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Free Trade
under those basic rules. Here are three compelling reasons why President Bush should be
granted that same authority: One, trade expansion promotes American prosperity.
Economic growth in the past decade was the most robust during those years when trade--
both imports and exports--was growing the most rapidly. Trade stimulates competition,
innovation, and efficiency, making U.S. workers more productive and raising real family
incomes. Imports keep prices down at the store, especially for low-income families. During
the recent downturn, trade flows have fallen sharply along with employment and
manufacturing output. Promoting trade would help to stimulate the economy. TPA would
open the door for regional and global trade agreements that would open markets for
America's most competitive exports. At their just-completed meeting in Qatar, the 142
members of the World Trade Organization agreed to pursue a new round of negotiations to
lower barriers to agricultural, industrial, and service exports, including a cut in Europe's
huge farm export subsidies. A recent study by the University of Michigan estimates that
even a one-third cut in tariffs on agriculture, industrial, and service trade would boost
annual global production by $613 billion, including $177 billion in the United States--or
about $1,700 per U.S. household. Two, trade expansion promotes U.S. security. Nations that
trade with one another tend to get along better than nations that shun trade. America's
historic post-war shift away from Depression-era trade wars and toward open trade was
driven as much by foreign policy and security concerns as by economic self-interest. Trade
with Europe, Japan and developing countries cemented the Western alliance against
communism. Free trade within the European Community, an American condition of
Marshall Plan aid, has made another major European war virtually unthinkable today.
Nations open to trade are far more likely to enjoy full civil and political liberties than those
closed to trade. Trade tills the soil for democracy by introducing new ideas, encouraging
tolerance of other cultures, and creating hope for a better life through individual effort.
America's commercial ties with the rest of the world have encouraged diplomatic and
military cooperation from other nations in the war against terrorism. In contrast, none of
the nations most closely linked to terrorism--Afghanistan, Iran, Iraq, Syria, Libya, Sudan,
and North Korea--belong to the WTO.......................................................................................93
TPA – Key To Free Trade............................................................................................................94
TPA – Key To Trade Credibility.................................................................................................95
TPA – Key To U.S. Leadership...................................................................................................96
TPA – Key To U.S. Leadership...................................................................................................97
TPA – Key To U.S. Leadership/Agriculture Industry...............................................................98
TPA – Trade Facilitation Outweighs..........................................................................................99
Protectionism Bad......................................................................................................................100
Protectionism Bad......................................................................................................................101
Protectionism Bad......................................................................................................................102
If Mr. Montesquieu is correct that trade promotes peace, then protectionism - a retreat
from open trade - raises the chances of war............................................................................102
Outsourcing Good......................................................................................................................103
Outsourcing Good......................................................................................................................104
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Free Trade
Outsourcing Good......................................................................................................................105
Outsourcing Good......................................................................................................................106
Outsourcing Good......................................................................................................................107
Outsourcing Bad........................................................................................................................108
Neoliberalism Bad......................................................................................................................109
Neoliberalism Good....................................................................................................................110
Collectivism Bad.........................................................................................................................111
Collectivism Bad ........................................................................................................................112
Economic Nationalism Causes Collectivism...........................................................................113
NAFTA – Key To U.S. Economy...............................................................................................114
SKFTA – Will Pass Now............................................................................................................115
SKFTA – Will Not Pass Now.....................................................................................................116
Administration officials said this month they are unlikely to send the Korea FTA to
Congress this year because there are fewer than 90 legislative days left until the scheduled
adjournment, making it impossible to "force" a vote under the 90-day window prescribed
in presidential trade negotiating authority protocols.............................................................116
SKFTA Good...............................................................................................................................117
It is time Congress set aside partisan differences and worked for the common good of the
American public. .......................................................................................................................117
SKFTA Good...............................................................................................................................118
SKFTA Good..............................................................................................................................120
AT: Trade Deficits Impact.........................................................................................................121
AT: Trade Deficits impact.........................................................................................................122
AT: Trade Deficits Impact.........................................................................................................123
AT: Trade Deficits Impact.........................................................................................................124
AT: Trade Deficits Impact.........................................................................................................125
AT: Trade Deficits Impact.........................................................................................................126
AT: Trade Deficits Impact.........................................................................................................127
AT: Trade Deficits Impact.........................................................................................................128
AT: Trade Deficits impact.........................................................................................................130
AT: Trade Deficits Impact.........................................................................................................131
AT: Trade Deficits Impact.........................................................................................................132
Trade Deficits Good ..................................................................................................................134
Elections – Free Trade Key Issue..............................................................................................135
Elections – Obama Pro WTO/Anti FTAs.................................................................................136
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Free Trade
We are unlikely to remain there long. What happened in Geneva will not stay in Geneva. The failure of the talks
will sour broader relations between rich countries and the developing world, especially the emerging giants of
China and India. And it will speed the already rapid proliferation of bilateral and regional trade deals, which
undermine the global system, despite all professions to the contrary. So while the short-term political outlook
for ministers Mr. Fortier and Mr. Ritz has not darkened, that of the world and especially that of small, open
economies that depend on trade (i.e., Canada) is a lot gloomier today than it was a week ago.
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Free Trade
The choice facing the West today is much the same as that which faced the Soviet bloc after World War II: between
meeting head-on the challenge of world trade with the adjustments and the benefits that it will bring, or of
attempting to shut out markets that are growing and where a dynamic new pace is being set for innovative
production. The problem about the second approach is not simply that it won't hold: satellite technology alone will
ensure that the consumers will begin to demand those goods that the East is able to provide most cheaply. More
fundamentally, it will guarantee the emergence of a fragmented world in which natural fears will be fanned and
inflamed. A world divided into rigid trade blocs will be a deeply troubled and unstable place in which suspicion and
ultimately envy will possibly erupt into a major war. I do not say that the converse will necessarily be true, that in a
free trading world there will be an absence of all strife. Such a proposition would manifestly be absurd. But to trade
is to become interdependent, and that is a good step in the direction of world stability. With nuclear weapons at two
a penny, stability will be at a premium in the years ahead.
Plenty of empirical evidence confirms the wisdom of Montesquieu's insight: Trade does indeed promote
peace.
During the past 30 years, Solomon Polachek, an economist at the State University of New York at
Binghamton, has researched the relationship between trade and peace. In his most recent paper on the topic,
he and co-author Carlos Seiglie of Rutgers University review the massive amount of research on trade, war,
and peace.
They find that "the overwhelming evidence indicates that trade reduces conflict." Likewise for foreign
investment. The greater the amounts that foreigners invest in the United States, or the more that Americans
invest abroad, the lower is the likelihood of war between America and those countries with which it has
investment relationships.
Professors Polachek and Seiglie conclude that, "The policy implication of our finding is that further
international cooperation in reducing barriers to both trade and capital flows can promote a more peaceful
world."
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Free Trade
If market critics don't realize the obvious economic and philosophical value of markets - prosperity and
freedom - they should appreciate the unintended peace dividend. Trade encourages prosperity and
stability; technological innovation reduces the financial value of conquest; globalization creates
economic interdependence, increasing the cost of war.
Nothing is certain in life, and people are motivated by far more than economics. But it turns out that
peace is good business. And capitalism is good for peace.
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Free Trade
The 2005 Economic Freedom of the World Report contains an insightful chapter on "Economic Freedom and Peace" by Dr. Erik Gartzke, a professor of political
science at Columbia University. Dr. Gartzke compares the propensity of countries to engage in wars and their level of economic freedom and concludes that economic
freedom, including the freedom to trade, significantly decreases the probability that a country will experience a military dispute with another country. Through econometric
analysis, he found that, "Making economies freer translates into making countries more peaceful. At the extremes,
the least free states are about 14 times as conflict prone as the most free."
By the way, Dr. Gartzke's analysis found that economic freedom was a far more important variable in determining a
countries propensity to go to war than democracy.
Trade Solves War- Allows resource acquisition without conflict and dematerializes wealth
making conquest ineffective.
Griswold ‘7
(Daniel T., Associate director of the Cato Institute’s Center for Trade Policy Studies, Trade, Democracy and Peace:
The Virtuous Cycle, Peace through Trade Conference, April 20, http://www.freetrade.org/node/681)
A third reason why free trade promotes peace is because it allows nations to acquire wealth through production and
exchange rather than conquest of territory and resources. As economies develop, wealth is increasingly measured in
terms of intellectual property, financial assets, and human capital. Such assets cannot be easily seized by armies. In
contrast, hard assets such as minerals and farmland are becoming relatively less important in a high-tech, service
economy. If people need resources outside their national borders, say oil or timber or farm products, they can
acquire them peacefully by trading away what they can produce best at home. In short, globalization and the
development it has spurred have rendered the spoils of war less valuable.
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Free Trade
Griswold 2k4
(Daniel T., Griswold, Associate director of the Cato Institute’s Center for Trade Policy Studies, Trading Tyranny for
Freedom: How Open Markets Till the Soil for Democracy, January 6, Trade Policy Analysis, no. 26)
In a November 6, 2003, speech on the need to promote democracy in the Muslim world, President George W. Bush
explicitly drew the connection between economic and political freedoms: Historians will note that in many nations,
the advance of markets and free enterprise helped to create a middle class that was confident enough to demand their
own rights. They will point to the role of technology in frustrating censorship and central control—and marvel at the
power of instant communications to spread the truth, the news, and courage across borders.1
In an April 2002 speech in which President Bush urged Congress to grant him trade promotion authority, he argued that trade is about more than raising incomes. “Trade creates the habits of
freedom,” the president said, and those habits “begin to create the expectations of democracy and demands for better democratic institutions. Societies that are open to commerce across their
borders are more open to democracy within their borders.”2 Other administration officials have taken that reasoning a step further, arguing that the democracy and respect for human rights that
trade can foster would create a more peaceful world, reducing the frustration and resentment that can breed radicalism and terrorism.
There is a great deal of research on the economic impact of trade, but much less on its political impact. Do the assertions that expanding trade and international commerce promote
democracy and human rights make sense in theory, and do they stand up to empirical scrutiny? The evidence from this study strongly suggests that those assertions rest on solid ground and
deserve to be considered as Congress and the administration shape our international economic and trade policy. Theory: How Free Markets
Foster Political Freedoms
Economic openness and the commercial competition and contact it brings can directly and indirectly promote civil
and political freedoms within countries. Trade can influence the political system directly by increasing the contact a
nation’s citizens experience with the rest of the world, through face-to-face meetings, and electronic
communications, including telephone, fax, and the Internet. Commercial communication can bring a sharing of ideas and exposure to new
ways of thinking, doing business, and organizing civil society. Along with the flow of consumer and industrial goods often come books, magazines, and other
media with political and social content. Foreign investment and services trade create opportunities for foreign travel and study,
allowing citizens to experience first-hand the civil liberties and more representative political institutions of other
nations.
Economic freedom and trade provide a counterweight to governmental power. A free market diffuses
economic decisionmaking among millions of producers and consumers rather than leaving it in the hands of a few
centralized government actors who could, and often do, use that power to suppress or marginalize political
opposition. Milton Friedman, the Nobel-prize-winning economist, noted the connection between economic and political freedom in his 1962 book, Capitalism and Freedom: Viewed as a
means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power. The kind of economic organization that provides
competitive capitalism, also promotes political freedom because it separates economic power
economic freedom directly, namely
from political power and in this way enables the one to offset the other.3
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Free Trade
Moreover, while the criteria for judging a state democratic vary, the statistic that 45 percent of states were
democratic in 1990 corresponds with Freedom House's count of "democratic" polities (as opposed to its smaller count of
"free" countries, a more demanding criterion). But by this same count, Freedom House now says that the proportion of democracies has grown to
62.5 percent. In other words, the "third wave" has not abated.
< waxing. is democracy for yearning the Islam radical of cradle in even that suggests 2001 victory election landslide second Khatami="s"
President Iranian And these. majority a assent won not has and Moslems to only definition by appeals it but world, parts alternative an offer still
may Radical democracy. challenge ideological universalist ended also War; Cold Communism fall The>
That Freedom House could count 120 freely elected governments by early 2001 (out of a total of 192 independent
states) bespeaks a vast transformation in human governance within the span of 225 years. In 1775, the number of
democracies was zero. In 1776, the birth of the United States of America brought the total up to one. Since then, democracy has spread at an
accelerating pace, most of the growth having occurred within the twentieth century, with greatest momentum since 1974.
That this momentum has slackened somewhat since its pinnacle in 1989, destined to be remembered as one of the
most revolutionary years in all history, was inevitable. So many peoples were swept up in the democratic tide that
there was certain to be some backsliding. Most countries' democratic evolution has included some fits and starts
rather than a smooth progression. So it must be for the world as a whole. Nonetheless, the overall trend remains powerful and
clear. Despite the backsliding, the number and proportion of democracies stands higher today than ever before.
This progress offers a source of hope for enduring nuclear peace. The danger of nuclear war was radically reduced
almost overnight when Russia abandoned Communism and turned to democracy. For other ominous corners of the
world, we may be in a kind of race between the emergence or growth of nuclear arsenals and the advent of
democratization. If this is so, the greatest cause for worry may rest with the Moslem Middle East where nuclear
arsenals do not yet exist but where the prospects for democracy may be still more remote.
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Free Trade
Empirical studies prove free trade has brought democracy to 700 million people.
Griswold ‘7
(Daniel T., Associate director of the Cato Institute’s Center for Trade Policy Studies, Trade, Democracy and Peace:
The Virtuous Cycle, Peace through Trade Conference, April 20, http://www.freetrade.org/node/681)
First, I examined the broad global trends in both trade and political liberty during the past three decades. Since the early 1970s, cross-border flows of trade, investment, and
currency have increased dramatically, and far faster than output itself. Trade barriers have fallen unilaterally and through multilateral and
regional trade agreements in Latin America, in the former Soviet bloc nations, in East Asia, including China, and in more developed nations as well. During that
same period, political and civil liberties have been spreading around the world. Thirty years ago democracies were
the exception in Latin America, while today they are the rule. Many former communist states from the old Soviet Union and its empire have successfully transformed
themselves into functioning democracies that protect basic civil and political freedoms. In East Asia, democracy and respect for human rights have replaced authoritarian rule in South Korea,
Taiwan, the Philippines, and Indonesia.
Freedom House, a human rights think tank in New York, measures the political and civil freedom each year in every country in the world. It classifies countries into three
categories: "Free"--meaning countries where citizens enjoy the freedom to vote as well as full freedom of the press, speech, religion and independent civic life; "Partly Free"--those countries "in
which there is limited respect for political rights and civil liberties"; and "Not Free"--"where basic political rights are absent and basic civil liberties are widely and systematically denied."
According to the most recent Freedom House survey, political and civil freedoms have expanded dramatically along
with the spread of globalization and freer trade. In 1973, 35 percent of the world's population lived in countries that
were "Free." Today that share has increased to 46 percent. In 1973, almost half of the people in the world, 47 percent, lived in countries that were "Not
Free." Today that share has mercifully fallen to 36 percent. The share of people living in countries that are "Partly Free" is the same, 18 percent.
In other words, in the past three decades, more than one-tenth of humanity has escaped the darkest tyranny for the
bright sunlight of civil and political freedom. That represents 700 million people who once suffered under the jack boot of oppression who
now enjoy the same civil and political liberties that we all take for granted.
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Free Trade
By causing widespread extinctions, humans have artificially simplified many ecosystems. As biologic simplicity
increases, so does the risk of ecosystem failure. The spreading Sahara Desert in Africa, and the dustbowl conditions
of the 1930s in the United States are relatively mild examples of what might be expected if this trend continues.
Theoretically, each new animal or plant extinction, with all its dimly perceived and intertwined affects, could cause
total ecosystem collapse and human extinction. Each new extinction increases the risk of disaster. Like a mechanic
removing, one by one, the rivets from an aircraft's wings, 80 mankind may be edging closer to the abyss.
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Free Trade
One of the most contentious issues surrounding globalization is the concern that free trade hurts the environment,
both locally and globally. The classic argument for free global trade is that it is efficient for countries to specialize in
producing goods where they have a comparative advantage, which they can then exchange for other goods. But
skeptics like ecological economist Herman Daly have questioned this on the grounds that the real costs of trade --
including depletion of natural resources and pollution -- are hidden and routinely ignored.
In the new book “Trade and the Environment: Theory and Evidence,” economists Brian Copeland and Scott Taylor
attempt to replace some of the rhetoric in this debate with systematically produced results. Based on a study of
sulfur dioxide concentrations in over 100 cities around the world from 1971 to 1996, they reach the surprising and
provocative conclusion that free trade can actually be good for the environment.
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Free Trade
Protectionism can’t stop pollution havens- they harm high quality factories just as much as
polluting ones.
Wheeler 2k1
(David, Senior Fellow at the Center for Global Development, P.H.D. from MIT, Racing to the Bottom? Foreign
Investment and Air Pollution in Developing Countries, Journal of Environment & Development, Vol. 10, No. 3, 225-
245, September)
Rejection of trade and aid sanctions as levers to force closure of the regulatory gap between low- and high-income
countries. First, such sanctions are unjust because they fail to discriminate between clean and dirty firms in the
affected countries. Numerous studies have shown that factories with world-class standards are operating even in the
poorest countries (Afsah& Vincent, 1997; Hartman et al., 1997; Huq & Wheeler, 1992; Wheeler et al., 1999).
Second, such blunt instruments will inevitably penalize workers in poor countries by reducing opportunities for jobs
and higher wages. Finally, they will not work anyway. As noted in previous sections of this article, poor countries
have weaker regulations and higher pollution intensities for a host of reasons. Governments of low-income countries
could not deliver on promises of OECD-level regulation, even if they were willing to make them.
The complexity of the subject becomes evident as the book leaves a host of questions unanswered. The authors limit
their focus to local pollution caused by production of goods, while ignoring other significant environmental impacts
of trade.
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Free Trade
Nuclear War
MEAD ’92 Fellow, Council of Foreign Relations
[New Perspectives Quarterly, Summer, p.28, walter Russell]
Remember the "giant sucking sound"? That was 1992 Presidential candidate Ross Perot's colorful auditory description of how
multitudes of Americans would lose their jobs to low-wage competitors in Mexico. Well, it's more than a decade and a half later,
and Perot's bête noir, the Nafta agreement, is once again the subject of heated debate in a campaign for the White House.
Democratic Presidential candidates, Senators Barack Obama (D-Ill.) and Hillary Clinton (D-N.Y.) have both criticized the
agreement (BusinessWeek, 3/19/08). But the regional fears Nafta inspired in 1992 have gone global in 2008. In addition to
Mexico, most of the world's dynamic emerging markets, including China, India, and Brazil, have become strong players in
the global economic arena. Americans worry about competition from overseas companies and workers from other lands
emigrating to the U.S., especially with the economy faltering amid falling home prices, tottering financial markets, and shaky
consumer confidence. The case for freer trade and open markets is overwhelming. Economic evidence and economic history
alike support the view that freer trade over time invigorates economic growth by encouraging the spread of new
commercial ideas, new technologies, and new ways of organizing everyday life. Consumers enjoy lower prices and greater
choice. Competition from overseas rivals encourages corporate efficiency and innovation. THE POLITICS OF TRADE To
be sure, free trade is a powerful economic medicine that can have some unpleasant side effects, and policymakers could do a
better job of ameliorating attendant job losses and other economic dislocations. But the problems associated with free trade are
manageable compared to those caused by closed economic borders. (Just ask Messrs. Smoot and Hawley.) Yet many
economists worry that election-year pressure from voters to "do something" about income inequality, stagnant wages, and pink
slips is pushing Washington toward protectionism. Invoking the Harry Potter books, Greg Mankiw, Harvard University
economist and former head of the White House Council of Economic Advisors, writes in a recent New York Times opinion piece
that "no issue divides economists and mere Muggles more than the debate over globalization and international trade." Mankiw
sees the crux of the problem as this: "Where the high priests of the dismal science see opportunity through the magic of the
market's invisible hand, Joe Sixpack sees a threat to his livelihood." With all respect to Mankiw, a terrific economist with a best-
selling textbook, that's nonsense. First of all, give Joe Sixpack credit. The knowledge gap between the "high priests" and
ordinary Americans is exaggerated. It seems to me most voters have a pretty good grasp of the gains from freer trade with
the rest of the world. Protectionists and immigrant-bashers garner plenty of media attention, yet voters have handed over
relatively little power to the apostles of protectionism over the past three decades or so. Just ask free-trade opponents Ross
Perot, Pat Buchanan, and Tom Tancredo, each of whom failed in a Presidential bid. Meanwhile, Bill Clinton and George H.W.
