Bifurcated Effect of Trade Agreements

trade

 

Ostensibly, lowering barriers on trade seems like a good thing. Any Economics 101 student can tell you how tariffs and other protectionist measures result in a loss to all parties involved. For this reason, I typically expressed support for trade agreements in opposition to the majority of the Democratic Party, my long-time and beloved political organization.

However, the recent debate has made me change my mind. Yes, trade agreements benefit the overall economy in the long-term, but there are a number of caveats that must be addressed. First and foremost comes the questions about winners and losers in America. After all, this is where the impact of trade agreements comes home to roost. It turns out the Economics 101 argument primarily benefits international corporations who have the infrastructure to operate on a global level. The trickle-down effect, like the Republicans’ supply-side economics, is largely a sham.

… trade agreements might be more productive if the competition occurred on a level playing field.

Moreover, trade agreements might be more productive if the competition occurred on a level playing field. But inevitably, other nations enter the game with minimum wages hovering around $1 or $2 an hour. This allows the establishment of quasi-sweat shops that American competitors should not and are not able to match.

Finally, other national economies use currency manipulation as a standard tool to improve their domestic economy. We have safeguards in the United States to prevent that sort of thing. And we should.

So, unless trade agreements are very tightly worded to address the above, they hurt our workers more than helping them. And taking away the ability to amend these agreements and just subjecting them to an up-or-down vote makes it impossible to address the above issues.