Opinion

Global Trade Is (Slowly) Moving Things In A Small-Government Direction

When now-President Donald Trump first burst on to the political scene, one of the ways he made a name for himself was by ridiculing many of the trade deals the United States has spent the last several decades cutting. 

Trump pointed out that our trade agreements were far from “free.” They were usually one-sided sell-outs, where we agreed to not tax or regulate other countries’ imports while none of the other countries agreed to do any such thing with ours.

Trump’s frequent visual aide was China (I still have yet to find a way to spell phonetically the way he pronounces it).  China taxes everything we send them.  China gives all sorts of preferential treatment to their companies that export.  The country even manipulates their currency to artificially lower the prices of their exports on the global market. 

About all of which we do… nothing. We continue to cut deal after deal with them.  Where we pledge all sorts of free market protections for their products and they promise none for ours. They allowed to continue to manipulate the market in the same ways they always have.  And then we wave around the next signed agreement and hail it as another “free trade” deal when it is anything but.

The United States has for decades been the Neville Chamberlain of trade agreements.  In what we’ve been engaged isn’t free trade, it’s appeasement trade.  It’s unilateral capitulation to every other nation on the planet. Wonder why our domestic production has spent the last half century fleeing our country’s confines?  Because nigh every other country on the planet treats it better than do we.  (Not just in trade deals, but in tax and regulatory policy, too.)

Trump rightly called for an end to this titanic nonsense.  And all of the usual “free trade” suspects — who have spent the last several decades selling our domestic producers down the Yangtze, Ganges and Rio Grande Rivers — denounce him as “protectionist.” 

The alleged “free traders” are the only protectionists in the equation.  Protecting their cushy, overseas-manufactured, global-governments-protected profits from an intrusion by reality.  At the continued, further expense of American production.  (Think about all of this when next you hear opposition to policies like the Border Adjustment Tax [BAT].)

Trump wants less government involvement in trade — on all sides of the equation.  Rather than the unilateral disarmament in which we have for so long engaged.  Reducing the market manipulations of all governments everywhere is genuine free trade.

These moves toward less government are born at the bargaining tables.  The United States is far and away the largest market in the world and we have for far too long been negotiating as if we are Tuvalu or Montserrat (no offense intended to either of the two smallest economies on the planet).  We should be wielding our market weight and cutting deals that reflect it.

Trump prefers bilateral agreements to multilateral ones, and on this too he is correct.  The more nations involved in a trade deal the less negotiating power any one nation has.  Every other nation loves to enmesh us in multi-player agreements because we lose the inherent leverage we have.  Sit down one-to-one and there is no big-government safety in numbers.

We at Less Government immediately hailed the arrival of Trump and his actual free trade policies, because they are virtually identical to for what we had been calling for years prior.

Here we are on May 17, 2013: “What we should instead do now is zero-out our protectionist … regime(s) in exchange for (other countries) simultaneously doing the same.  We can — and absolutely should — use all our considerable trade negotiation prowess to effect this regulations-and-subsidies clean slate.”

And here we are on October 10, 2013: “The world’s … nations need to sit down together, each with a copy of everyone else’s lists of protectionist…policies. And start horse trading.  ‘Brazil – how about if you get rid of this subsidy, we’ll each get rid of one.’  ‘Mexico – if you get rid of this tariff, we’ll each get rid of one.’  Let the subsequent discussions ensue. Lather, rinse, repeat.”

It all sounds very Trump-like, does it not?  And now that Trump is President, it appears that things are beginning to take this turn for the oh-so-much better.

China Offers Concessions to Avert Trade War with U.S.: “China will offer the Trump administration better market access for financial sector investments and U.S. beef exports to help avert a trade war…U.S. Commerce Secretary Wilbur Ross said on Friday that President Donald Trump and Chinese President Xi Jinping have agreed to a new 100-day plan for trade talks on Friday.”

Guatemala Agrees to Early Poultry Tariff Elimination: “Office of the U.S. Trade Representative is set to announce today that Guatemala has agreed to eliminate its 12.5 percent tariff on U.S. fresh, frozen and chilled poultry products four-and-a-half years earlier than expected under the U.S.-Central American-Dominican Republic free trade agreement, approved by Congress in 2005….”

Get that?  We in 2005 cut a deal with teeny, tiny Guatemala.  That allowed them to keep in place a 12.5% tax on our chicken imports , for sixteen years.  How is that a free trade deal?  How is that using our leverage as leverage?  How pathetic and stupid is that?

Here’s hoping the Age of Trump augurs a new age in American trade where we stop apologizing for being successful and use the leverage our success gives us to ensure that there is less government in trade all over the world. Where we work to ensure that other nations treat our stuff fairly and freely — the way we have for so long treated theirs.   It would be a wonderful new dawn indeed.