Bush each pushed through a number of free-trade agreements during their Presidencies. Yes, the politics of trade is often a
dance with two steps forward and one step back. Yet at the end of the day the embrace of globalization is strong.
KEEPING THE FAITH Even more important, it's not Joe Sixpack who is at fault. It's economists such as Mankiw who bear
much of the blame for the current backlash in many quarters against international competition. As everyone who took Economics
101 knows, the gains from trade are dispersed throughout the economy while the costs are highly concentrated. Too many
employees in recent years have felt the downside of "creative destruction." Thanks to the routine corporate restructurings,
downsizings, reengineerings—pick your favorite euphemism—in Corporate America, there's little job security and stagnant
wages. Yet the economic priesthood continues to devote enormous intellectual firepower to making the case for freer trade
and writing op-ed pieces extolling the benefits while ignoring the downside and dismissing the losers. "They have been
quick to denounce opponents of this [free trade] agenda as 'protectionists' who should not be allowed in polite circles," writes
Dean Baker, co-director of the Center for Economic & Policy Research in the latest issue of the Real-World Economics Review.
"Yet, they rarely acknowledge the unavoidable implication of trade theory—that a large segment of the U.S. workforce
will have to endure lower living standards as a result of the current course of trade liberalization." In the battle of public-
policy ideas, American economists do wield influence. It's time to claim victory in the free-trade debate. But if economists
want Washington and the general public to keep the free-trade faith they need to get more involved in helping out the
"losers." And it doesn't matter whether the culprit is international competition, deregulation, technological innovation, or some
combination of the three. No, protectionism is not the answer. Let's all agree on that, and move on. But preserving the
economy's dynamism calls for the considerable brainpower of the economic profession to help come up with ways that
offer workers better security in an era marked by rising fears of wage stagnation, job turmoil, long-term unemployment,
and underemployment, unaffordable or unavailable health insurance, and increasingly at-risk pension plans. Now that's a
challenge worth taking up.
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Free Trade
Meanwhile, the existence of an arsenal of mass destruction in such an unstable region in turn has serious
implications for future arms control and disarmament negotiations, and even the threat of nuclear war.
Seymour Hersh warns, "Should war break out in the Middle East again,... or should any Arab nation fire
missiles against Israel, as the Iraqis did, a nuclear escalation, once unthinkable except as a last resort, would now be a strong
probability."(41) and Ezar Weissman, Israel's current President said "The nuclear issue is gaining
momentum(and the) next war will not be conventional."(42) Russia and before it the Soviet Union has long been a major(if not the major)
target of Israeli nukes. It is widely reported that the principal purpose of Jonathan Pollard's spying for Israel was to furnish satellite images of Soviet targets and other super
sensitive data relating to U.S. nuclear targeting strategy. (43) (Since launching its own satellite in 1988, Israel no longer needs U.S. spy secrets.) Israeli nukes aimed at
the Russian heartland seriously complicate disarmament and arms control negotiations and, at the very
least, the unilateral possession of nuclear weapons by Israel is enormously destabilizing, and
dramatically lowers the threshold for their actual use, if not for all out nuclear war. In the words of Mark Gaffney,
"... if the familar pattern(Israel refining its weapons of mass destruction with U.S. complicity) is not reversed soon- for whatever reason- the deepening Middle East
The evidence has become so strong that President Bush has used it to show why a liberal trade policy is a
necessary part of a strong national defense. The latest "National Security Strategy of the United States of
America" says free trade and open markets can be as important to securing the peace for the long run as
robust military funding. The document represents new thinking in the government that U.S. security depends on
economic success in other countries, that economic and political repression breed poverty, frustration and
resentment, and that open markets -- as well as open governments and open societies -- can alleviate the causes of
the terrorist threat
against the West. It is not that poverty causes terrorism. The 19 hijackers of Sept. 11 were chiefly middle class in
origin, with 15 coming from oil-rich Saudi Arabia. But the conditions that produce poverty -- lack of economic
freedom -- also produce the sense of hopelessness and despair that breeds resentment. Terrorist organizations
exploit the situation to recruit new members. Meanwhile, the leaders of these countries blame the United
States rather than accept responsibility for the policies impoverishing their own people. As the Bush
administration put it in its National Security Strategy document, "economic growth supported by free trade
and free markets creates new jobs and higher incomes. It allows people to lift their lives out of poverty, spurs
economic and legal reform, and the fight against corruption, and it reinforces the habits of liberty." Helping
the poor of the world prosper and reinforcing "the habits of liberty" certainly is an attractive alternative to a
permanent war against radical Islam. And it would be far less costly.
Nuclear terrorism could even spark full-scale war between states. Such war could involve the entire spectrum of
nuclear-conflict
possibilities, ranging from a nuclear attack upon a non-nuclear state to systemwide nuclear war. How might such far-
reaching consequences of nuclear terrorism come about? Perhaps the most likely way would involve a terrorist
nuclear assault against a state by terrorists hosted in another state. For example, consider the following scenario: Early in the
1990s, Israel and its Arab-state neighbors finally stand ready to conclude a comprehensive, multilateral peace settlement. With a bilateral treaty
between Israel and Egypt already many years old, only the interests of the Palestinians—as defined by the PLO—seem to have been left out. On
the eve of the proposed signing of the peace agreement, half a dozen crude nuclear explosives in the one-kiloton range detonate in as many Israeli
cities. Public grief in Israel over the many thousands dead ands maimed is matched only by the outcry for revenge. In response to the public
mood, the government of Israel initiates selected strikes against terrorist strongholds in Lebanon, whereupon Lebanese Shiite forces and Syria
retaliate against Israel. Before long, the entire region is ablaze, conflict has escalated to nuclear forms, and all countries in the area have suffered
unprecedented destruction. Of course, such a scenario is fraught with the makings of even wider destruction. How would the United States
react to the situation in the Middle East? What would be the Soviet response? It is certainly conceivable that a chain reaction of
interstate nuclear conflict could ensure, one that would ultimately involve the superpowers or even every nuclear-
weapons state on the planet. What, exactly, would this mean? Whether the terms of assessment be statistical or human, the
consequences of nuclear war require an entirely new paradigm of death. Only such a paradigm would allow us a proper framework
for absorbing the vision of near-total obliteration and the outer limits of human destructiveness. Any nuclear war would have
effectively permanent and irreversible consequences. Whatever the actual extent of injuries and fatalities, such a war
would entomb the spirit of the entire species in a planetary casket strewn with shorn bodies and imbecile
imaginations.
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Free Trade
Now we turn to the question of whether the usual strong association between growth and poverty reduction is
somehow modified by openness. Openness and the poor There are strong reasons to suppose that
trade liberalization will benefit the poor at least as much as it benefits the
average person. Trade liberalization tends to reduce monopoly rents and the value of
connections to bureaucratic and political power. In developing countries, it may
be expected to increase the relative wage of low-skilled workers, who are likely to be
scarcer in the more developed world economy than at home. Liberalization of agriculture may
increase (relatively low) rural incomes. If, nonetheless, trade liberalization worsens the income distribution
enough, then it is possible that it is not, after all, good for poverty reduction, despite its positive overall effect on
growth. After examining the cross-country evidence and reviewing some of the vast
microeconomic literature on the effects of trade liberalization on income
distribution, we find that there is no systematic relationship between openness and the income of the
poorest, beyond the positive effect of openness on overall growth. The aggregate evidence shows that the
income of the poorest tends to grow one-for-one with average income. Of course, in
some countries, the poor sometimes do better than average, and sometimes they do worse. But, as Dollar and
Kraay have shown, openness does not help explain which of these outcomes occurs. On the question of whether the
poor benefit more or less than others, no clear pattern emerges from the numerous studies of individual
liberalization episodes. This is not surprising, as any particular liberalization will change relative prices and
incentives throughout the economy in idiosyncratic ways.
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Free Trade
Economic openness is already triggering reforms in China- more free trade could trigger a
democratic transition.
Griswold ‘7
(Daniel T., Associate director of the Cato Institute’s Center for Trade Policy Studies, Trade, Democracy and Peace:
The Virtuous Cycle, Peace through Trade Conference, April 20, http://www.freetrade.org/node/681)
A More Democratic China?
In China, the link between trade and political reform offers the best hope for encouraging democracy and greater
respect for human rights in the world's most populous nation. After two decades of reform and rapid growth, an expanding middle class is experiencing
for the first time the independence of home ownership, travel abroad, and cooperation with others in economic enterprise free of government control. The number of telephone lines, mobile
phones, and Internet users has risen exponentially in the past decade. Tens of thousands of Chinese students are studying abroad each year.
China's entry into the World Trade Organization in 2001 has only accelerated those trends.
So far, the people of mainland China have seen only marginal improvements in civil liberties and none in political liberties. But the people of China are
undeniably less oppressed than they were during the tumult of the Cultural Revolution under Mao Tse-Tung. And China is reaching the stage of
development where countries tend to shed oppressive forms of government for more benign and democratic
systems. China's per capita GDP has reached about $7,600 per in terms of purchasing power parity. That puts China
in the upper half of the world's countries and in an income neighborhood where more people live in political and
civil freedom and fewer under tyranny. Among countries with lower per capita incomes than China, only 27 percent
are free. Among those with higher incomes, 72 percent are free. Only 16 percent are not free, and almost all of those
are wealthier than China not because of greater economic freedom but because of oil.
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Accordingly, individualism holds that the interests of men do not conflict -- provided we are speaking of self-
supporting individuals who pay for what they get. Where there is free trade, the exchange of value for value,
one man's gain is another man's gain.
The same harmony of men's interests applies in the international arena. One nation's enrichment raises the
standard of living of all other nations with which it trades. Which nation adds more to your standard of
living: Japan or Bangladesh? And how would you fare if Japan were suddenly reduced to the economic level
of Bangladesh?
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Globalization has also helped extend rights to women that had long been confined to men. These
include being able to go into business, get an education, inherit money, and so on. One reason for
this is simple economics. In a globalized, competitive economy, women are a potential resource.
They are able to have new ideas, to produce, and to work. If you discriminate against women – or
anyone else -- you lose opportunities as a society or as an employer. Take the discussion that's going
on now in Saudi Arabia about whether women should be allowed to drive, which they can't legally
do now. While it's unlikely the situation there will change anytime soon, it's progress just to have
the discussion. People are saying it's extremely costly to hire drivers, often from other countries, to
drive women around. You can see how basic economics, basic capitalism, creates the incentive to
give women more rights. A second reason is that all the goods, ideas, and people that cross borders
under globalization allow people to see more alternatives, to see other ways of living. When women
and other oppressed groups in poor countries see how their counterparts in Western societies are
treated, they begin to have ideas about how they want to be treated. Globalization is a great
influence because people everywhere get all sorts of new ideas. They say, "Wow, things can be very
different than I'm used to."
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University Park, Pa. -- Countries that maintain in-depth financial and economic ties with each other are less
likely to engage in military conflict, according to a Penn State study. "Political analysts have observed for
several centuries that international trade inhibits interstate war between countries by raising the cost of
military violence," says Dr. Quan Li, assistant professor of political science. [continues] "Interdependent
countries are in a better position to test the resolve of economic partners because they can more effectively
exert non-violent (i.e. economic) pressure, and then observe the consequences," Li notes. "By taking
commercial measures that represent both a clear and credible threat, a state can signal to economic partners
that it is prepared to make considerable sacrifices. If, however, these sacrifices are too critical, the country
could lose bargaining power in future conflicts. "In the event of a serious dispute, countries that are autarkic
or economically isolated are most at risk of war, because they have no financial bargaining chips. All they can
do is fall back on bluff and `cheap talk.' Should that fail, their only option is to fight," says Li. The Suez crisis of 1956 is an
example of how economic interdependence allows countries to compete financially rather than through force. On July 26 of that year, Egyptian President Gamal Abdel Nasser nationalized the
Suez Canal, prompting protests from Great Britain and France. When negotiations failed to resolve the crisis, British and French forces invaded Egypt on Oct. 31. Despite a U.N. General
Assembly resolution ordering a cease-fire and vocal opposition from the United States, Britain and France persisted in their attempts to occupy the canal and overthrow Nasser. On Nov. 5, the
United States, which then represented 45 percent of the world economy, decided to take action against its traditional allies, Britain and France. Rather than employing military force, the U.S.
government started selling off its supply of British pounds sterling, compelling the central bankers in Britain either to buy pounds on the market or face a devaluation of their currency relative to
the dollar, the international benchmark at that time. This caused British reserves to fall 15 percent within a month. "U.S. Treasury Secretary George Humphrey informed Britain that, unless it
obeyed the U.N. resolution and withdrew from Suez, the United States would continue to sell pounds and block British access to International Monetary Fund reserves," Li notes. "The United
States, by far the biggest contributor to the IMF in those days, could block loans from the IMF by simply refusing to lend it the money. U.S. control of the IMF assured that Britain remained in an
economic predicament that the United States had created. This strategy had the desired effect. On Nov. 6, Britain ordered a cease-fire, in effect forcing the French to end military operations as
well." The increasing economic openness of China might have just helped in preventing a military contest between China, Taiwan and the United States during the wake of Taiwan's 2000
presidential election. The admission of China to the World Trade Organization will foreseeably generate the positive political externality of promoting peace, the researchers say. In contrast, the
economically isolated Afghanistan appears to serve as an example of the effect of economic autarky.
History demonstrates the peaceful influence of trade. The century of relative world peace from 1815 to 1914
was marked by a dramatic expansion of international trade, investment and human migration, illuminated by
the example of Great Britain. In contrast, the rise of protectionism and the downward spiral of global trade in
the 1930s aggravated the underlying hostilities that propelled Germany and Japan to make war on their
neighbors. In the more than half a century since the end of World War II, no wars have been fought between two
nations that were outwardly oriented in their trade policies. In every one of the two dozen or so wars between
nations fought since 1945, at least one side was dominated by a nation or nations that did not pursue a policy of free
trade. In the recurring Middle East wars between Israel and its Arab neighbors, dating back to 1948-49, none
of the direct participants were what could be described as open economies at the time of conflict, with the
Arab countries enforcing a virtual boycott of trade with Israel. Saddam Hussein, the instigator of the 1991 Persian Gulf War, could be described
in many ways, but not as a free trader. Wars have been fought between members of the General Agreement on Tariffs and Trade, but only when at least one of the warring sides was protectionist
in its trade policies. For example, India and Pakistan were both members of GATT during their 1965 and 1971 conflicts, but they were also both committed to protection as a trade policy. Great
Britain and Argentina were members of GATT when they fought over the Falklands in 1982, but Argentina, the aggressor in that conflict, was at the time still under the protectionist spell of
Peronism. After the nightmare of two world wars, the United States encouraged the nations of Western Europe to form a free-trade area not only to promote economic development but also to
reduce international rivalries. Decades of trade liberalization have helped to make war among members of the European Union virtually unthinkable today or in the foreseeable future. A growing
web of international investment has also strengthened peace among nations. New York Times columnist Thomas Friedman has pointed out what he calls the Big Mac thesis: that no two nations
with McDonald's franchises have ever gone to war. A nation open enough and developed enough to be a profitable home for an established international franchise such as McDonald's will
generally find war an unattractive foreign policy option.
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Yes, we can stop some jobs of computer programmers from going overseas. But what if Japan, for example,
restricts the outsourcing of jobs to the United States, and Americans working for Toyota and Honda start
getting laid off? What about Americans working for other foreign-owned companies operating in the United
States?
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In the South, the different elements of trade liberalisation often translate directly
into food insecurity. Among these elements the following have the most severe
impacts on peoples livelihood. In addition they easily result in internal migration,
urban growth and environmental destruction: * undoing land reform and allowing
concentration of land ownership * privatising water * introducing monopoly
control on seeds through IPRs * diverting land from food to cash crops for exports
* diverting food from local to global markets Volatile prices and globalisation are
creating an unstable, insecure and costly food system and undermine the
ecological security of agriculture, the livelihood security of farmers and the food
security of both poor and affluent consumers. "We in the South Asian
subcontinent have more than the World Bank indices as our guide. We have our
history", says Vandana Shiva. "India's worst famines took place when India's
economy was most integrated though the globalisation of the colonial period."
THE POPULATION-CRASH SCENARIO IS SURELY THE MOST APPALLING. PLUMMETING CROP YIELDS WOULD CAUSE SOME POWERFUL
COUNTRIES TO TRY TO TAKE OVER THEIR NEIGHBORS OR DISTANT LANDS – IF ONLY BECAUSE THEIR ARMIES, UNPAID AND LACKING
FOOD, WOULD GO MARAUDING, BOTH AT HOME AND ACROSS THE BORDERS. THE BETTER-ORGANIZED COUNTRIES WOULD ATTEMPT
TO USE THEIR ARMIES, BEFORE THEY FELL APART ENTIRELY, TO TAKE OVER COUNTRIES WITH SIGNIFICANT REMAINING RESOURCES,
DRIVING OUT OR STARVING THEIR INHABITANTS IF NOT USING MODERN WEAPONS TO ACCOMPLISH THE SAME END: ELIMINATING
COMPETITORS FOR THE REMAINING FOOD. THIS WOULD BE A WORLDWIDE PROBLEM – AND COULD LEAD TO A THIRD WORLD
WAR – BUT EUROPE’S VULNERABILITY IS PARTICULARLY EASY TO ANALYZE.
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Free Trade
By causing widespread extinctions, humans have artificially simplified many ecosystems. As biologic simplicity
increases, so does the risk of ecosystem failure. The spreading Sahara Desert in Africa, and the dustbowl conditions
of the 1930s in the United States are relatively mild examples of what might be expected if this trend continues.
Theoretically, each new animal or plant extinction, with all its dimly perceived and intertwined affects, could cause
total ecosystem collapse and human extinction. Each new extinction increases the risk of disaster. Like a mechanic
removing, one by one, the rivets from an aircraft's wings, 80 mankind may be edging closer to the abyss.
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Monoculture does quite well with free trade and the spread of global
consumerism, which is monoculture economics. Other economic systems are not
allowed and are systematically undermined. The economic might of the monoculture
levels any economic diversity, moving towards a single financial standard or currency
worldwide. A uniform world economy destroys local economies and their rich
diversity of expression and interactions based on an organic dependency. The rule
of multinational businesses takes the place of local economies. Global corporate
solutions are applied to local management issues, often with disastrous results.
Corporate agriculture, the new agricultural monoculture, for example, is advertising its
ability to feed the world and end world hunger, portraying itself in the benefic aspect of the
church or a socialist government selflessly aiding the poor. What it is really doing is
undermining the most basic of human rights, the right to feed oneself and to
control one’s food sources. What the global agribusiness envisions is control of
the world food market, so that it can force entire countries to bow down before it,
who cannot even eat without its favor. Among its tools are genetically engineered crops,
including terminator seeds that destroy local plant varieties, fertilizers that weaken the soils
and breed dependency, and patents on plants that afford corporate ownership to nature’s
bounty. Meanwhile, those who oppose the global food business are deemed
backwards, causing hunger and starvation in the world, as if apart from the
agribusiness no one could feed themselves!
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The economic progress in Europe is to a large extent the result of colonial looting. Nowadays large groupings
(NAFTA, EU, MERCOSUR etc.) supposedly removed the causes of wars among rich countries; however, the global
system of world trade promoted by WB, IMF and WTO ignites all over the world a new type of wars,
particularly in thirdworld countries, the former Soviet Union, the Middle East and, unfortunately, even in
Europe. Since 1990, inequality among the nations and within individual nations has been growing more than ever
before. As Michel Chossudowsky and Silvia Federici showed – the new wars constitute the direct result of
structural adjustments, as carried out by the WB together with the IMF. When such wars broke out in Africa
(Somalia, Rwanda, Congo, Mozambique), they were labeled as civil wars due to old tribal dissensions, when they
broke out in Russia (Chechnya) or Bosnia and Yugoslavia (Kosovo) they were labeled as the result of ethnic or
religious conflicts and the efforts of minorities to become independent. Chossudowsky demonstrated convincingly
how the policy of the WB and IMF really prepared the ground for these wars: it imposed neoliberal reforms
which did not respect the identity of given countries, applied pressure to reduce government spending on social,
health or educational programs. Moreover, a massive support for the import of goods from the West and
devaluation of the currency led to the increase of prices of the bare necessities of life, the fall of real wages and
the ruin of agricultural production in these countries. No wonder that the most affected states being
ethnically mixed, instead of distinguishing their real enemies, turned against their neighbors and began to
murder one another. Similarly, the last war in the Yugoslav province of Kosovo showed that the nationalist
conflict between Kosovar Albanians and the Serbs had nothing in common with an honest effort aimed at
national independence. This war was previously prepared by the destabilization of the Yugoslav economy by
means of all kinds of economic embargoes justified politically. It was done to set up globalized free trade in
Kosovo under the protectorate controlled by the EU and USA. Chossudowsky called that the re-colonizing of the
Balkans. Such neocolonial wars may break out wherever the neoliberal global system has the upper hand.
