trade deficit. With China, our trade deficit jumped to $250 billion today from about $22 billion. President George H.W. Bush once estimated that a $1 billion trade deficit represents 13,000 lost jobs. Do the math.

We rarely mention trade deficits because they are a meaningless statistic. Trade deficits are the flip side of positive investment in the US. There is no evidence whatsoever that a trade deficit is a net job loser (see this paper by Russell Roberts of George Mason University). When China earns a dollar by selling us something they have to do something with that dollar. They can choose to buy US goods or services or they can invest in the US. They won't just stuff that dollar in a mattress somewhere, but even if they did it wouldn't hurt the US. The only unfortunate part of this equation is that too many of those dollars right now are being invested in US Treasury Bills, Notes and Bonds to fund a government spending beyond our means. And that is a direct result of people like - Sherrod Brown.

Advocates of free trade rarely want to debate the fact that unregulated trade with China has recently allowed toys with lead paint, contaminated toothpaste and poisonous pet food into this country. We take for granted our clean air, pure food and safe drinking water. But these blessings are not by chance: They result from laws and rules about wages, health and the environment. Trade agreements with no rules to protect our health, the environment and labor rights inevitably create a race to the bottom and weaken health and safety rules for our trading partners and for our own communities.

Chinese companies that manufacture contaminated products will find that they have difficulty selling more of those products until they fix the problem. No action by Sherrod Brown is necessary. As for "protecting our health, the environment and labor rights" it would seem that those are problems for workers in those countries to resolve. It certainly isn't the job of the US Congress. Trade will allow other countries to reach a level of wealth, like in the US, that allows them to address those issues. Richer countries have more healthcare, higher wages and cleaner environments than poor countries. How will they reach that goal if we cut off trade?

Mr. Brown finally makes some good points at the end of his rant:

Let's focus on the merits of the agreement (the Columbia Agreement). Supporters sell it as a free-trade agreement, a great opportunity for American companies because it eliminates tariffs on our products. If that were true, the agreement would be a few lines long.

Instead, we have a trade agreement that runs nearly 1,000 pages and is chock full of giveaways and protections for drug companies, oil companies, and financial services companies, and incentives to outsource jobs now held by Americans.

Nafta. The Central American Free Trade Agreement. China. Now Colombia. We have a pattern in our trade policy that aims to protect special interests, but betray our workers, our environment, our communities.

Mr. Brown is absolutely right about all of these regional or single country "free trade" agreements. They are full of exceptions and protections for specific industries. But the solution to that problem is to adopt unilateral, real free trade even if our trading partners do not. Then lobbyist wouldn't be able to pay off Senators to write special rules for a favored industry. And unions wouldn't be able to pay off the likes of Mr. Brown to lobby against specific agreements. We could reduce corruption and help the economy all at the same time. I bet Mr. Brown wouldn't like that.

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