Parallel to the present phase of the WB, IMF and WTO policy, the next phase is being prepared - the so-called
ongoing primitive accumulation. This phase provides the economies of EU and NATO member countries with new
markets, cheap labor, possibilities to export advantageously environmentally unsuitable technologies and
productions. This leads to the growth of the military-industrial complex which has a particular interest in
igniting ethnic unrest and, in return, further enrichment of the already wealthy member states.
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"We are told that free trade brings opportunity for all people, not just a fortunate few," U.N. Secretary
General Kofi Annan said at the opening Wednesday of a five-day meeting of the 146 member nations of the
World Trade Organization. "Sadly, the reality of the international trading system today doesn't match the
rhetoric. Instead of open markets there are too many barriers that stunt, stifle and starve. Instead of fair
competition, there are subsidies by rich countries that tilt the playing field against the poor."
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Congress recently considered several trade-related measures containing massive subsidies for American corporations that sell their products
overseas. For example, the Export-Import bank received more than $750 million in appropriations funding last week. The biggest beneficiary of
this money is China, which has used Ex-Im funds to build nuclear power plants, expand its state-run airline, and even build steel factories that
compete directly with our own struggling domestic steel industry. Undoubtedly the American companies who benefit from contracts with China
are happy with these trade subsidies, but American taxpayers should not be forced to pay for corporate welfare that simply benefits some
politically favored interests. I introduced an amendment to completely defund the Ex-Im bank, because true free trade cannot
flourish when subsidies interfere with healthy market competition. Unfortunately, however, the
debate in Washington tends to focus on which nations and companies should be subsidized, rather
than whether American taxpayers should pay for trade subsidies at all. I focus on the Constitution
when voting on trade issues. This approach leads me to always oppose trade subsidies, as there is no
enumerated power that gives Congress authority to send your money abroad to help big
corporations sell their products. The current system allows the most powerful interests, with the
largest political lobbies, to prevail in the Congressional pork subsidy game. So the biggest
corporations tend to get bigger, while smaller competitors face a very uneven playing field. This is
not free trade, but rather government-mangaged trade epitomized by international bodies like
NAFTA and the WTO. As noted Austrian economist Murray Rothbard explained, we don't need
government agreements to have free trade. In fact, true free trade means just the opposite- true free
trade occurs only when government is not involved at all. We must remember that government-
managed trade always means political favoritism. Merit, rather than politics, should determine which
companies succeed in the export markets. Congress should abide by the Constitution and get out of
the subsidy business altogether, so that real free trade can work and benefit all Americans. The same
free-market principles that compel me to oppose subsidies apply to tariffs as well. Simply put, tariffs are
taxes. Like subsidies, tariffs are paid for by American taxpayers and consumers. I vote against tariffs for
the same reasons I vote against any federal taxes- I want to get the federal government out of your
pocketbook. Many tariff bills in Congress are touted as pro-American, but they really just raise taxes by
stealth. In a free society, consumers must be allowed to buy goods from abroad if they so choose.
Americans should not be taxed simply because they determine that their family budgets are better
served by purchasing an imported item. When Congress attempts to punish certain nations by imposing tariffs on their
products, it really simply punishes average Americans who end up paying more for the goods they buy every day. Tariffs especially harm the
poorest American families, who spend roughly half of their income on just two things: food and clothes. These basic necessities are the most
highly-taxed items imported into the United States. Of course many families don't realize that they pay very high import tariffs, because the taxes
are buried in the cost of everyday items. Yet estimates show that most poor families pay $1,100 annually because of import taxes. So while it's
easy for Congress to impose self-righteous tariffs as a political statement, we forget that our own poorest citizens pay the real price. Finally, I
always oppose trade sanctions against foreign nations. Sanctions are terribly ineffective foreign policy tools that
harm the people, rather than the governments, of nations we hold in disfavor. Sanctions also hurt
American exporters, including Texas farmers, who are prohibited from selling their products overseas.
China, Russia, the middle east, North Korea, and Cuba all represent huge markets for our farm
products, yet many in Congress favor current or proposed sanctions that prevent our farmers from
selling to the billions of people in those nations. Given our status as one of the world's largest
agricultural producers, why would we ever choose to restrict our exports? The only beneficiaries of
our sanctions policies are our foreign competitors. I recently voted to against continued trade sanctions
against Iran and Libya, and I have introduced legislation to end our trade embargo against Cuba. All
Americans benefit from both sides of the free trade equation, and Congress should not interfere
with exports any more than it should tax imports.
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BusinessWorld, 8/17/07 [“Trade Tripper; Some Myths About the WTO”, LexisNexis [Accessed
8/1/08]]
One of the easiest targets to lay criticism on is the World Trade Organization. NGOs and left-leaning
organizations love blaming the WTO for all existing poverty. This despite the fact that it is actually their
advocacies, to paraphrase Thomas Friedman, that "keep the poor in being poor." Governments find in the
WTO a convenient scapegoat, placing responsibility on the latter for the consequences of what is actually
government policies or measures.
In truth, the WTO is a highly beneficial, albeit misunderstood, body whose purpose is to improve the lives of
many of the world's poor. The following is a short discussion on some myths (and there are many
peddled around) about the WTO.
WTO demands "free trade." This is a myth spread by governments (trying to shift responsibility for
probable consequences of trade liberalization policies) and anti-globalization NGOs (for anything
wrong with this world). What is to be remembered is this: the WTO never imposed free trade or
aspired for free markets. If one studies the 492 pages that make up the Marrakesh Agreement and its
Annexes, one would see that not once do the words "free trade" appear. Instead, one finds that the goals
of the WTO are more inclusive and real: "raising standards of living, ensuring full employment and ...
growing volume of real income and...expanding the production of and trade in goods and services, ...the
optimal use of the world's resources in accordance with the objective of sustainable development...." Nothing
objectionable there.
WTO forced us to lower tariffs. The WTO, 12 years after it came into being, is still being blamed for
present levels of Philippine tariffs. This is wrong. To understand, one first must make a distinction between
"bound" and "applied" rates. To bind means to commit to a certain level of tariffs for which a country may
not impose in excess of, the so-called "bound" rates. The binding is our WTO commitment. Thus, if the
Philippines decides to bind its tariffs on, say, widgets, at 80%, then the Philippines may impose tariff rates
from anywhere from 0% to 80% but not to exceed 80%. The actual tariff rate imposed by the Philippines
within the bound rate is the "applied" rate.
The current "simple average final bound rate" for the Philippines is 25.6% (with agriculture at a high 34.7
and non-agri products at 23.4%). Thus, to use the averages as an example, we could have rates from 0% to
25.6%. The Philippines, on its own, voluntarily and without being required by the WTO, has a "simple
average mfn applied rate" of 6.3% (with agri products at 9.6%, non-agri products at 5.8%). Some of our
bound rate commitments are actually quite high (sugar is at 80%) and with some products having no bound
rate commitments at all (e.g., cement, ceramics) and thus technically could be raised to any level we want.
Our tariffs are at such levels because our own internal policies make it so. This is not to dispute the merit
of such policies. The point is that the WTO rules were framed in such a way that countries have a great
leeway in formulating their domestic rules that ensure they get the most out of WTO membership. WTO
rules have enough safety provisions that can be used in cases where trade becomes unduly harmful (i.e., trade
remedies such as safeguards and anti-dumping measures).
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Free Trade
In a study conducted by the Oakland Institute this year (Food Aid or Food Sovereignty: Ending World Hunger in
Our Time), we have concluded that this position overlooks two fundamental elements: Food trade is largely
dominated by developed countries and a few developing countries such as Brazil and South Africa, who are
affected by the displacement of commercial imports. In addition, increased food trade, controlled by international
agribusinesses and large-scale farmers, will not provide market access and benefit the poorest countries and
their small farmers.
World hunger will be again at stake at the December WTO Ministerial in Hong Kong. WTO, as the agency to
regulate food aid, will not address world hunger and will serve the interests of competing food exporting
countries. Furthermore, developed countries are putting pressure on developing countries to dismantle tariffs
and open their markets to increased dumping of agricultural commodities by agribusiness cartels. Any
additional cuts to the agricultural tariff in developing countries, the only instrument available for protecting
farmers who have no subsidies to offset the effects of low commodity prices, would unleash more hunger and
destitution. For example, India has reduced its tariff rate to almost 65% lower than the average applied rate in 1990-
91, and is reeling from depressed global prices. Home to some 221.1 million food-insecure people, India is faced
with rampant suicide rates among farmers, and the National Sample Survey Organization reports that nearly 48.6
percent of the 90 million farm households are caught in a debt trap.
What the hungry really need is an enforcement mechanism that ensures the human right to food. This would require
support for national policies that protect and restore the livelihoods of small farmers and increase national food
availability. After all, examples from hunger crises around the world clearly prove that policies that help countries
develop their own agricultural sector and strengthen their small-scale farmers, actually help feed more people
in the long run.
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Ministers are seeking "modalities" - or the parameters of an agreement - in talks over reducing barriers
to trade in agricultural and industrial goods. This would include the formulas for cutting tariffs and
subsidies on goods like cotton, rice, shoes, and cars, and designations of what products can be shielded
from cuts. Those exceptions are especially important for developing countries. Diplomats have agreed on
the shape of the formulas. Ministers are discussing the numbers to go into them. Agreement in the core
areas of farming and manufactured goods would open the door for deals in other parts of the Doha
round, including cross-border services.
DEADLINE FOR COMPLETING CALCULATIONS
Once the formulas for agriculture and industry are agreed, officials will have to calculate their impact
on thousands of different products or "tariff lines." This detailed, painstaking process, which would
take months, is known as scheduling. Only when those calculations are complete - and the WTO's 153
members can see what their partners' future import duties will look like - will it be possible to sign off
on a deal. So agreement among ministers on when that scheduling should be finished would set an
important milestone for the Doha round, and give negotiators in services a clear target to aim for.
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Canadian trade minister John Crosbie said after the Uruguay Round talks failed in 1990: "She's dead but she won't lie down." Four years later,
that round was completed.
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Resource constraints on the part of developing countries create a forced choice that cause
them to participate in RTA’s instead of the WTO. Insufficient trade facilitation only
exacerbates the problem.
Schott ‘8
(Jeffery J., Senior Fellow at the Peterson Institute for International Economics, visiting lecturer at Princeton University (1994) adjunct professor at Georgetown University (1986–88),
senior associate at the Carnegie Endowment for International Peace (1982–83), official of the US Treasury Department (1974–82) in international trade and energy policy. During the Tokyo
Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and
The
Environment Policy Advisory Committee of the US government. He is also a member of the Advisory Committee on International Economic Policy of the US Department of State.,
future of the multilateral trading system in a multi-polar world, accessed online,
www.iie.com/publications/papers/schott0608.pdf)
Second, there is a sizeable gap in the ability of countries to participate actively in WTO deliberations. Resource
constraints are real, and many developing countries allocate their representation to regional bodies that offer more
immediate pay-offs in terms of unilateral trade preferences. Unfortunately, this leads to foot-dragging in the WTO. Furthermore,
developing countries have been unsure whether they could take advantage of new trading opportunities in the Doha
Round due to infrastructure and human capital constraints. These legitimate concerns underscore the need to follow
through on trade facilitation reforms in the Doha Round and complementary commitments to “Aid for Trade” to
strengthen economic infrastructure and administrative capabilities.3 Trade and integration arrangements should also be part of the policy response
and integrally linked with a country’s development strategy (though not necessarily the main driver of that strategy).
Friction over Iraq, Chinese Competition, energy security and nuclear proliferation
Schott ‘8
(Jeffery J., Senior Fellow at the Peterson Institute for International Economics, visiting lecturer at Princeton University (1994) adjunct professor at Georgetown University (1986–88),
senior associate at the Carnegie Endowment for International Peace (1982–83), official of the US Treasury Department (1974–82) in international trade and energy policy. During the Tokyo
Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and
The
Environment Policy Advisory Committee of the US government. He is also a member of the Advisory Committee on International Economic Policy of the US Department of State.,
future of the multilateral trading system in a multi-polar world, accessed online,
www.iie.com/publications/papers/schott0608.pdf)
Third, the foreign policy imperative to work together – which solidified global support to
start the Doha Round two months after the tragic terrorist attacks of September 11, 2001 –
has frayed amid frictions over US policy in Iraq, increasing competitive pressures from
China, and renewed concerns about energy security and nuclear proliferation. The cooperative
spirit of Doha, forged by the crisis of the moment, seems to be a fading memory. In its place, trade officials offer a
cacophony of diplomatic rhetoric known in Geneva as “the blame game.”
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RTA’s spur competition and check inflation- in the face of a stagnating WTO the
alternative is protectionism which drives out investment vital to economic growth.
Schott ‘8
(Jeffery J., Senior Fellow at the Peterson Institute for International Economics, visiting lecturer at Princeton University (1994) adjunct professor at Georgetown University (1986–88),
senior associate at the Carnegie Endowment for International Peace (1982–83), official of the US Treasury Department (1974–82) in international trade and energy policy. During the Tokyo
Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and
The
Environment Policy Advisory Committee of the US government. He is also a member of the Advisory Committee on International Economic Policy of the US Department of State.,
future of the multilateral trading system in a multi-polar world, accessed online,
www.iie.com/publications/papers/schott0608.pdf)
For developing countries, RTAs have become increasingly important, especially given the low expectations that the Doha Round can fulfill its
development objectives. Given the lackluster pace of the WTO talks, and the ongoing challenges posed by globalization and competition from China and India,
many developing countries have turned to RTAs to complement and often propel domestic economic reforms. If
properly crafted, RTAs can contribute to economic growth by spurring competition in domestic markets and
dampening inflation – which in turn helps create a more stable and attractive environment for investment. Indeed,
competition for investment drives many of the RTAs to which developing countries participate. If a country
maintains high levels of protection, costly regulations, or discriminatory standards, investors generally will opt to locate in other
countries that have policies more conducive to production and investment. Note that the access to trade preferences is generally not an important
driver, particularly in North-South RTAs where industrial countries maintain only a few albeit significant border barriers to developing country exports. Preferential access is important for some
products (e. g., agriculture; autos; apparel), but RTAs often limit or exempt those products from free trade commitments. Moreover, preferences are depreciating assets whose value declines as
WTO negotiations and/or other RTAs are concluded.
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Last-ditch talks to secure a new global free-trade agreement were entering a second fraught
week in Geneva today as China became the latest stumbling block to ending almost seven
years of marathon negotiations. Pascal Lamy, the director general of the World Trade Organisation,
tabled new proposals last night in the hope of securing a deal by the middle of the week that would
liberalise international trade in agriculture, manufactured goods and services.WTO sources said Lamy
was confident of a final breakthrough after a cabal of the organisation's 150 members - the US, the
European Union, Brazil, India, Japan, Australia and China - agreed a deal late last week that would
see cuts in farm protection in the west in return for easier access to the industrial markets of
developing countries. But over the weekend India expressed concern about some of the details of
the agreement and was insisting on extra safeguards for its farmers, while China angered
other developing nations by demanding that some of its key manufacturing sectors - such as
chemical and machinery - be excluded.A source from one of the key players at the talks said last
night: "Up until now the big hold-out has been India. But in the last 24 hours China has started
to emerge as a big stick-in-the-mud. Lamy is going to have a fight on his hands."
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Doha – Resiliency
THE WTO IS RESILIANT—COLLAPSE OF DOHA DOES NOTHING TO WEAKEN IT
Lynn in 2008 (Jonathan, WTO to focus on dispute role after Doha blow, Jul 30, Reuters,
http://in.reuters.com/article/businessNews/idINIndia-34738320080730?sp=true )
For Lamy, the opening offered by Doha would have strengthened the world's insurance policy against
protectionism.
"My hope is that given the resilience of the system, it will be able to resist the bumpy road ahead of
us," he said.
That bumpy road, many trade experts believe, could express itself in one way in an increase in litigation,
as rows over bananas, cotton and import pricing that would have been dealt with in a Doha deal
continue to fester.
But that is where the WTO comes in.
"If the Doha round fails it is a lost opportunity, that's for sure, but the WTO will continue to be used to
resolve disputes where its integrity is intact," said David Woods of World Trade Agenda Consultants,
and a former spokesman of the WTO's predecessor, the GATT.
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Ministers are seeking "modalities" - or the parameters of an agreement - in talks over reducing barriers
to trade in agricultural and industrial goods. This would include the formulas for cutting tariffs and
subsidies on goods like cotton, rice, shoes, and cars, and designations of what products can be shielded
from cuts. Those exceptions are especially important for developing countries. Diplomats have agreed on
the shape of the formulas. Ministers are discussing the numbers to go into them. Agreement in the core
areas of farming and manufactured goods would open the door for deals in other parts of the Doha
round, including cross-border services.
DEADLINE FOR COMPLETING CALCULATIONS
Once the formulas for agriculture and industry are agreed, officials will have to calculate their impact
on thousands of different products or "tariff lines." This detailed, painstaking process, which would
take months, is known as scheduling. Only when those calculations are complete - and the WTO's 153
members can see what their partners' future import duties will look like - will it be possible to sign off
on a deal. So agreement among ministers on when that scheduling should be finished would set an
important milestone for the Doha round, and give negotiators in services a clear target to aim for.
Passing plan does nothing to Doha it will take months of negotiations post plan to even
have a chance to create change
The Economist in 2008 (Defrosting Doha; World Trade, Briefs, July 19, Lexis)
Even if ministers reach agreement in Geneva, officials will still have lots to sort out. The deal?s basic
formulae will have to be converted into tariff schedules for thousands of products, controversial rules on anti-
dumping must be thrashed out, and the services negotiations must catch up. And success is far from
guaranteed. Talks have centred on two main areas: trade in farm goods and industrial products (non-agricultural
market access, or NAMA, in WTO jargon). The ambassadors who chair the WTO?s agriculture and NAMA
negotiations have smoothed out a lot of rough areas, but would still have liked to leave ministers with less work to
do. Talks on NAMA have continued this week.
Broadly speaking, Europe and India are under attack for wanting to spare too many farm products from
deeper tariff cuts; some developing countries are being asked to reduce industrial tariffs further and faster;
and America is under pressure to do more to cap trade-distorting subsidies to its farmers.
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The next U.S. president should shift American trade policy away from an emphasis on bilateral free
trade agreements to bigger accords with the world's leading economic powers, a new report from a
centrist Democratic policy group said on Wednesday. "The United States needs a new trade and
financial strategy that reflects America's commercial interests," the Democratic Leadership Council
said in "Winning in the World Economy (II)," a follow-up to the group's 1985 policy paper on the same
topic. "It should shift away from the FTA-focused approach of the Bush era, and focus instead on
multilateral policy, targeting the largest markets and the growth sectors likely to lead America's
economy in the 2010s and the 2020s," the DLC said. The report comes as many supporters of
Democratic presidential candidate Barack Obama are calling for a moratorium on new trade deals until
what they view as problems with previous trade agreements are fixed. Groups such as the AFL-CIO labor
federation, the Teamsters union and the United Steelworkers, as well as many small and medium-sized
manufacturers, blame trade agreements for millions of lost U.S. manufacturing jobs. Obama has promised
to renegotiate the North American Free Trade Agreement to include stronger labor and environmental
provisions, and has opposed Bush administration free trade deals with Colombia, South Korea and
Panama. However, the first-term Illinois senator has not articulated a clear outline of what types of trade
agreements he would pursue if elected president. In contrast, Republican presidential candidate John
McCain has warned of the risks of reopening NAFTA and embraced the Bush administration's bilateral
free trade agenda. The DLC urged whoever is elected president to push for approval next year of the
Colombia, South Korea and Panama deals, with "clear and appropriate benchmarks" for addressing
congressional concerns about anti-labor violence in Colombia and auto market openness in South Korea.
The next administration's No. 1 priority should be the successful conclusion of the long-running Doha
round of world trade talks, now in their seventh year, the group said. But whether or not a Doha deal is
concluded, the United States should shift from President George W. Bush's emphasis on bilateral free
trade pacts with mostly small countries to a multilateral approach with big economies such as the
European Union, China, Canada, Mexico, Japan, India, Russia and the Middle East, the DLC
recommended. Those negotiations should also be focused in areas that represent the best growth
opportunities for U.S. exports such as high-tech manufacturing, services and newly invented
technologies, the group said. The DLC report faulted the Bush administration for failing to aggressively
challenge unfair foreign trade practices at the World Trade Organization and urged the next president to
take a more vigorous approach. It also called for abolishing tariffs on selected goods such as olive oil,
clothes, textiles, leather and ceramics made in "major Muslim countries cooperating in the campaign
against terror," as well as expanding trade benefits and other assistance for least-developed countries.
Congress should unilaterally eliminate tariffs on shoes, clothes, luggage and other products no longer
made in America to save consumers billions of dollar per year, the DLC said.
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Despite protests from farmers and certain industries about the deal that was
on the table, most major business federations believed the negotiations to
be crucial in boosting the global economy, especially in the framework of the
current oil and food crises. NGOs such as Oxfam also say a "trade reform
that puts poor countries first is desperately needed in the face of rising food
and fuel prices and global economic insecurity".
A return towards bilateralism would cut up markets leading to a
complex "spaghetti bowl" of trade rules that raises operating costs
for businesses. A shift to bilateral free trade agreements is also bad
news for developing countries, which are more likely to see
themselves strong-armed into big concessions.
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European Bilat agreements increase third world poverty and food insecurity in
favor of European corporations
World Development Movement, 04/21/08 [“Beware Bilateral Trade Deals with the EU”,
http://www.wdm.org.uk/news/bewarebilateraltradedeals21042008.htm]
EU trade deals are unfair to developing countries and can lead to increased poverty warns a
new report, ‘Raw Deal’, released today by the World Development Movement. According to the report the
benefits of signing a free trade deal with the EU sit firmly with European businesses, rather than developing
countries. The launch coincides with the UN conference on trade and development (UNCTAD), held in Accra,
Ghana (commences 21 April).
Assessing the development impacts of two existing EU bilateral trade agreements, with South Africa and
Mexico, the new report ‘Raw Deal’ shows how one-sided these deals have been in favour of the EU.
Key findings include:
An almost 50 per cent increase in South African food and drink imports from Europe. In particular: dairy
products, cereals and processed food and drink. The reduction of tariffs on European sweets in South Africa has
resulted in a 25 per cent fall of employment in the South African sweet making industry.
Mexico can no longer regulate the proportion of foreign shareholdings in banks. This has meant that the
Mexican banking sector has become dominated by a few foreign banks, which has led to higher interest rates
and reduced access to credit for small and medium sized companies and small farmers.
World Development Movement trade policy officer Vicky Cann is attending the UNCTAD meeting to present these
findings to developing countries that are on the EU’s hit list of future trade deals.
Vicky Cann, trade policy officer of the World Development Movement said: “Highlighting the damaging impacts
of EU bilateral trade agreements is critical at a time when the EU is pushing to open markets in over 100
developing countries with these deals. The evidence is stark; the EU’s trade deals are unfair and hurt the
poor. The aim is to open up developing countries’ markets for the benefit of European multinational
companies, which hinders rather than helps the development of poor countries. In this time of rocketing
world food prices, it is hard to believe that Europe seeks to open up developing countries’ markets to heavily
subsidised Europeans exports, putting their own farmers out of business and undermining food security.”
Recently campaigners from all over the world who are fighting Europe’s push to open markets in their countries
raised the issue at a public meeting in the European Parliament: Norma Maldonado, of the International Gender and
Trade Network Central America said: “The European Union wants to impose things on us which they don’t
impose on themselves, like demanding access to our agriculture markets even though they still have huge
subsidies on their own agricultural goods. We are not against trade; we have a culture of trade but we are
against the type of trade rules that the WTO, US and EU impose. And that is why we say no to European
pirates! And we do not want to see a new form of colonialism in the 21st century where Europeans take our
natural wealth and our people and we are left poorer.” Charles Santiago, MP for the Democratic Action Party in
Malaysia said: “This is a re-writing of trade rules, in favour of European corporations. To other developing
countries I say keep away from FTAs – they do not work in your interest! “Europe’s plans have been thwarted
at the World Trade Organisation by developing countries, so now it is targeting countries individually to reap the
rewards it couldn’t get at the WTO because countries were standing up and saying no together.”
John Ochola, of Econews in Kenya said: “This battle against European trade deals goes to the heart of African
and European society. We need a chance for our industries and our farmers to grow and then we link
production of our sectors holistically. Without this it will be difficult to see how Africa can develop.
Europeans must stand up to their governments and tell them not to make the poor poorer.”
Impacts highlighted by the new report, ‘Raw Deal’, include: balance of payment problems; decreased tax
revenue; decreased access to credit for farmers; decreased ability to effectively regulate foreign investors; and
increased unemployment and poverty. Examples include: A projected fall in government revenue of 7.5 per
cent of GDP in Namibia (which is required to implement the same trade rules as South Africa under the Southern
African Customs Union). An equivalent fall of revenue in the UK would amount to the UK government’s entire
expenditure on education. South Africa’s growing trade deficit with the EU has made the country more
vulnerable to international debt, particularly destabilising short-term capital flows. Mexico can no longer
favour domestic companies for government procurement contracts, which amounts to six per cent of GDP.
UNCTAD has said that favouring domestic companies is a ‘vital tool of development’ but under this deal, this
tool is no longer open to the Mexican government.
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Where the next battle will erupt between rich and developing countries is impossible to predict. Globalization
has forged so many connections between countries that there is a wealth of possibilities.
While ministers Mr. Fortier and Mr. Ritz expressed somewhat rote disappointment about the failure of the talks, they
spoke with enthusiasm about their plans to pursue yet more bilateral trade deals. Canada's on a “dual track,”
explained Mr. Fortier. We are exploring bilateral deals while remaining committed to multilateral talks. This is called
having your cake and eating it too. The world doesn't work that way.
Bilateral deals undermine the global trade system by setting up separate and often contradictory regimes that
favour the few and exclude everyone else. The effort and energy governments expend on negotiating these
deals necessarily reduces the amount of time or interest they have in seeking a broader deal. And when a deal
is struck between a powerful, rich country and a poorer, developing country anxious to attract new trade and
investment, you can guess whose interests are protected.
Proponents say bilateral and regional deals, such as the North America Free Trade Agreement, can act as
building blocks for a global pact. Critics say they are stumbling blocks, creating powerful vested interests that
are loath to lose the protection and benefits they receive from being inside protective walls. The critics have
the more realistic view. One reason why so many countries were prepared to walk away from the negotiating
table in Geneva is that they knew they had these bilateral and regional deals in their back pocket.
Yet this is where we now are heading. Canada is far from the only country looking to sew up bilateral and
regional deals. The U.S. is doing the same thing, as are India, China and many others. Following this path to
its logical conclusion leads to a world of powerful trade blocs, vying with each other for advantage.
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With the collapse of the Doha Round, the United States threatened to pursue a set of bilateral and regional trade
agreements. Such agreements are against the spirit of the multilateral trading system, which has been based on most-favored-nation principles. Moreover, developing
countries may be even more disadvantaged in one-on-one bargaining with the united States; a series of such
agreements may leave many developing countries worse off than they would be even with another unfair
multilateral agreement. While in principle, such agreements are only consistent with WTO rules if there is limited trade diversion, in practice, little attention has been paid to this
requirement. The argument that these regional agreements are useful as a step towards improved multilateral agreements
is also suspect. The kind of multilateral agreement to which they may lead may be more unbalanced than one which
would be directly entered into, without the more circuitous route. More to the point, there is a high cost to the
roundabout approach. For to the extent that there is temporary trade diversion, some industries are being temporarily encouraged, only to b
e later discouraged. Adjustment costs are typically high in developing countries; there may be significant costs of
entry and exit, and with a scarcity of capital, the burden on developing countries may be particularly large.
Bilateral and regional trade agreements do not generate any of the benefits of Multilateral
Free Trade- they don’t allow for necessary competition.
FurchtGott-Roth 2k8
(Diana, "TERMITES IN THE TRADING SYSTEM" ECONOMIC TREATIES ARE ONLY GOOD IF IT’S A FREE
FOR ALL, New York Post, July 27)
Columbia University economics professor Jagdish Bhagwati, for decades a leading international scholar on trade
theory and practice, has some ideas. And his first one, counterintuitively, is to scrap our free trade agreements like
NAFTA. He argues that these preferential trade agreements, or PTAs, are damaging to our economy.
"Acting like termites, PTAs are eating away at the multilateral trading system relentlessly and
progressively," Bhagwati writes. "To use another analogy appropriate to what is happening, the proliferating PTAs are leading us inexorably to
what might be aptly described as a trade wreck."
Trade policy should instead be run on the basis of multilateral free trade agreements, where countries extend to all other nations the lowest tariff that it has on a product.
Many people have grasped the benefits of free trade, but falsely conclude that the more individual, bilateral
agreements, the better off we are. But this just isn't so. For instance, an American shopper might benefit if she
bought a purse from Argentina, which makes many, less expensive leather goods, rather than from Mexico. But
because of the existence of the North American Free Trade Agreement, purses are cheaper from Mexico, because
tariffs don't apply. So, in 2007, we imported $10.5 million of leather handbags from Mexico, and only $16,000 from
Argentina.
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Trading Blocs destroy global free trade agreements by helping countries concentrate
trading leverage in one area which kills negotiations.
Dinopoulos et al. ‘2
(Elias, Professor of Business @ University of Florida and Constantinos, Department of Economics and International
Business @ Drexel University, Bilateralism: ‘Stepping Stone’ or ‘Stumbling Block’ to Global Free Trade?, May,
http://bear.cba.ufl.edu/dinopoulos/research.html)
We demonstrate that, in the setting we consider, there always exist circumstances under which a CU
undermines a feasible global free trade agreement (i.e., an agreement that all countries favor over a global
tariff war). A necessary condition for this possibility is that the CU enables its members to exploit their
collective market power vis-a-vis the rest of the world which become precise and operational with the help
of well-defined measures of country size that we propose herein.
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What's next? U.S. trade negotiators will shift to winning congressional approval for pending bilateral free-
trade deals with Colombia, Panama, and South Korea. Levy says such pacts can be "proving grounds" for a
global deal by demonstrating the economic potential of various kinds of trade liberalization.
Not that bilateral deals are a piece of cake, either. Congress has refused to act on free-trade agreements
sought by President George W. Bush. And while McCain is a free trader, his Democratic rival, Senator
Barack Obama (D-Ill.), has been more skeptical.
Still, the U.S. can secure better terms in bilateral deals by promising access to its vast domestic market. Such
small agreements aren't perfect, but they're better than nothing.
The collapse of global trade talks on July 29 proves Voltaire's aphorism that the perfect is the enemy of the good. In
pursuit of the perfect—an international trade deal agreed upon by some 150 countries with vastly different
goals—negotiators wound up with nothing. The way forward is likely to be via bilateral and regional
agreements. A global deal, if one can be reached, may be a package of smaller agreements between subsets of
the full body.
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John Audley, October 2003 [Former Trade Policy Coordinator for the EPA, “Bad Bilateral
Trade Deals Are No Better Than Bad Multilateral Deals”, Carnegie Endowment for International
Peace,
http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=1366&prog=zgp&proj=zted]
Finally, the United States muscling smaller economy countries into accepting trade agreements may actually
be more destructive to development goals than multilateral trade deals. A case in point involves the Central
America trade talks. While Central Americans hope that negotiations will make them more attractive to U.S.
investors, the United States is pressuring them to accept a deal that opens their markets to U.S. products
while doing nothing to ensure that their agriculture and apparel products find markets in the United States.
Central America countries are among the poorest in the world, and most are likely to collapse under this kind
of "beggar-thy-neighbor" deal.
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Clive Crook, 7/30/08 [Senior Editor of The Atlantic Monthly and commentator for The
Financial Times, http://clivecrook.theatlantic.com/]
Multilateral trade liberalization brought the world an awfully long way after 1945, but that era has come to
an end. The trade-reform agenda is unfinished--especially in the developing world--but future progress, if
any, will come from unilateral unreciprocated liberalization, or from discriminatory bilateral (or plurilateral)
agreements, or some blend of the two. There has been a lot of the first lately, which is good. The danger lies with
the second. It is a trend that the United States pioneered with its proliferating (until recently) regional FTAs.
A rationale often offered for that approach was that regional FTAs were building blocks for broader
multilateral liberalization, with the WTO presiding over the subsequent assembly. Skeptics said no: regional
FTAs would complicate the system and create frictions that would make broader trade reform more, not less,
difficult. I'd say the skeptics have been proven right.
The FTA tendency is capable, given an enfeebled WTO, of eventually unwinding some of what has been
achieved over the past half-century. (On this, see Jagdish Bhagwati's new book.) If a growing China, India and
Brazil follow the US example and use their muscle to develop their own hub-and-spoke networks of trade
preference, the eventual costs in forgone trade and income could be great. The logic of trade protection never
sleeps.
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only a few officials for all trade negotiations. But it can also affect developed countries, whose budgets can be inadequate to meet the
extensive demands of a proactive, multifaceted trade agenda (see Ambassador Robert Zoellick’s letter appended to GAO 2004). Second, some developing
countries become less interested in WTO talks after concluding preferential deals with their
key trading partners because they want to preserve their preference margins in partner
countries from erosion due to MFN trade liberalization in WTO negotiations. Third, RTA
critics fear that trade diversion caused by RTAs may indirectly cause disengagement from
multilateral talks. Trade diversion increases the cost of nonparticipation, inciting third
countries to attempt to join RTAs or create their own (Baldwin 1993). This concept, dubbed
“domino regionalism” by Richard Baldwin, could fragment the trading system into blocs or
spur competitive liberalization that complements and reinforces multilateral reforms
(Bergsten 1996).
RTA’s created one sided agreement’s that privilege the global North. This is then modeled
in future multilateral agreements.
Schott ‘8
(Jeffery J., Senior Fellow at the Peterson Institute for International Economics, visiting lecturer at Princeton University (1994) adjunct professor at Georgetown University (1986–88),
senior associate at the Carnegie Endowment for International Peace (1982–83), official of the US Treasury Department (1974–82) in international trade and energy policy. During the Tokyo
Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and
Environment Policy Advisory Committee of the US government. He is also a member of the Advisory Committee on International Economic Policy of the US Department of State., The
future of the multilateral trading system in a multi-polar world, accessed online,
www.iie.com/publications/papers/schott0608.pdf)
Fourth, RTA critics argue that some accords can set bad precedents
for multilateral trade. Due to economic and political asymmetries in
North-South RTAs, developed country partners can push for the
inclusion of origin rules or intellectual property protection that
developing countries may find burdensome to implement and
enforce. Others argue that RTAs cover subjects that are better dealt with outside the trade arena, such as labor and environment. Of course, many
believe that coverage of these areas is crucial – for both substantive reasons and to bolster domestic political support for the pact in industrial countries.
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Interestingly, some researchers ... larger trading blocs. Interestingly, some researchers paint
a completely different picture about the implications of bilateral trade agreements:
Nordstrom (1995) finds that regional trade agreements might provide trading
blocs with stronger incentives to pursue multilateral trade liberalization since
establishing these types of agreements allows small countries to more effectively
deal with large trading blocs. Perroni and Whalley (1996) indicate that recent regional
trade agreements generally take the form of Free Trade Associations in which member
countries can choose their external tariff rates freely. In contrast to
Krugman’s findings, this new form of regionalism does not increase the monopoly
power of newly established trading blocs and does not necessarily imply higher
external trade barriers between the emerging trading blocs. They conclude that
increasing regionalism is not a threat to the multilateral trading system. Campa and
Sorenson (1996) also employ Krugman’s framework, but they consider an infinitely repeated
tariff setting game. Their results suggest that global free trade equilibrium can be
sustainable if the small economies form a trading bloc since the integration of
small countries can undermine the market power of the larger trading blocs.
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The belated efforts of the US to sign bilateral agreements with Chile, Singapore and a few other small partners
threaten, we are told, to destroy the entire trading system. A "selfish hegemon", as Jagdish Bhagwati and Arvind
Panagariya call it (Bilateral trade treaties are a sham, FT, July 14), is conspiring with special interests to distort the
global system. Such arguments themselves distort reality. To begin, the US is hardly treading on new ground. The
multilateral system makes room for free-trade areas through Article 24 of the General Agreement on Tariffs
and Trade. The World Trade Organisation's charter allows customs unions or free-trade agreements between
members, recognising "the desirability of increasing freedom of trade by the development, through voluntary
agreements, of closer integration between the economies of (those) countries". More than 250 such
agreements have been negotiated; if the Chile and Singapore agreements become law, the US will be party to
exactly five. Beyond their economic impact, free-trade agreements of the sort the US are pursuing can benefit
the parties involved, the global trading system, and the world at large in many ways. First, FTAs provide an
important safety valve if multilateral negotiations become stuck - an all-too-real possibility. Since the Kennedy
Round concluded in 1967, only two other comprehensive multilateral agreements have been reached: the Tokyo
Round in 1979 and Uruguay Round in 1994. And because of the need for consensus, it takes only one of the 146
nations in the WTO to scuttle a new agreement. Given the history of multilateral negotiations, it would be
unwise to put all of our eggs in the Doha Round basket. Fears that FTAs will divert attention from the
multilateral track are unfounded. The US government signed pacts with Israel, Canada and Mexico during
the Uruguay Round negotia tions from 1986 to 1994 without reducing its commitment to a final multilateral
agreement. Robert Zoellick, US trade representative, is leading the Doha Round with proposals to liberalise global
trade in manufactured goods, agricultural products and services. FTAs can also level the playing field for US
exporters put at a disadvantage by free-trade agreements that exclude the US. In Chile, for example, US
exporters of wheat, soya beans, corn, paper products, plastics and heating and construction equipment have lost
market share since its government began in 1997 to aggressively pursue free-trade agreements with its non-US
trading partners. FTAs can also help less-developed countries lock in economic reforms. A signed agreement
prevents nations backsliding in times of economic or political duress, assuring foreign investors that reforms
mark a permanent commitment to liberalisation. So FTAs can serve as carrots to encourage the spread of
political and economic freedom abroad. Moreover, FTAs can provide useful templates for broader
negotiations. As membership of the WTO grows, reaching consensus becomes more difficult. Negotiators can
be forced to consider only the lowest common denominator. Negotiating with one nation or a small group of
like-minded countries can allow more meaningful liberalisation in areas such as sanitary and regulations,
technical barriers to trade, service trade and investment, electronic commerce, customs facilitation, labour
and environmental standards and market access for politically sensitive sectors. Those talks can blaze a trail
for wider regional and multilateral negotiations. Finally, FTAs can spur the economic reform and
consolidation within member states cited in Article 24. By encouraging regional integration, they increase
economies of scale and create a more integrated production process. Consolidation may be most pronounced in
more heavily protected service sectors such as telecommunications, financial services and transportation. More
efficient industries and infrastructure can yield dynamic gains year after year, boosting growth, investment, and
demand for imports from FTA partners and the rest of the world. Nafta is one reason why North America has been
an engine of global growth in the past decade. For all those reasons, the Bush administration's FTA agenda is
worth pursuing. Despite their peculiarities and incremental nature, the agreements can serve the cause of
freedom and development by breaking down barriers to trade between nations.
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The Doha Round is scheduled for completion at the end of 2004 -- but don't hold your breath. Negotiators will have
to sort out a host of contentious issues, none more complicated and politically explosive than agriculture trade
barriers and subsidies. The Bush administration has signaled its willingness to make deep cuts -- in effect, to undo
much of what was signed into law last year -- but only if the E.U. and Japan, whose farm policies are even more
horrendous than ours, agree to cut even deeper. The first outlines of a possible U.S.-E.U. compromise position
emerged recently in preparation for the WTO ministerial meeting in September in Cancun, Mexico. But barring an
unexpected breakthrough in Cancun, the Doha Round is likely to drag on for years past the scheduled deadline.
Although strongly committed to seeking progress at the WTO, the Bush team is not putting all its eggs in that
basket. Instead, it has launched an ambitious new program of "competitive liberalization" -- in other words,
entering into bilateral and regional trade agreements with a growing "coalition of the willing." Singapore and
Chile are the first partners to have signed up; free-trade agreements with those two countries were finalized earlier
this year and recently sailed through Congress. In addition, FTA negotiations are now under way with Australia,
Morocco, five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), and the
five nations of the Southern African Customs Union (Botswana, Lesotho, Namibia, South Africa, and Swaziland);
negotiations will soon commence with Bahrain and the Dominican Republic. Meanwhile, talks for a hemisphere-
wide Free Trade Area of the Americas (FTAA) continue to putter along, although differences over agriculture
subsidies probably ensure that the FTAA, if it is to happen at all, will have to await the conclusion of the Doha
Round. This flurry of activity for regional and bilateral deals has raised concerns that the United States is
abandoning its traditional commitment to the broader multilateral trading system. Don't lose sleep over that
one: This administration has been quite active at the WTO and is pushing hard for progress there. The fact,
though, is that global trade rounds are few and far between; since the Kennedy Round ended in 1967, only two
other agreements (the Tokyo Round and the Uruguay Round) have been concluded over the subsequent three-and-a-
half decades. To its credit, the Bush team isn't content to wait around for the next return of the multilateral comet.
Other administration critics have sniped at the selection of FTA partners. And it's true that the current list of
countries is long on economic lightweights. Nevertheless, as my Cato colleague Dan Griswold has pointed out,
combining Chile, Singapore, and the other countries now negotiating FTAs with us would make for the world's ninth
largest economy and the U.S.'s fourth biggest export market. That's not chump change. Furthermore, trade policy
serves more than purely commercial objectives; it's also a useful instrument of diplomacy. Encouraging
economic reform in Central America and southern Africa through trade agreements is a smart and effective
way to lend a helping hand to people struggling to escape poverty. And expanding U.S. economic engagement
with the Muslim world -- the Bush administration has announced that the planned FTAs with Morocco and Bahrain
(as well as existing ones with Israel and Jordan) will serve as building blocks for an eventual U.S.-Middle East
free trade area -- is a critical adjunct to the larger war on terrorism. Can the Bush administration make good on
its ambitious plans? Time will tell. The achievement of a real and lasting trade legacy will require threading the
needle with often-fractious trading partners and an always demanding Congress. And it will require reelection
in 2004 to get the time needed to finish the job. For now, give the Bush trade record a flawed but promising
"incomplete."
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RTA’s provide real world experience that educates trade negotiators- this real world
education is critical to effective agreements in the future.
Schott ‘8
(Jeffery J., Senior Fellow at the Peterson Institute for International Economics, visiting lecturer at Princeton University (1994) adjunct professor at Georgetown University (1986–88),
senior associate at the Carnegie Endowment for International Peace (1982–83), official of the US Treasury Department (1974–82) in international trade and energy policy. During the Tokyo
Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and
The
Environment Policy Advisory Committee of the US government. He is also a member of the Advisory Committee on International Economic Policy of the US Department of State.,
future of the multilateral trading system in a multi-polar world, accessed online,
www.iie.com/publications/papers/schott0608.pdf)
In addition to setting precedents, RTAs provide a real world classroom to help educate trade negotiators. Negotiators
learn by doing – it is hard to know the sticking points of a problem until one tries to negotiate a solution for it. Such
education is invaluable for developing countries exposed to the rulemaking puzzles presented in talks on services,
intellectual property, and other new issues on the WTO agenda.
Rta’s Form Closer trade relationships that facilitate agreements in the future.
Schott ‘8
(Jeffery J., Senior Fellow at the Peterson Institute for International Economics, visiting lecturer at Princeton University (1994) adjunct professor at Georgetown University (1986–88),
senior associate at the Carnegie Endowment for International Peace (1982–83), official of the US Treasury Department (1974–82) in international trade and energy policy. During the Tokyo
Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and
The
Environment Policy Advisory Committee of the US government. He is also a member of the Advisory Committee on International Economic Policy of the US Department of State.,
future of the multilateral trading system in a multi-polar world, accessed online,
www.iie.com/publications/papers/schott0608.pdf)
Fourth, RTAs strengthen relationships among partner countries and help build alliances for WTO reforms in areas of
common interest. The launch of the Doha Round in 2001 succeeded in large measure due to the closer trade relations
resulting from US and EU trade initiatives with Latin American and African countries.
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The multilateral trade negotiations, which were "sold" to the developing countries, are being held
hostage by the developed countries with focus on their development agenda.
The expiry of the US fast-track authority also means that the Doha Development Agenda, too, will be
subjected to the same scrutiny as the Malaysia-US bilateral agreement, if and when it is concluded.
The window to conclude the multilateral negotiations, for it to be submitted to Congress for approval
before expiry of the fast-track authority, is also closing fast.
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TPA, also known as "fast track," would give President Bush the authority to negotiate new market-
opening trade agreements with other nations. TPA would allow the president to submit trade agreements
to Congress for an up or down vote without amendments, so that foreign governments would not have to
negotiate twice, first with the administration and then with Congress. Every president since 1974 has
been able to pursue trade agreements under those basic rules. Here are three compelling reasons
why President Bush should be granted that same authority: One, trade expansion promotes
American prosperity. Economic growth in the past decade was the most robust during those
years when trade--both imports and exports--was growing the most rapidly. Trade stimulates
competition, innovation, and efficiency, making U.S. workers more productive and raising real family
incomes. Imports keep prices down at the store, especially for low-income families. During the recent
downturn, trade flows have fallen sharply along with employment and manufacturing output. Promoting
trade would help to stimulate the economy. TPA would open the door for regional and global trade
agreements that would open markets for America's most competitive exports. At their just-
completed meeting in Qatar, the 142 members of the World Trade Organization agreed to pursue a
new round of negotiations to lower barriers to agricultural, industrial, and service exports,
including a cut in Europe's huge farm export subsidies. A recent study by the University of
Michigan estimates that even a one-third cut in tariffs on agriculture, industrial, and service trade
would boost annual global production by $613 billion, including $177 billion in the United States--
or about $1,700 per U.S. household. Two, trade expansion promotes U.S. security. Nations that trade
with one another tend to get along better than nations that shun trade. America's historic post-war shift
away from Depression-era trade wars and toward open trade was driven as much by foreign policy and
security concerns as by economic self-interest. Trade with Europe, Japan and developing countries
cemented the Western alliance against communism. Free trade within the European Community,
an American condition of Marshall Plan aid, has made another major European war virtually
unthinkable today. Nations open to trade are far more likely to enjoy full civil and political liberties
than those closed to trade. Trade tills the soil for democracy by introducing new ideas,
encouraging tolerance of other cultures, and creating hope for a better life through individual
effort. America's commercial ties with the rest of the world have encouraged diplomatic and military
cooperation from other nations in the war against terrorism. In contrast, none of the nations most closely
linked to terrorism--Afghanistan, Iran, Iraq, Syria, Libya, Sudan, and North Korea--belong to the WTO.
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The case for fast-track authority is simple: The most promising approach for advancing free trade in today's
international political economy is through negotiated trade agreements, and those agreements will be difficult
if not impossible to reach if the President of the United States is denied fast-track authority.
Of course, negotiated agreements are not the only way to advance free trade. A strong economic case can be made
for unilateral trade liberalization. By lowering our own barriers to trade regardless of what other countries do, the
United States would make its own economy more efficient and its citizens freer to control the fruits of their own
labor. It would also offer a powerful example to other nations of the benefits of an open economy. [7] Negotiated
trade agreements can also advance economic liberty. By linking lower barriers at home with reciprocal
liberalization abroad, a country's import consumers and export industries can be brought together in a
powerful protrade coalition. Agreements also reduce the chances of a destructive trade war by effectively
locking in lower trade barriers through mutual agreement. Finally, it's hard to argue with success. American
participation in eight rounds of GATT and in free-trade agreements with Canada and Mexico has helped
bring global trade barriers to historic lows and to keep them down.
Fast-track authority is not a gimmick. It allows the president to submit a negotiated trade treaty to Congress for an
up-or-down vote without the possibility of amendment. Without assurance of a fast-track vote, foreign
governments would find it virtually impossible to negotiate with the U.S. executive branch because any treaty
they agreed to could be rewritten by Congress. Negotiations would be pointless. Fast-track authority was first
granted in the Trade Act of 1974. Since then every U.S. president, from Gerald Ford to Bill Clinton, has been
granted authority to negotiate trade treaties for an up-or-down, no-amendments vote in Congress. The fast-track
approach to trade has yielded impressive fruit. Four major trade agreements have been implemented since
1979 under fast-track authority: the Tokyo Round of GATT in 1979, the U.S.-Canada Free Trade Agreement in
1988, the North American Free Trade Agreement with Mexico in 1993, and the Uruguay Round of GATT, signed in
1994. Each of those agreements lowered tariff and nontariff barriers, opening new markets for U.S. exporters
and raising the living standards of U.S. consumers. The agreements have locked the gains of free trade into
place, making it far less likely that the major trading nations of the world will slip into a trade war as they did
in the 1930s. It is almost certain that none of those trade-expanding agreements would have been possible
without the fast-track process.
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A cornerstone of President Bush's trade agenda is securing Trade Promotion Authority (TPA). Formerly known as
fast-track authority, TPA would limit Congress to a straight up-or-down vote on any trade agreements negotiated by
the Administration. This would accelerate the implementation of trade agreements and enhance U.S. credibility
by assuring foreign countries that there will not be counterproductive amendments to deals they negotiate
with the President. Some Members of Congress are apprehensive about the TPA legislation (H.R. 3005) that is up
for consideration in the House of Representatives due to its provisions dealing with labor and environmental
standards. Although it is warranted to have reservations over including labor and environmental provisions in trade
agreements, these reservations need not be a deterrent to giving President Bush TPA. The key is for Congress to give
President Bush a version of TPA that does not mandate that the United States enforce labor and environmental
standards through economic sanctions. There are other, less draconian tools available to the Administration.
Moreover, the fear that U.S. sovereignty will be eroded by including labor and environmental provisions in trade
agreements is misplaced. Although every President since Gerald Ford has had fast-track authority, the United
States has been without it for the past seven years. Without TPA the United States has been forced to sit on
the sidelines while other countries have been moving ahead and securing free-trade deals. There are 131 trade
and investment agreements in the world, and the U.S. is party to only three of them. U.S. exporters are at a
competitive disadvantage every time another country or region negotiates a free-trade deal. For instance,
according to the National Association of Manufacturers (NAM), countries that negotiated a free-trade agreement
with Chile since 1997 have seen their market share increase by 8 percentage points, while the U.S. market share has
declined by 6 percentage points. NAM estimates that the decline of U.S. exports to Chile since 1997 represents a
loss of $800 million and 10,000 job opportunities.
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The first deals with the benefits of 50 years of continuous United States leadership of the
world trading system. And why trade promotion authority is vital to maintaining this
leadership. The second point is to briefly explain why, if we are serious about maintaining
American leadership in global trade policy, there is no good alternative to renewing the
President's trade promotion authority this year. With regard to American leadership of world
trade, the facts speak for themselves. In 1947, when we helped start the global trading
system, the total value of world trade was around $50 billion. Today, the total value of world
trade is around $ 7 trillion. This huge jump in the total value of world trade is largely due to
the scrapping or reduction of tens of thousands of tariffs, quotas, and other non-tariff trade
barriers in the eight series, or rounds, of global trade negotiations America has led since
1947. Here is another way of expressing this achievement: Trade rules that we helped put in
place today permit world trade in goods and
services to be successfully conducted at the rate of close to $1 billion per hour, every hour
of the day. This is not just a WTO success story. This is an American success story. As a result
of this American-led effort to open world markets, hard-working American consumers make
their paychecks stretch farther, because they have access to more and better competitively
priced goods. And American businesses and farmers have prospered. In my state of Iowa,
our farmers sold $3.2 billion in agricultural products in international markets in 1999, more
than at any time in our history. Why have we been so successful in international trade? Part
of the answer is because we are so efficient and productive. But a major reason is that for
the last 50 years, America has been a leader in breaking down trade barriers. Trade barriers
are a lot like the barnacles that get encrusted on the hull of a ship. They build up overtime.
They slow the ship down. They are hard to scrape off. And that is exactly what we did, over
eight rounds of global trade
negotiations. Scrape away a lot of the trade barriers that slowed the world economy. That
hurt our competitive, export-oriented businesses and farmers. America was able to lead this
effort because we had credibility. Our trading partners believed us when America made
commitments. Without this credibility – the conviction that we mean what we say – our
trading partners have no assurance that our trade negotiators can ever close a deal. Think
about the last time you bought a car. A lot of us have had this experience. You go to the
dealer. You tell the sales person what you want to pay. The sales person goes back to talk to
the sales manager. The sales manager writes down a different number – usually higher. The
sales person gives you the new number. Maybe you agree. If you don't, you're back to
square one. Sometimes, you get so frustrated that you can't close the deal, you walk out.
That's what
negotiating without trade promotion authority is like. Our trade negotiators aren't able to put
their best deal on the table, because they know Congress will change it. Perhaps dozens of
times. Or more. So without trade promotion authority, negotiations just drag on and on.
Negotiators on all sides put off making the crucial offers and compromises that can close the
deal. We should never put our trade negotiators in this difficult position. This leads me to my
last point. If we believe that American leadership in trade is really important, there is no
good alternative to renewing the President's trade promotion authority this year. Some
opponents of trade promotion authority say you can open just as many markets by
negotiating individual free trade agreements, one country, or one region, at a time. But just
look at this chart.
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Our enemy’s selection of targets – the White House, the Pentagon, and the World Trade Towers – recognizes that
America’s might and light emanate from our political, security, and economic vitality. Our counteroffensive
must advance U.S. leadership across all these fronts. So in addition to military actions we must thrust
forward the values that define us against our adversary: openness, peaceful exchange, democracy, the rule of
law, compassion, and tolerance. This is, as Chairman Greenspan said to me, a struggle between the producers and the destroyers; between those striving day in and day
out to build better lives for their families and those who only know destruction, tearing down what others have created. On September 11, over 60 countries lost people to the hate of the
; today’s enemies will learn that America is the economic engine
destroyers. 2 Earlier enemies learned that America is the arsenal of democracy
for freedom, opportunity, and development. Economic strength – at home and abroad – is the foundation of
America’s hard and soft power. To that end, U.S. leadership in promoting the international economic and
trading system is vital. Trade is about more than economic efficiency. It promotes the values at the heart of this protracted struggle. Prior Americans
recognized the role of economic ideas in overcoming international adversity. Congress granted Franklin D. Roosevelt the authority to employ free trade as a cure for the protectionism of the
Throughout the Cold War, Congress empowered Presidents with
Great Depression and then to help Harry Truman revive a devastated world.
trade negotiating authority to open markets, promote private enterprise, and spur liberty around the world –
complementing U.S. alliances and strengthening our nation. Now we face a different danger. As President Bush
explained, the terrorists who attacked the United States did so because they hate our freedoms. They “kill not
merely to end lives, but to disrupt and end a way of life. . . . They stand against us, because we stand in their way.”
The President called upon Americans to “direct every resource at our command . . . to the disruption and
defeat of the global terror network.” We must prevail because openness is not preordained. Not long ago,
Chairman Greenspan gave a speech in which he pointed out that the degree of openness in the world today is about
what it was a hundred years ago. We only recently attained the level of trade as a percentage of the global
economy that existed in the late 19th century. The figures for capital flows are similar. Global immigration, too, was at a high point a century ago.
Indeed, the world of the late 19th and early 20th centuries was an era of great technological change, much like today. There were new forms of transportation that transformed
economies, such as airplanes and automobiles. There were new forms of communication that linked peoples, such as oceanic cables, the telephone, and the wireless. There were
even great social movements sparked by globalization, although the participants in the revived Olympics of 1896 ran around a track, instead of in the streets, and hurled objects
toward chalk lines, instead of at windows. Yet as Barbara Tuchman's book The Proud Tower vibrantly describes, the years from 1890 to 1914 were also rattled by crashing debates
in the Socialist International and anarchists bent on senseless destruction. As Tuchman recounts, at the turn of the century theorists and thinkers called for a stateless society,
without government and law, without ownership of property, without the ruling class and their despised ally, the bourgeoisie. “Tirades of hate and invective” trumpeted calls for
action. Others were driven to deeds: “These became the Assassins.” Eventually, a terrorist, Gavrilo Princip, who belonged to a shadowy group named the Black Hand, 3 triggered a
cataclysm that began in the Balkans, but spread throughout the world. The point of this brief recollection is to caution that no future is inevitable. The hopeful prospects of 100
years ago – that age of globalization – were overwhelmed by other "isms": dangerous, even terrifying ideas, such as fascism, uthoritarianism, corporatism, communism, a new
mercantilism, isolationism, and protectionism. The world learned anew that not all ideas are good. Bad ideas can lead to cruelties and tragedies: depression, mass starvation,
economic disasters, even wars and genocide. Thus it took American advocacy for openness, growth, and individual liberty over the past 50 years to reverse the disastrous decisions
made in the first half of the 20th century. In the wake of the shock of 13 days ago, many people will struggle to understand why terrorists hate the ideas America has championed
around the world. As Peter Beinart of the New Republic pointed out, it is inevitable that people will wonder if there are intellectual connections with others who have turned to
violence to attack international finance, globalization, and the United States. To put the question in their own words, not mine, can people really think, as does the editor of the
Earth Island Journal, that the terrorist assault “was not an ‘attack on freedom,’” but instead an assault on “U.S. foreign policy,” with the real targets being, “World Trade and U.S.
militarism”? So as professors and students debate these topics in the months and years ahead, I hope they take a serious look at economic and political history. Here's a lesson I
learned from history: Change breeds anxiety. Anxieties can be manipulated to force agendas based on fear, antagonisms, resentments, and hate. And then those who are the
weakest, those with the least influence, are hurt the most by cold and hard people who overrun openness and liberty and the rule of law in the name of ill-defined causes. Let me be
clear where I stand: Erecting new barriers and closing old borders will not help the impoverished. It will not feed hundreds of millions struggling for subsistence. It will not liberate
the persecuted. It will not improve the environment in developing nations or reverse the spread of AIDS. It will not help the railway orphans I visited in India. It will not improve
the livelihoods of the union members I met in Latin America. It will not aid the committed Indonesians I visited who are trying to build a functioning, tolerant democracy in the
largest Muslim nation in the world. And it certainly will not placate terrorists. This President and this Administration will fight for open markets and free trade. We will not be
intimidated by those who have taken to the streets to blame trade – and America – for the world’s ills. The global trading system has demonstrated – from Seoul to Santiago – that
it is a pathway out of poverty and despair. As President Bush stated in July in a speech at the World Bank, the protesters against globalization, largely upper middle class and
affluent young people, are "no friends of the poor." Or as former President Zedillo of Mexico said, the protesters "seem strangely determined to save the developing world from
development." The plural of anecdote is not fact. A recent World Bank study examined developing countries that opened themselves to global competition, and those that did not.
The income per person for globalizing developing countries grew more than five percent a year; non-globalizing countries fell a little over one percent a year. The absolute poverty
rates for globalizing developing countries fell sharply over the past 20 years, and the income levels of the lowest income households grew in line with the overall economy. I was
pleased to see recently that Prime Minister Blair and Chancellor Brown, who helped lead an old Labor Party to new thinking – and then to stunning electoral victory – have
Will we, as a global
embraced free trade to help those seeking hope and opportunity. Perhaps others will take heed. And so we find ourselves at a point of decision.
coalition of nations, strengthen and expand development, growth, and openness through trade? Will America
lead this advance? And will the Congress strongly support free trade as a cornerstone of international
leadership, global economic stewardship, and the promotion of our values through granting U.S. Trade
Promotion Authority to the President?
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harms our enemies. Trade Promotion Authority (TPA) is another arrow for the president's foreign policy bow.
The Heritage Foundation's Center for International Trade and Economics has put together a convincing amount of papers -- all with cogent insight and analysis -- to highlight the benefits of TPA.
Economic development: Increasing trade with other countries is clearly in the U.S. interest, as it raises incomes and provides better paying jobs while promoting economic development around the world. For more: Time to Give
"Our failure to grant the President trade promotion authority will play right
President Bush Trade Promotion Authority Economic engagement:
into those hands and those nations that unfortunately are not willing to move forward with a policy of really
economic engagement." For more: A Pragmatic Trade Agenda War on Terrorism:
The terrorists declared war on America: its values, beliefs, culture, and products. By signing new trade agreements with other countries, the United States will show the terrorists that America, which has many allies and business
partners, is undeterred by their actions. There is no better time for Congress to grant the President trade promotion authority and add a strong international economic program to the global fight against terrorism. For more: Fighting for
America's Economy With Free Trade
Negotiating leverage: With TPA, Congress agrees to take a straight up-or-down vote on trade agreements the president negotiates before June 1, 2005. It has been extended to the previous five U.S. presidents and is granted by most of
It is much more difficult for the United States to negotiate significant trade deals without
our trading partners to their heads of state.
an assurance that Congress will refrain from adding numerous amendments and conditions the president
must take back to the negotiating table. Congress hasn't granted TPA for seven years - one reason the United
States is party to only three of the 131 trade and investment agreements in force worldwide. For more: Trade and
Sovereignty
Negotiating leverage II:
The lesson is simple: Without Trade Promotion Authority, the United States won’t be taken seriously as a
prospective trading partner. Being in only three out of 150 trade agreements doesn’t help matters, and it’s made
worse by the reluctance of many countries to enter into negotiations with the United States.
Yes, we are currently negotiating a free trade agreement with Chile. But it took years to convince the Chileans to enter into such talks. We can’t keep doing business that way. For more: Trade Benefits All
Negotiating leverage III: "But here's what throws me: If liberals are so determined to keep America from turning isolationist, why aren't they just as anxious for the president to pursue a vigorous free trade agenda? On that issue, their
impression of Teddy Roosevelt charging up San Juan Hill suddenly disappears. We see Bush repeatedly asking Congress to give him Trade Promotion Authority (TPA, formerly known as "fast track") to negotiate trade deals-- and
repeatedly being rebuffed.
The president wants this authority because he knows other nations are reluctant to enter into trade pacts with the United States if they know Congress can, at a later date, load up the agreements with unwanted amendments. With
(Evidence continued…)
Trade Promotion Authority, our lawmakers can either approve a pact or reject it--but they can't rewrite it.
There's nothing new or unusual about this authority. Both Republican and Democratic presidents held this authority from 1974 until 1994. Today most all of the world's other leaders enjoy this authority." For more: The Democrats
Take The "Fast Track" To Hypocrisy Labor standards: Congress should give President Bush TPA that will allow him to negotiate trade agreements with foreign countries without insisting that they adopt labor standards that they may
not be able to implement. If the President has TPA, it is likely that more countries will enter into trade agreements with the United States. Increased trade with the U.S. market will spur economic development in these countries, and
this in turn will increase their labor standards. For more: Raising Labor Standards Through Trade Environmental standards: Efforts to impose stricter environmental standards through trade sanctions or by imposing regulations
through trade agreements are fruitless and counterproductive. Countries in general--but developing countries in particular--are able to protect their environment only if their economies prosper and the standard of living of their citizens
improves. The surest way to promote sustainable environmental policies around the world is to increase economic growth and the standard of living in poor countries. Economic growth is achieved through greater economic
liberalization, including free trade. Therefore, those truly concerned with protecting the environment should support a trade promotion authority that effectively advances free trade. For more: Trade: The Best Way to Protect the
Environment Auto industry: Lowering tariffs and non-tariff barriers will increase U.S. automotive exports. Increased exports mean more sales and a larger piece of the global automotive pie for the United States. A larger share of this
global market means more choices and higher-paying jobs for American workers. Free trade has not diminished U.S. dominance in the global automotive market, nor has it taken "hundreds of thousands" of jobs from American
workers. The United States continues to have the lion's share of the global market. Advancing free trade not only will maintain this share, but will increase it. For more: Free Trade Drives the Auto Industry Prosperity for the
agriculture sector:
As Secretary of Agriculture Veneman explains, "the long-term prosperity of the U.S. food and agriculture sector
depends on our ability to stay ahead of the competition in the global economy. One of the most important
tools we have in the struggle to remain competitive is Trade Promotion Authority. Only with TPA can we
continue to create new market opportunities for U.S. food and agricultural products in growing, and competitive,
global markets."
... If the United States is to lead the effort to promote further opening of markets during this meeting round, it is
essential that the President have TPA. Without it, U.S. agricultural products will continue to be
disadvantaged by high tariffs, quotas, and other non-tariff barriers to trade. Build economic and political freedom around the world:
"This is a time to choose. Through the vote on U.S. Trade Promotion Authority, Americans will make a choice between two competing sets of ideas. Will we fight for America's national interests through an open trading system? Will
we continue to help tear down walls to economic and political freedom around the world? Or will we preserve existing walls, erect new ones, and retreat as a nation? In order to succeed, we need a partnership with the Congress.
Wherever I go, whatever progress we make, I am asked the same question: Will the Congress join with the Administration in supporting trade? These are not questions for Democrats or Republicans. They are for Americans.This is not
an abstract debate on trade policy. I'm at the table now--every day--negotiating with countries from around the world. They have the full authority to negotiate for their nations' interest. I need it too. So now it is time. Not next year.
Not later this year. But now." For more: A Time to Choose: Trade and the American Nation
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Trade facilitation is a far bigger issue than free trade related issues such as tariff reduction.
Ikenson ‘8
(Daniel, is associate director of the Center for Trade Policy Studies at the Cato Institute, Greasing the world
economy without Doha, July 30 http://freetrade.org/node/904)
that trade facilitation could do more to increase global trade flows than further reductions in tariff rates. While
reduced tariffs are important, they will not improve trade flows if bureaucratic customs procedures and shoddy
logistics and communications systems are still in place.
Yet progress on trade facilitation is being made. In the past three years, according to the World Bank, 55 countries have implemented 68 reforms to help streamline trading procedures. For
example, India introduced an online customs declaration system that allows the customs clearance process to begin before the ship docks and has helped reduce delays for exporters and importers
by seven days. Rwanda partially privatized its customs bonded warehouse facilities, sparking construction of new warehouses and a 40% reduction in storage fees.
Much remains to be done. The World Bank's most recent "Doing Business" survey offers the anecdote of a Yemeni fish exporter, Tarik, whose fortunes are limited by the
persistence of bureaucratic export procedures. Tarik can sell fresh tuna to Germany for $5.20 per kilo or frozen tuna to Pakistan for $1.10 per kilo. But since it takes on average 33 days to get
official clearance to export from Yemen, he sells only 300 fresh tons to Germany and 1,700 frozen tons to Pakistan, at an opportunity cost of about $7 million per year.
Robert Guest, former trade correspondent for the Economist, reported at a recent Cato Institute forum about the process of delivering beer from a port in Cameroon to the country's interior rain
A trip supposed to take less than one day took four because the delivery truck was stopped 47 times at ad hoc
forest.
roadblocks where tolls and other fees were extorted from the truck driver.
Trade increases when barriers fall. Tariffs are barriers, but so are corruption, administrative incompetence,
superfluous paperwork, transportation monopolies, and the use of antiquated technology. Governments are becoming motivated to
reduce these barriers, since the number and quality of companies operating in their countries, employment levels, investment flows, and economic growth are all determined to some degree by
the government's approach to trade facilitation.
Protectionism Bad
TRADE LIBERALIZATION DECLINING IN THE STATUS QUO. MORE UNILATERAL
PROTECTIONIST POLICIES NOW WOULD SPIRAL TO GLOBAL TRADE WARS.
Ikenson, 2007 (Daniel, Associate Director at Cato Institute's Center for Trade Policy Studies, “Dark Days Ahead? A
storm is brewing on Capitol Hill over the future of U.S. trade policy,” 8/13/07, http://www.freetrade.org/node/727)
The era of trade liberalization is dead. Yet it could get worse still. Not only have prospects for liberalization
over the next few years been dashed, but Congress is considering legislation that could precipitate a retreat
from the trade policies and institutions that have served U.S. interests for 60 years. These are indeed dark days
for trade. The Democratic Party, which has grown increasingly hostile to trade over the past decade, controls
the legislature. The president’s authority to negotiate trade agreements and present them to Congress for an
up-or-down vote has expired, and will not be renewed. The bilateral trade agreements completed with South
Korea, Colombia, Peru and Panama will likely rot on the vine, as Congress shunts them aside to consider
instead trade legislation that is either antagonistic or protectionist. And for the first time in post-World War
II history, a multilateral trade negotiating round has ended in failure. The era of negotiation and
accommodation may yield to one of confrontation and litigation. One thing that has become clear this year is that
Democratic Party opposition to trade runs much deeper than the leadership has been willing to admit. When
the Democrats assumed control of Congress in January, the party’s leadership whispered assurances that,
notwithstanding the strident anti-trade rhetoric adopted by its rank and file, they understood the importance of
continuity in U.S. trade policy. With some modifications to the U.S. trade agreement template to reflect Democratic
priorities on labor and environmental issues, the Congressional leadership would be able to help the administration
move the agenda forward. A grand bargain was struck in the spring, which was nothing more than a wholesale
capitulation by the administration to Congressional demands for strict, enforceable labor and environmental
provisions in prospective trade agreements, including the four pending congressional consideration. But as
the ink was drying, the Democrats moved the goalposts. The South Korea agreement was deemed unsupportable by
House Ways and Means Chairman Charles Rangel (DNY) and Ways and Means Trade Subcommittee Chairman Sander Levin (D-
MI) because its terms do not condition Korean automobile access to the U.S. market on the performance of U.S. automobile
exporters in the Korean market. Of course, such a provision, which was put forward by Rangel and Levin in the waning days of
the negotiations, would leave the U.S. auto producers in a position to decide just how much competition it wanted from Korean
producers. Accordingly, that provision was a nonstarter. The Colombia agreement was deemed unsupportable because the Uribe
government allegedly has done an inadequate job of finding and prosecuting thugs who have terrorized and killed Colombian
unionists over the years. Thus, Democratic disdain for a right-of-center Latin American government, which also happens to be
one of the few regional governments not openly hostile to U.S. policy, suffices for justification to deprive Colombian citizens of
the opportunity to improve their lots through better trade terms with the United States. Consideration of the Peru agreement was
sidelined until Chairman Rangel and others have a chance to visit Peru, see first hand how its factories are run, and possibly
change the agreement’s terms, again. Democrats have used the labor conditions excuse to camouflage Big Labor’s real motive,
which is to kill trade deals at all costs. At least that truth now has been exposed. But regrettably, the anti-trade objectives of
organized labor and import competing interests have dovetailed conveniently with proliferating misconceptions and myths about
imports, jobs, and manufacturing to produce a phony sense of crisis. Most of the anti-trade legislation introduced this Congress is
premised on the myth of U.S. manufacturing decline at the hands of rising imports, mostly from China. But U.S. manufacturing
is thriving. In 2006 the manufacturing sector achieved record output, record sales, record profits, record profit rates, and record
return on investment. Imports are not a bane for U.S. producers. In fact, there is a strong correlation between manufactured
imports and manufacturing output, as U.S. producers account for more than half of the value of all U.S. imports. When imports
rise, output rises. When imports fall, output falls. In the past quarter century, imports have increased six- fold, while real GDP has
grown by more than 130 percent, creating an average of 1.8 million net new jobs each year. But policymakers fail to
acknowledge this crucial relationship. Instead, too many in Congress view exports as good, imports as bad, and the trade account
as the scoreboard. Given the large and growing U.S. trade deficit, policymakers conclude that we are losing at
trade. And we are losing at trade because our trade partners are cheating. In China’s case the alleged cheating
involves currency manipulation, subsidization of industry, unfair labor practices, hidden market barriers, dumping,
and other transgressions. Some of these allegations may carry a degree of truth, but by and large the trade
relationship has been conducted within the rules and consensually, yielding huge benefits for Americans. In any
event, the proper course for redress for complaints is through the dispute settlement system of the World
Trade Organization. The Bush administration lodged three formal complaints earlier this year, which are working
their way through the process. Congress should allow that process to continue and restrain its urge to be seen doing
something. There is a distinct risk that unilateral, punitive actions on trade could severely damage the trade
relationship and lead to a contagious deterioration of respect for the WTO and its decisions. That, ultimately,
would take us back to the days when tit-for-tat trade wars were common, and uncertainty in trade prevailed.
ADI 101
Free Trade
Protectionism Bad
Protectionist policies destroy freedom, free societies require growth. There is no right to
stagnation.
Ghate ’04 [Dr. Onkar Ghate, resident fellow at the Ayn Rand Institute with a PhD in philosophy, "To Outsource or
to Stagnate?”, Capitalism Magazine, July 26, 2004, < http://www.capmag.com/article.asp?ID=3812>]
There are, however, those who resent the growth that a free society demands. Typically, they pursue one of
two courses of action. Either they simply cling to the old way of doing things, like a manufacturer who
claims that if horse buggies were good enough for our forefathers, they should be good enough for us. Or
they cry for governmental protection--and demand that the government restrict the cotton gin, steam engine,
automobile, locomotive, Japanese imports, factory automation, etc.
This last is the opponent of "outsourcing." He does not advance even a semi-cogent economic argument, as
economists have pointed out repeatedly. But he does resent the fact that his life has been or may be disrupted
by the freedom of other people advancing their interests--that others' progress may require him to grow or be
left behind. So in an attempt to freeze reality, the opponent of "outsourcing" demands that the government
forcibly restrain the success of his fellow citizens--by restricting them from dealing abroad.
Unscrupulous politicians then pander to this backward mentality. Thirty-five state legislatures have
introduced "anti-outsourcing" legislation. John Kerry denounces management as "Benedict Arnold CEOs"--
even though the CEOs are being quintessentially American in pursuing their (and their shareholder's)
happiness.
The demands of the "anti-outsourcers" must be rejected; there is no right to stagnation. But there remains
nevertheless one thing to ask of our government.
Some companies are moving offshore because they find greater economic freedom there. Don't demand that
they be prevented from relocating or hiring foreign workers; that would just further restrict freedom in
America. Demand instead that the government rescind the plethora of regulations--from workers'
compensation to Social Security to governmental education to governmental healthcare--that is strangling us.
We need the American solution: to once again fully embrace freedom and the growth it both creates and
requires.
ADI 102
Free Trade
Protectionism Bad
Protectionists (of whatever party) believe that consumers who buy goods and services from foreigners cause
domestic employment - and wages - to fall. Economists since before Adam Smith have shown that this belief
is mistaken, largely because foreigners sell things to us only because they either want to buy things from us
or invest in our economy.
These activities employ workers here at home and raise their wages. Mountains of empirical evidence show
that protectionism is economically destructive. The facts also show that protectionism is inconsistent with a
desire for peace - a desire admirably expressed by many Democrats during the recent campaigns.
Back in 1748, Baron de Montesquieu observed that "Peace is the natural effect of trade. Two nations who
differ with each other become reciprocally dependent; for if one has an interest in buying, the other has an
interest in selling; and thus their union is founded on their mutual necessities."
If Mr. Montesquieu is correct that trade promotes peace, then
protectionism - a retreat from open trade - raises the chances of war.
ADI 103
Free Trade
Outsourcing Good
Outsourcing creates a net increase of U.S. jobs in multiple ways
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
Remember, those jobs would not be established overseas if there were not some compelling advantage to do
it, probably cost savings. That means the employing company is more profitable. It can pay out those profits
in dividends, which then get reinvested in other opportunities that create US jobs -- opportunities that
wouldn't have existed otherwise.
Or it can reinvest those profits themselves in new US employment, at things that US workers do better. For
example, Delta Airlines outsourced 1,000 call-center jobs to India in 2003, but the $25 million in savings
allowed the airline to add 1,200 positions at home.
And if cheaper foreign labor translates into lower prices of US consumer goods, then US consumers will
have money left over to buy other goods and services that they weren't buying before. And that will create
new jobs.
ADI 104
Free Trade
Outsourcing Good
Outsourcing forecasts are bad guesses made mostly by consultants with records of
incorrect forecasts.
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
The McKinsey Global Institute estimates that the volume of offshore outsourcing will increase by 30 to 40
percent a year for the next five years. Forrester Research estimates that 3.3 million white-collar jobs will
move overseas by 2015. Gartner estimates that by the end of this year, 1 out of every 10 IT jobs will be
outsourced overseas. Deloitte Research estimates the outsourcing of 2 million financial-sector jobs by 2009.
These aren't even really "estimates." They're forecasts. No, they're S.W.A.G.'s -- stupid wild-ass guesses.
Remember, these consultants are the same geniuses who said, four years ago, right about the time when the
NASDAQ was at 5000, that Internet traffic would grow at 90% a year forever, and that by 2002 every
American citizen would have digital video-on-demand beamed via low earth orbit satellite to his cell phone.
Hey, if that were true I could be watching "Friends" right now.
Even if outsourcing forecasts are correct 10 times more jobs will be created in the same
time.
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
Let's get real. Suppose Forrester is right, that 3.3 million white-collar jobs will move overseas by 2015.
That's eleven years, folks. That's 300,000 jobs a year, or 25,000 a month. Today there are 130 million jobs in
the United States.
So the cost is 2/100 of 1% of jobs each month. Don't worry about it. On average the US economy generates
job growth 10 times that much every month.
But it's not just that even the wild-ass guesses are actually quite small in the grand scheme of things. The
worst part of it is that these forecasts inevitably just look at costs, and never benefits.
When Forrester says that 3.3 million white-collar jobs will move overseas by 2015, not a single thought is
given to any possible offsetting benefit of that in the US. The implicit assumption is that 3.3 million people
who would have otherwise have jobs will instead be on food stamps. But it's hardly that simple.
ADI 105
Free Trade
Outsourcing Good
Outsourcing lowers prices while increasing profits and quality
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
Other offsetting advantages of outsourcing are less obvious, but just as compelling. Last time I was in San
Diego, I attended a meeting with Dick Heckman, the CEO of K2, the sporting goods conglomerate that is
moving most of its manufacturing to China. Heckman says that he can lower his labor costs by a factor of
more than 20, compared to the US.
Okay, that's a smart arbitrage. But there's more to it than that. He's found that when labor is that much
cheaper, he finds new things to do with labor that he couldn't have afforded to do before. When K2's major
league baseball batters helmets were made in Missouri, labor was so expensive that all he could afford to do
was pull the helmet off the injection molder, throw it in a box, and ship it to Walmart. But in China, he can
afford to pay laborers to hand polish the helmet first, removing all the little mold artifacts and making it look
and feel great.
Cheaper labor, then, means not only lower consumer prices and higher corporate profits back in the US, but
also higher quality.
ADI 106
Free Trade
Outsourcing Good
Negative outsourcing rhetoric and scare tactics are illogical but effective political
propaganda
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
The issue of outsourcing has some very special psychological properties that make it especially useful as
propaganda -- perfect fodder for the conspiracy to keep you poor and stupid.
First, it is an amorphous fear about the unknowable future more than it is a realistic observation about the
present. So the message is, "Yes, I know the economy is recovering and you have a good job. Today! But two
years from now that job could go to China! If you don't vote for me, that is." You can't argue with that kind of
non-logic. But it doesn't even have to be logical. It just has to be scary.
Second, the outsourcing issue cleverly links economic concerns to national security concerns. Of course in
the wake of September 11, such concerns are never far below the surface, and they are very powerful.
Especially when the story connects directly to the ability of grubby people in poor, third world countries to
threaten the all-powerful United States.
ADI 107
Free Trade
Outsourcing Good
Outsourcing will self correct as long as we don’t mess with it – Indian wage increases prove
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
The people who are supposed to "do something" are us. If that means outsourcing something your business
does to China or India or anywhere else, I say go for it.
But be careful. For all the same reasons that the hype about outsourcing makes it a red-hot political issue, it's
also potentially a dangerous fad. Remember, those consultants with all the big forecasts have consulting
services to sell. They make money helping you do your outsourcing whether it ends up making money for
you in the long run, or not.
And like all fads, the first ones in make all the money. Then it gets harder. Already wage rates in India for
call center operators are rising at 20% a year. That sweet spot gets less sweet every day. But the consultants
keep on consulting.
So it's a self-correcting process, like most economic processes, if we are just patient. So try to tune out the
conspiracy to keep you poor and stupid. If you're a worker, don't feel afraid. If you're a manager, don't feel
guilty.
That simple world of cheese and wine can be ours if we just stick patiently to the basic axioms developed by
classical economics 200 years ago. If you have the courage to build a world based on trade, you'll get your
daily cheese. Plus you'll get more wine.
ADI 108
Free Trade
Outsourcing Bad
Outsourcing hurts specialized labor leading to protectionist backlash
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
Obviously, the first guy is the US and the second guy is -- China, India, you name it. Steel may be a necessity
of our life -- like cheese in the example. But we're going out of the steel business, even though we are the
best at making steel, or at least could be if we wanted to be. But we don't want to be. Because we're even
better at designing fiber optic networks or figuring out financial derivatives or making blockbuster action-
hero movies -- or something.
But of course it's not that simple. A nation is not a single individual who does two things -- and as soon as he
stops doing one, he just does more of the other. A nation is many people who are specialized into different
things. If a nation stops making cheese, its cheese makers can't just suddenly become winemakers. US steel
workers can't just start designing fiber optic networks. So at least in the short term, there will be winners and
losers
And any time there are losers, politics gets involved. The winners from the deal are busily reinvesting their
gains -- but the losers run to their lobbyists. So we end up with things like the Bush administration's tariffs on
foreign steel. Sure, it protects the domestic steel industry -- sort of. But any advantage conveyed to steel
producers becomes a disadvantage to steel consumers. So this ends up being a problem from which you can
run, but you can't hide.
ADI 109
Free Trade
Neoliberalism Bad
Neoliberalism is a project of sacrificial genocide normalizing docility to the point we are
unable to stop the colonizing war machine ultimately culminating in collective suicide—this
ideological thinking fosters a death drive of endless error replication justifying the worst
impacts
Santos in 2003 (Boaventura de Sousa [Director of the Center for Social Studies @ U of Coimbra], BAD
SUBJECTS, Issue #63, April, http://bad.eserver.org/issues/2003/63/santos.html)
According to Franz Hinkelammert, the West has repeatedly been under the illusion that it should try to
save humanity by destroying part of it. This is a salvific and sacrificial destruction, committed in the name
of the need to radically materialize all the possibilities opened up by a given social and political reality over
which it is supposed to have total power. This is how it was in colonialism, with the genocide of indigenous
peoples, and the African slaves. This is how it was in the period of imperialist struggles, which caused
millions of deaths in two world wars and many other colonial wars. This is how it was under Stalinism, with
the Gulag, and under Nazism, with the Holocaust. And now today, this is how it is in neoliberalism, with the
collective sacrifice of the periphery and even the semiperiphery of the world system. With the war against Iraq,
it is fitting to ask whether what is in progress is a new genocidal and sacrificial illusion, and what its scope
might be. It is above all appropriate to ask if the new illusion will not herald the radicalization and the ultimate
perversion of the Western illusion: destroying all of humanity in the illusion of saving it.
Sacrificial genocide arises from a totalitarian illusion manifested in the belief that there are no alternatives to the
present-day reality, and that the problems and difficulties confronting it arise from failing to take its logic of
development to ultimate consequences. If there is unemployment, hunger and death in the Third World, this is
not the result of market failures; instead, it is the outcome of market laws not having been fully applied. If there
is terrorism, this is not due to the violence of the conditions that generate it; it is due, rather, to the fact that total
violence has not been employed to physically eradicate all terrorists and potential terrorists.
This political logic is based on the supposition of total power and knowledge, and on the radical rejection
of alternatives; it is ultra-conservative in that it aims to reproduce infinitely the status quo. Inherent to it is
the notion of the end of history. During the last hundred years, the West has experienced three versions of this
logic, and, therefore, seen three versions of the end of history: Stalinism, with its logic of insuperable efficiency
of the plan; Nazism, with its logic of racial superiority; and neoliberalism, with its logic of insuperable
efficiency of the market. The first two periods involved the destruction of democracy. The last one trivializes
democracy, disarming it in the face of social actors sufficiently powerful to be able to privatize the state and
international institutions in their favor. I have described this situation as a combination of political
democracy and social fascism. One current manifestation of this combination resides in the fact that intensely
strong public opinion, worldwide, against the war is found to be incapable of halting the war machine set in
motion by supposedly democratic rulers.
At all these moments, a death drive, a catastrophic heroism, predominates, the idea of a looming
collective suicide, only preventable by the massive destruction of the other. Paradoxically, the broader the
definition of the other and the efficacy of its destruction, the more likely collective suicide becomes. In its
sacrificial genocide version, neoliberalism is a mixture of market radicalization, neoconservatism and
Christian fundamentalism. Its death drive takes a number of forms, from the idea of "discardable
populations", referring to citizens of the Third World not capable of being exploited as workers and consumers,
to the concept of "collateral damage", to refer to the deaths, as a result of war, of thousands of innocent
civilians. The last, catastrophic heroism, is quite clear on two facts: according to reliable calculations by the
Non-Governmental Organization MEDACT, in London, between 48 and 260 thousand civilians will die during
the war and in the three months after (this is without there being civil war or a nuclear attack); the war will cost
100 billion dollars, enough to pay the health costs of the world's poorest countries for four years.
Is it possible to fight this death drive? We must bear in mind that, historically, sacrificial destruction has
always been linked to the economic pillage of natural resources and the labor force, to the imperial
design of radically changing the terms of economic, social, political and cultural exchanges in the face of falling
efficiency rates postulated by the maximalist logic of the totalitarian illusion in operation. It is as though
hegemonic powers, both when they are on the rise and when they are in decline, repeatedly go through times of
primitive accumulation, legitimizing the most shameful violence in the name of futures where, by definition,
there is no room for what must be destroyed. In today's version, the period of primitive accumulation consists
of combining neoliberal economic globalization with the globalization of war. The machine of democracy and
liberty turns into a machine of horror and destruction.
ADI 110
Free Trade
Neoliberalism Good
Neoliberalism has made lives better reducing poverty and increasing inclusivity
Mhone no date (Guy C. Z. [Former Director of the Graduate School of Public and Development
Management at the University of Witwatersrand, Johannesburg] accessed online on 7/31/08 @
.http://science.jrank.org/pages/10467/Neoliberalism-Effects-Neoliberal-Policies.html)
In the wake of these challenges, shifts have begun to occur in the neoliberal camp in the early twenty-first
century, and new syntheses of approaches have been proposed. The neoliberal agenda has begun to
include welfare issues by supporting the promotion of sustainable livelihoods, social safety nets, and
poverty reduction. In addition, given that neoliberal policies have tended to be unilaterally imposed,
particularly in developing economies, there has been a shift to accommodating popular participation and
good governance, as in the development of Poverty Reduction Strategy Papers (PRSP) associated with the
Highly Indebted Poor Countries (HIPC) debt initiative of the Bretton Woods Institutions. More generally, there
is less of a dogmatic stance on the nature and content of policy packages comprising economic reform
initiatives, yielding what has been labeled the "post-Washington Consensus." At another level, some have
worked toward synthesizing lessons from neoliberalism with those from social democracy, resulting in the
proposal for a "third way." Finally, from a philosophical point of view, the assumptions underlying the
neoliberal model have also been challenged, particularly as to whether methodological individualism
assumed in the model, to the exclusion of other plausible assumptions that could be made, is necessarily
the most appropriate or adequate assumption to guide formulation of social theories; and, if it can be
contended that a particular proclivity of human beings is natural and inevitable, such a proclivity must
necessarily be pandered to as a normative ideal. Thus, while as deductive theory and approach
neoliberalism may appear unchallengeable and highly persuasive, its benefits are increasingly viewed as
unsustainable on intellectual, philosophical, social, and political grounds.
ADI 111
Free Trade
Collectivism Bad
Collectivism is racist xenophobia that reduces life to a zero sum game which leads to
resource wars justified by an “us or them” ideology
Binswanger ’03 [Dr. Harry Binswanger, professor of philosophy at the Objectivist Academic Center of the Ayn
Rand Institute, “'Buy American' is UN-American,” Capitalism Magazine, 09/05/2003,
<http://www.capmag.com/article.asp?ID=576>]
Most "Buy American" advocates are motivated by misplaced patriotism. But for some the motive is a
collectivist
hostility towards foreigners. This xenophobic attitude is thoroughly un-American; it is plain bigotry.
Giving preference to American-made products over German or Japanese products is the same injustice as
giving preference to products made by whites over those made by blacks. Economic nationalism, like racism,
means judging men and their products by the group from which they come, not by merit.
Collectivism reflects the notion that life is "a zero sum game," that we live in a dog-eat-dog world, where one
man's gain is another man's loss. On this premise, everyone has to cling to his own herd and fight all the
other herds for a share of a fixed, static, supply of goods. And that is exactly the premise of the "Buy
American" campaign. "It's Japan or us," is the implication. If Japan is getting richer, then we must be getting
poorer.
ADI 112
Free Trade
Collectivism Bad
Collectivism is Marxist
Binswanger ’03 [Dr. Harry Binswanger, professor of philosophy at the Objectivist Academic Center of the Ayn
Rand Institute, “'Buy American' is UN-American,” Capitalism Magazine, 09/05/2003,
<http://www.capmag.com/article.asp?ID=576>]
The patriotic advocates of buying American would be shocked to learn that the economic theory underlying
their viewpoint is Marxism. In describing the influx of Japanese products and investment, they don't use the
Marxist terminology of "imperialism" and "exploitation," but the basic idea is the same: capitalistic acts are
destructive and free markets will impoverish you. It's the same anti-capitalist nonsense whether it is used by
leftists to attack the United States for is commerce with Latin America or by supposed patriots to attack
Japan for its commerce with the United States.
Contrary to Marxism, one does not benefit from the poverty or incompetence of others. It is in your interest
that other men -- in every country -- be smart, ambitious, and productive, not stupid, lazy, or incompetent.
Would you be better off if Thomas Edison had been dim-witted? Nothing is changed if we substitute a
Japanese inventor for Edison.
ADI 113
Free Trade
But collectivism is the premise of "Buy American." In purchasing goods, we are expected to view ourselves
and the sellers not as individuals, but as units of a nation. We are expected to accept lower quality or more
expensive goods in the name of alleged benefits to the national collective.
Government interference with free trade is un-American. Sacrificing one's standard of living in order to
subsidize inefficient domestic producers is un-American. The tribal fear of foreigners is un-American.
Resentment at others' success is un-American.
ADI 114
Free Trade
Chosunilbo, 7/10/08 [“Bush Vows to Push Ratification of Korea-US FTA”, English Chosunilbo
News, http://english.chosun.com/w21data/html/news/200807/200807100016.html]
U.S. President George W. Bush on Wednesday said the controversy surrounding Korea’s import of U.S. beef
has bolstered, not weakened, his will to get the Korea-U.S. FTA ratified. In a meeting with Bush on the sidelines
of the G8 summit in Japan, President Lee Myung-bak told him, “There is something you need to do before your
term ends” in January next year, and Bush responded by saying he would press on with the ratification of the
FTA. While he could not promise that it will be passed by Congress, he will try his best to win approval, he
vowed.
Presidential spokesman Lee Dong-kwan said the two leaders agreed to work together closely for the “faithful
implementation” of an additional beef agreement to restore Koreans’ trust in U.S. beef. The deal effectively
bans shipments of beef from cattle aged over 30 months.
ADI 116
Free Trade
SKFTA Good
KORUS net beneficial to US economy – leads to better products and lowered prices on
goods
The Reporter, 8/1/08 [“Time to Implement Agreement with Korea”, Richard L. Kirkwood, The
Reporter, http://www.thereporter.com/opinion/ci_10066857]
It's been more than a year since its signing, and still Congress has not implemented the Korean-U.S. Free
Trade Agreement.
On April 1, 2007, the United States concluded negotiations on what the office of the U.S. Trade Representative
called its "most commercially significant FTA since NAFTA." Upon implementation, the agreement promises
to eliminate tariffs, expand markets, increase U.S. access in Korea, protect U.S. investors and intellectual
property rights, and increase governmental transparency, among a host of other benefits.
So why is Congress stalling?
Free trade stabilizes domestic economies and improves diplomatic relations, but its biggest beneficiary is
always the consumer. Open markets and fewer tariffs mean more choices, better products and lower prices
for consumers. In 2005, the United States and Korea exchanged $71 billion in goods and services, yet only 38
percent of American and 13 percent of Korean tariff lines were duty free.
The greatest push-back to the Korea-U.S. agreement comes from the American automakers, which fear the
competition of the Korean market.
In comments made to a Korean news source (korea.net) on Jan. 8, Susan Schwab, the U.S. Trade Representative,
noted that the United States has "an obligation and desire to look after [the auto industry], but the rest of the
economy should not be punished by virtue of that. The American taxpayer and consumer should not have to
pick up the cost in terms of the U.S. not opening its market."
holding up the Korean-U.S. Free Trade Agreement, Congress chooses to cater to the voices of a few large
automakers and labor unions, to the detriment of the whole of the American consumer population.
It is time Congress set aside partisan differences and worked for the
common good of the American public.
ADI 118
Free Trade
SKFTA Good
KORUS key to reverse downward relations trend and bolster South Korean economy –
failure to ratify a huge missed opportunity
Young, 3/11/08 [Lee Jae, MA from Cornell, “Impact of the US-South Korea FTA”, UPI Asia
Online, http://www.upiasiaonline.com/Economics/2008/03/11/impact_of_the_us-
south_korea_fta/5536/]
Seoul, South Korea — The World Trade Organization, since its founding in 1995, has been seen as the central player
driving world trade in the globalization era. It has helped reduce trade barriers and settle trade and policy disputes
among member countries.
However, the WTO's negotiations reached a stalemate in 2003 due to continuous discord between its rich and poor
member countries. Since then it has been overwhelmed by a wave of regionalism driven by free trade agreements.
Many have viewed these FTAs with skepticism because they are seen as undermining the WTO's multilateralism.
South Korea and the United States, though members of the WTO, have advocated FTAs and even collaborated to
create a new one, known as the "KORUS FTA," in 2007. With the widespread admission that the WTO is
dysfunctional, many countries are eager to join the FTA trend. This has made the South Korea-U.S. deal look
like a natural progression -- all the more so because the two countries traditionally have been allies in terms
of economics and politics.
According to the U.S. Congressional Report Service's January report, the KORUS FTA was seen as an example
for other potential U.S. trade partners, advancing the Bush administration's policy of "competitive
liberalization" that, through free trade agreements, induces trading partners to remove trade and investment
barriers. KORUS is the United States' largest FTA in terms of mutual trade and investment since the North
American Free Trade Agreement, or NAFTA, came into force in 1994.
The U.S. also has viewed its free trade deal with South Korea as a means to check China's increasing
economic influence. And it has been seen as devised to reinforce the traditional U.S.-South Korean alliance,
perceived as weakened in recent years due to conflicts over North Korean policy.
It seems there is consensus regarding the KORUS FTA's political effects, though the economic perspectives of
the FTA partners may still diverge somewhat, influenced by diverse interest groups. Opposition has arisen from such
U.S. groups as auto and steel workers, manufacturers and labor unions. On the other hand, Korea faces challenges
mainly from agricultural and medical groups.
South Korea has sought to negotiate FTAs with several longtime trading partners such as Chile, Singapore, China,
the European Union, the United States, the Association of Southeast Asian Nations, Japan, Hong Kong, Taiwan,
Mexico, Russia and India. A South Korea-Chile FTA came into force in 2004 and a South Korea-Singapore trade
deal was formed in 2006. After South Korea concluded FTA negotiations with the United States in 2007, it
immediately began to launch negotiations with the European Union.
South Korea's government has two main policy goals in seeking these trade agreements. Firstly, according to the
Korea Institute for Industrial Economics and Trade, South Korea's initial goal of launching these negotiations was to
keep pace with the FTA-driven regionalism wave. South Korea's new government is shifting its focus to reforming
its economy through the U.S. and EU trade deals. In addition to these policy goals, the KORUS FTA can be
reviewed through a cost/benefit analysis.
The FTA's primary benefit is to grant South Korea preferential access to the U.S. market through reduced
trade barriers. Although it was considered that the United States could gain more than South Korea from this
agreement because South Korea's tariffs have been higher, such an exclusive privilege available only to an
FTA partner is not to be passed up.
Furthermore, the United States is special in that it has been South Korea's third-largest trading partner. So,
even any minimal additional preferential access to the U.S. market represents a new, incomparable trading
opportunity.
Another expected economic benefit is an increased inflow of foreign direct investment. FDI-related business
activities have been, in fact, regulated by WTO rules. However, the WTO's failure to provide properly
elaborated regulations and protections has given almost complete permission for bilateral investment treaties
and FTAs to take the place of the WTO. When it comes to FDI, most FTAs are absorbing bilateral investment
treaties' standardized rules.
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The U.N. Conference on Trade and Development has long studied the positive effects of FDI on economic
growth. Basically, FDI contributes to economic growth by injecting capital into a host country. FDI's most
precious benefits, however, are transfers of skills and technologies and structural market reforms.
FDI-related business activities channel foreign skills and technologies into a local economy: this is called the
"spill-over effect." The increased competition for FDI among domestic and local enterprises drives structural
reforms. The UNCTAD advises that these benefits of FDI cannot lead to economic growth in a host country
whose economy is not mature enough to absorb them. However, this is not the case in South Korea.
On the other hand, FDI is deemed in general to bring economic costs by creating a "trade-diversion effect" and,
furthermore, unsettling domestic economic policies because it falls under the protection of the "investor-state dispute
settlement mechanism," which allows a private investor to legally challenge a host government's public policy.
These concerns may sound reasonable at first. But a closer look shows whether they are true in the case of the
KORUS FTA. South Korea, with this FTA, does not intend to choose just one among equally important trading
partners. It is wise to deal selectively with counterparts who hold different values. South Korea rather attempts to
reinforce its focus on a major trading partner, the United States, and to discriminate against other minor
partners. This is likely to create more gains than having no FTA with the United States.
In this respect, the FTA would not simply create a "trade-diversion effect." It would rather enhance trade
through a trade discrimination process. In addition, South Korea has pursued its FTA projects with many
countries equipped with significant export markets. This may efficaciously offset such a diversion effect.
It looks as if the "investor-state dispute settlement mechanism" poses grave challenges to a host country's domestic
policy. However, it turns out that this mechanism has not worked that way. The UNCTAD's Jan. 8 report, "Investor-
State Dispute Settlement and Impact on Investment Rulemaking," reveals that many countries -- mostly in the Asia-
Pacific region -- have accumulated experience with the mechanism, which has helped host countries to elaborate
their investment-related policies for better interpretation and application.
The UNCTAD reaches the conclusion that thanks to the accumulated experience with the mechanism, host countries
can liberalize and protect FDI and avoid hurting their key public policy objectives.
Both governments embarked on this project with the idea that this FTA would mutually benefit their alliance,
whether the benefits are political or economic. This FTA would upgrade their alliance to a higher level in
terms of economic and political cooperation and mutual prosperity. Their traditional alliance yields
compellingly persuasive evidence to justify the FTA, and its long-term benefits confirm their need for it.
The KORUS FTA is still pending, awaiting approval from the countries' congresses. It is unclear now whether
it will overcome the opposition groups in both countries. However, it is clear that the KORUS FTA's failure
would be a great loss to the two countries' alliance.
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SKFTA Good
Korea FTA is critical to US-Korea relations and Northeast Asian Stability.
Kim ‘6
(Anthony B., Research Associate in the Center for International Trade and Economics at The Heritage Foundation,
An Agreement Among Allies: Advancing the Korea-U.S. FTA, November 14,
http://www.heritage.org/Research/TradeandForeignAid/wm1253.cfm)
The KORUS FTA would go beyond promoting free trade, increasing economic benefits, and bolstering the broader bilateral relationship.
Agreement and cooperation on economic issues provide a strong basis from which to reinforce collaboration in the
political and security arenas. An FTA would undoubtedly reinvigorate and strengthen the dynamic and compre-
hensive U.S.–South Korea partnership, the cornerstone of peace and stability in Northeast Asia for more than five
decades.
South Korea FTA solidifies US-South Korea relations, gives US access to larger Asian
markets, and counterbalances Chinese dominance in southeast asia.
Klinger and Kim ‘7
(Bruce, Senior Research Fellow for Northeast Asia in the Asian Studies Center, Anthony B., Policy Analyst in the
Center for International Trade and Economics, both at The Heritage Foundation, The U.S.-South Korea FTA: A
Defining Moment, April 2, http://www.heritage.org/research/asiaandthepacific/wm1413.cfm)
Big Benefits
The Korea-U.S. Free Trade Agreement--the largest signed by the U.S. since the North American Free Trade Agreement in 1994--is a milestone in
broadening the U.S.-South Korea relationship beyond the military alliance. It is expected to increase the countries'
robust $75 billion annual bilateral trade by an additional $20 billion. The FTA would give U.S. business another
important bridgehead into the Asian market, counterbalance South Korea's growing trade ties with China, and
potentially allow the U.S. to regain its position as Seoul's preeminent trade partner. For Seoul, the agreement will
improve South Korea's economic freedom by locking in additional economic reforms. It may also give a boost to
South Korea's credit ratings and give the country a competitive advantage over regional rivals China and Japan.
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Whether a country is able to borrow from, or lend to, the rest of the world is
not determined solely by domestic policies. Inflows of foreign capital will
depend partially on investors' perceptions of the riskiness of a country and
its currency. The United States has advantages in attracting foreign
capital due to the size and strength of its economy and the role of
the dollar as the world's main trading (or reserve) currency. Thus,
the United States is in a better position to finance a trade deficit
(through international borrowing) than small, open economies with
weak or less-traded currencies.
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Trade deficit statistics are often inaccurate. The U.S. Census Bureau
recently estimated that $62 billion of U.S. goods exports go
unreported each year--this amounts to almost one-third of the
current U.S. merchandise trade deficit. 3 Similarly, new areas such as
trade over the Internet and high value, high-tech products
transported by air often go un- or under- reported. While the
government is working to improve these figures, more accurate
data will not be available for several years.
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Many critics of the bilateral trade deficit with China fear that Chinese products will flood
the U.S. market. However, it is important to note that trade with China only amounts to 2
percent of total U.S. trade. Half of all U.S. trade is with three partners-- Canada, the European
Union, and Mexico. Moreover, increased Chinese imports tend to displace imports from
other countries, mostly Southeast Asian countries. One recent study showed that two-thirds
of China's exports to the U.S. displace third country exports rather than American
products. 5 Finally, and perhaps most importantly, cheaper, more competitive Chinese imports
amount to a price cut for U.S. consumers. According to a 1994 World Bank study, importing
from China compared to importing similar products from any other country saves the American
public $14 billion per year.
On worsening trade deficit with the U.S. (last year it reached a record 162 billion dollars),
Chinese economists point to Beijing having used the surplus to buy American government
bonds. This, in turn, has lessened budget deficits, kept interest rates low and contributed to
a housing boom that fuelled much consumer spending in recent years. ''The U.S. trade
deficit with China benefits U.S. consumers as well as the U.S. economy,'' argues Xiao Lian
from the Institute of World Economics and Politics, under the Chinese Academy of Social
Sciences. ''No trade deficit with China means the U.S. may have to import the same
products from other countries at higher prices''.
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The March trade deficit fell back from its record high in February, according
to numbers released by the Commerce Department this week. So does this
mean we are out of the woods? There is a better question to ask: What
woods? Despite cries of impending doom, the U.S. economy
continues to expand faster than all other advanced economies. In the
just-ended quarter, even with a record-level trade deficit, the U.S.
economy grew at a 3.1 percent rate, four times faster than
Germany, which consistently runs a trade surplus. Could it be that
trade deficits are not a drag on growth?
Since the end of the Cold War and through the booming 1990s, the U.S. trade
account has trended consistently towards deeper deficits. The media,
politicians, and consensus economists regularly warn that larger
trade deficits mean that America is losing in the global trade war. As
the dollar rose in the late 1990s and the trade deficit kept widening (see
Chart 1), many believed that a correction was inevitable, and some even
prescribed a "weak dollar" policy to fix things. Now that the dollar has
lost roughly a third of its exchange value on a trade-weighted basis,
things look different. The trade deficit keeps on getting bigger. It
appears that the conventional assertion that the dollar and the
trade deficit move in opposite directions does not hold much water.
All we have to show for the dollar's decline are higher oil prices, a jump in inflation, and blip upwards in short-term
interest rates. You might think that they would learn, but now the same alarmists want to bet our trade policy with
China on the same misguided logic. Make no mistake—those who call for China to end its policy of pegging the yuan
to the dollar are calling explicitly for a weaker dollar. In 2005 to date, the U.S. has a $42 billion trade deficit with
China, but China has a trade deficit with the rest of the world. As a result, China's overall trade account is roughly in
balance. And China too has suffered from more expensive oil and gas prices, unlike Europe, because global oil
markets are priced in dollars, not Euros. If China floats the yuan, it may do so to devalue the currency, not to
appreciate it. As they say, be careful what you wish for. The same goes for the "twin deficits" theory. According to
the budget deficit exacerbates the trade deficit. But the
this story,
deficits are not twins at all and probably aren't even cousins. Japan's
persistent trade surplus, according to twin deficit theory, is impossible with a
national debt that has grown to 169 percent of GDP, and yet there it is.
Another example: during the late 1990s, the U.S. federal government
ran a budget surplus (as we are often reminded), and yet the trade
deficit continued to set records. Here's how to make sense of all this.
Trade deficits are a symptom of one thing only: capital inflows. The
trade account and capital account must be equal and opposite. The
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trade deficit will tend to remain wide. However, the strength in exports
and recent slowing in import growth, which must be interpreted cautiously,
have reduced the trade gap. As economic growth improves in other
regions of the world, investment in these nations will expand, and real
interest rates will rise. Slower growth in U.S. consumption, higher household savings
rates, a greater reliance on exports to spur domestic economic growth and a gradual
narrowing in the U.S. trade gap are natural and necessary consequences of an
improved balance in world economies. The best contribution for U.S. economic policy is to
encourage the positive trends abroad while sustaining healthy domestic economic
fundamentals.
The high U.S. trade deficit has resulted largely from the U.S.'s
relative economic strength, while the unprecedented U.S. current
account deficit reflects global differences in growth, saving and
investment, and is not likely to be the primary source of economic
destabilization.
Since 1990, U.S. economic and investment growth has been persistently
and significantly stronger than Europe, Japan and other industrialized
nations, and its future potential growth is estimated to be higher. The
rising U.S. trade deficit reflects and is consistent with its relative
economic strength, as its strong domestic demand and
investment spending support rapid growth in imports. As long as
the U.S. maintains this growth advantage, which boosts the
demand for imports, and the demand for U.S. dollar-denominated
assets remains high, the trade deficit will remain large.
In general, the large current account imbalances of many nations and
international capital flows reflect the large difference in rates of economic
growth, investment and saving. The unprecedented U.S. current
account deficit now exceeding 6 percent of GDP reflects the U.S.'s
insufficient saving relative to investment, other nations' excess
saving, and the strong demand for U.S. dollar-denominated assets
as global portfolio managers seek the highest risk-adjusted rates
of return on investment. While U.S. investment remains strong, its large
budget deficit and low rate of personal saving drag down national saving.
In contrast, Asian nations tend to be large savers. Japan exports capital, as
its weak investment and high saving have generated current account
surpluses (Japan has been running a large government deficit, but its
private sector saving has been very high, reflecting the prolonged
deflation and long-run concerns about government finances and pensions).
Barring a sharp change in global economic fundamentals, I do not expect
a dramatic shift in asset allocations away from U.S. dollars that
would generate a sharp fall in the U.S. dollar and/or rise in
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are meaningless.
The flip side to the trade deficit is the large surplus the U.S. runs in its capital
account, which measures investment flows in and out of the country. This surplus
indicates the world's investors find the U.S. has a far more attractive business
climate than any other major country; thus they believe they will earn more on an
investment here than in Europe, Canada or Japan.
Writing in the Federal Reserve Bank of St. Louis's economic review, economist Michael Pakko
says, "...rising trade and current account deficits are consistent with the notion
that strong investment spending is associated with the adoption of new
technologies, with the anticipation of rapid economic growth in the future
suppressing domestic saving." The inflow of foreign investment is both a sign of
the economy's strength and a contributor to it. The trade deficit is simply a
statistical corollary. At least for now, it is nothing to worry about.
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America's chronic trade deficit continues to set new records, both for
its sheer size in nominal terms and for its share of an expanding gross
national product. The record deficit is fueling worry that it could
hurt U.S. industry, destroy jobs, burden future generations,
and cause the current economic expansion to end in a "hard
landing." But those worries rest on a fun-damental
misunderstanding of the causes and consequences of the U.S.
trade deficit.
In November 2000 the congressionally appointed Trade Deficit
Review Commis-sion issued its final report, The U.S. Trade Deficit:
Causes, Consequences and Recom-mendations for Action. The report
reflected the views of a sharply divided commission, with
Democratic-appointed members warning of the dangers of the
deficit while Republican-appointed members empha-sized its
more benign nature. Economic theory and experience
demonstrate that trade deficits are driven primarily by
macroeconomic factors, in particular investment flows, and not
by allegedly unfair trade barriers or declining industrial
competitiveness.
Because of the link between trade deficits and rising
investment, larger trade deficits are typically accompanied by
improving economic conditions. A survey of the U.S. economy
since 1973 confirms that, by almost any measure—economic
growth, employment, industrial production, poverty reduction
—the economy has per-formed better in years in which the
trade deficit rose than in years in which it shrank. America's
annual trade deficits are sus-tainable as long as the United
States remains a safe and profitable destination for the world's
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A survey of the U.S. economy since 1973, when the era of floating exchange rates and free capital flows
began, confirms that rising trade deficits generally accompany periods of rising investment and expansion.
Since 1973, America's current account deficit as a percentage of GDP has grown larger ("worsened") in 16
years and shrunk ("improved") in 11. By almost any measure, the economy has performed better in years in
which the trade deficit rose, compared to those in which it shrank.
Trade deficits lead to foreign investment, U.S. job creation, and economic growth
Williams ’06 [Dr. Walter Williams, a PhD in economics from UCLA, renowned author, winner of numerous
awards in a variety of subjects including economics, and advisor to the Cato Institute, Landmark Legal Foundation,
Institute of Economic Affairs, and Heritage Foundation, “Foreign Trade Angst”, Capitalism Magazine,
October 18, 2006 <http://www.capmag.com/article.asp?ID=4808>]
Mr. Buchanan writes, "Imports surged to $188 billion for the month [of July], as our dependency on
foreigners for the vital necessities of our national life ever deepens." That means we imported $188 billion
worth of goods. Do foreigners keep all those dollars they earned under a mattress? They are not that stupid.
They use those dollars to import capital goods such as U.S. stocks, bonds and U.S. Treasury notes.
They might use some of it to build factories in the U.S. such as Honda, Novartis and Samsung. The dollar
amount of those purchases is going to equalize the value of what we import. We sport a huge surplus in our
capital account with foreigners. As such, they are dependent on us for a safe and profitable place to invest
their earnings. That dependency contributes to our economic growth.
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The McCain campaign is using the issue of free trade in part to appeal to economic conservatives who
have sometimes been wary of him, but more to question Mr. Obama's candor after he has sent shifting
signals about trade in the past year. Mr. Obama and the Democrats are using the issue to question Mr.
McCain's empathy, and support, for struggling working people, especially in the Rust Belt, where
many workers blame free trade for the closing of factories and the loss of jobs. Free trade became a
major issue in the Democratic primaries, when all the major candidates, courting votes in Rust Belt states
and the support of unions that oppose free trade agreements, took a sharply critical view of free trade
agreements. Mr. Obama said that he would favor an ''opt-out'' clause that would allow the United
States to walk away from the deal if better labor and environmental standards could not be negotiated.
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Senator John McCain's campaign sent out an e-mail message on Friday highlighting what it called Senator
Barack Obama's ''completely mystifying shift'' on the North American Free Trade Agreement.
The Republican National Committee issued a news release charging that Mr. Obama is ''for free trade but
against free trade agreements'' and even released a Web video about Mr. Obama and free trade.
Mr. McCain's campaign plane, full of reporters, made an unusual foray past the battleground states here to
Canada, where Mr. McCain gave a speech to the Economic Club of Canada in which he was applauded for
saying that ''for all the successes of Nafta, we have to defend it without equivocation in political debate.''
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Agriculture is only 3% of European GDP and yet the EU accounts for 85% of the world’s
agricultural subsidies
Dale ’03 [Helle Dale, deputy director of the Davis Institute for International Studies at The Heritage Foundation
“Trading Insults: The WTO's Cancun Free For All”, Capitalism Magazine, September 21, 2003,
<http://www.capmag.com/article.asp?ID=3113>]
In African countries like Congo, Burundi or Tanzania between 45-60 percent of the GDP derives from
agriculture. These countries cannot compete in high tech or services. Meanwhile, in the United States,
agriculture accounts for 1.4 percent of GDP. In most European countries, it is less than 3 percent.
And yet, for political, emotional and other reasons, our farmers are protected against competition by huge
and expensive subsidies and tariffs. While American farmers also benefit from subsidies and export
guarantees, the European Union is the worst offender. The European Common Agricultural policy accounts
for 85 percent of the world's agricultural subsidies.
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Within the highly technical nature of global trade talks is an interesting color scheme when it comes to
domestic farm subsidies. At the Doha Round, rich nations have agreed to reduce the most "trade-
distorting" payments to agribusiness, including marketing loans and direct subsidies, which fall inside
the so-called "Amber" and "Blue" boxes and the minimal or "de minimis" category.
The United States and the European Union will continue to have some leeway for these types of farm support
and Doha Round negotiators agreed four years ago to leave the "Green" box category - for programs like
environmental protection and regional development that cause "not more than minimal trade-distortion" -
untouched.
While they may still directly subsidize farmers under the Green box, the EU and the US have pledged to do
away with payments that encourage production or support price levels which have led to dumping of produce
overseas.
Developing nations, however, suspect that Amber (all support measures) and Blue (exclusively for
agriculture) box subsidies will only be reclassified and stuffed inside the Green box in what amounts to
an escape clause. It did not help that in May, as WTO negotiators tried to gather momentum for the
talks, US lawmakers passed a new five-year, $289-billion Farm Bill - mostly for food stamps and
nutrition programs but which still includes farm payments.
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Laissez-Faire Good
Only by using a laissez-faire economic policy can we maximize our economy and preserve
freedom
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
Laissez-Faire Good
Laissez-faire economics are superior to regulated trade because they improve the economy
and solve foreign competition – empirically proven
Luskin ’04 [Don Luskin, Chief Investment Officer for Trend Macrolytics, an economics research and consulting
service providing exclusive market-focused, real-time analysis to the institutional investment community and author,
“Outsourcing: Threat or Menace?”, Capitalism Magazine, May 9, 2004, <
http://www.capmag.com/author.asp?name=13>]
Just remember, there was a time in the 1970s when the US was afraid of competition from Europe. That's
right, Europe. Can you imagine that now?
Then in the 1980s we were afraid of Japan. Can you imagine that now?
Then in the 1990s we were afraid of the giant sucking sound of NAFTA. Can you imagine that now?
What happened in all these cases was that America's politicians did pretty much nothing. We deregulated our
economy, and let individual economic actors figure it out for themselves. Europe and Japan laid regulation on
top of regulation on top of industrial policy on top of managed trade. We won, they lost.
We could have all won, by the way. I think that's generally how it's turned out with our NAFTA partners, so
far. This isn't a zero-sum game, as the cheese-and-wine example shows.
So now we're back in the same place, déjà vu all over again. But this time it's China and India we're worried
about. If it's not one thing it's another. But the answer is the same -- to do nothing.
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Let's say you have an economy consisting of two self-sufficient people, and in this economy it takes a
minimum of 1 pound of cheese every day in order to survive. So you spend as much time as you have to
making a pound of cheese. After that, you devote your leftover time to making wine, which is a luxury.
The first guy is very productive. It takes him only a quarter of his day to make his pound of cheese, and then
in the remaining three quarters he can make 12 bottles of wine.
The second guy's not so good. In fact, he's totally unskilled. It takes him half a day to make his pound of
cheese, and in the leftover half day he can only make 2 bottles of wine.
Right off you wouldn't think the first guy has any reason to trade with the second guy -- he's got him beat in
every way. But that's not the right way to look at it.
Suppose the second guy stops making wine altogether, and devotes his whole day to making cheese. He'll
able to make 2 pounds -- one to eat, and one leftover to trade. If he trades his extra pound of cheese to the
first guy, that would free up a quarter of the first guy's working day. That means the first guy would be free to
make another four bottles of wine.
He gives three of those four bottles to the second guy in exchange for the cheese. So now the second guy,
who started off with a pound of cheese and 2 bottles of wine every day, now ends up with a pound of cheese
and 3 bottles of wine.
The first guy, who originally had a pound of cheese and 12 bottles of wine, ends up with a bottle of cheese
and 13 bottles of wine. The world has become richer, on net, by two bottles of wine.
Notice that this result occurred even though the first guy enjoyed an absolute advantage over the second guy in both
wine and cheese. But absolute advantage isn't as important as comparative advantage. By going entirely out of the
cheese business, the first guy was able to exploit his comparative advantage in wine.
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It may not be a WTO meeting but for the US government and agribusiness, Sacramento has everything to do with
their global trade and investment agenda. Informal pressure can be just as effective in securing results as binding
trade agreements. The US administration uses every opportunity to coerce the rest of the world into
compliance with its economic and geopolitical interests, through its aid budget, its embassies, and through
meetings like this. Sacramento brings together many of the same players – officials and corporations -
behind the controversial addition of agriculture and intellectual property rights on the world trade agenda
during the GATT Uruguay Round which set up the WTO. These agreements protect the corporate players
that now dominate vast areas of the world’s food supply while undermining the rights and lives of small
farmers, peasant and indigenous communities.
The conference opening plenary says it all: “How science and technology, in a supportive policy environment,
can drive agricultural productivity increases and economic growth to alleviate world hunger and povertyâ€.
Other sessions include: Food security and the promise of new technologies Attracting foreign and domestic
investment in the agricultural economy Fighting Hunger and increasing incomes with biotechnology, and
“Combating Malnutrition, disease, and HIV/AIDS: Food-based interventionâ€. As Hope Shand of the ETC
Group recently wrote in the NY Times (27 May): “There is no scientific evidence that genetically modified foods
are cheaper, safer, better-tasting or more nutritious. Lacking consumer benefits for its genetically modified crops,
the biotech industry is desperately seeking moral legitimacyâ€. Expo exhibitors include biotech giants Monsanto and
DuPont (Qualicon), CropLife America (whose members read like a who’s who of US agribusiness/biotechnology corporations), and DC-
based International Food Information Council (funded by US food, beverage and agricultural industry and an advocate of biotech). Food
irradiation corporations like Ottawa-headquartered MDS Nordion, and San Diego-based Surebeam (sponsor for the Expo grand opening) will also
be there. Food irradiation, a technology which brings together the food processing, agribusiness, medical science and nuclear industries is highly
controversial. US agribusiness researcher and campaigner Al Krebs writes: “Critics of irradiation believe it is really not only just a quick (and
temporary) fix for poor slaughterhouse sanitation, but also a way of disposing of nuclear wastes by selling them to private industry and leaving
the taxpayers to fund the inevitable clean-up costs.†Agriculture remains a hugely contentious trade issue, with the EU and US in apparent
stalemate in WTO negotiations. Many countries in the South are resisting pressure to make yet more concessions on a range of issues, including
agriculture, saying that the system is based on double standards which favour the powerful, and that the promised benefits of free trade have not
materialized. The USDA, USAID and the State Department are advancing US geopolitical and corporate
interests internationally, and a market model of development which has caused ecological and human devastation,
both in the South and in the USA. These agencies work to promote biotechnology as a “solution†to hunger.
USAID has been promoting agricultural biotechnology for over a decade. The title of its recent policy document, “Foreign
Policy in the National Interest:i Promoting Freedom, Security and Opportunity†speaks volumes about the agency’s
agenda. Hegemony, not humanitarian assistance. Principled opposition to biotechnology on health, environmental, ethical and
other grounds, such as African countries decisions to refuse GE food aid are viewed as a new “axis of evil†to be overcome.
The international peasant and small farmer movement, Via Campesina, accuses the US of “trying to usurp the process of the
World Food Summit held in June 2002 by the United Nations Food and Agriculture Organization (FAO) by claiming that
Sacramento is a “follow up to the Rome Summit.†Via Campesina has denounced the Sacramento meetings urging
governments not to attend. Via Campesina believes that another "Blair House Agreement" between the US and the European
Commission – may be under negotiation. This agreement broke the standoff between the US and EU during the Uruguay
Round, and maintained support for corporate, export-oriented agriculture at the expense of small farmers, peasants, and food
producers worldwide. Industrial farming and the reorientation of agriculture to a corporate model is a human and ecological
disaster. Under free trade, the dumping of subsidised (and often genetically modified) imports on the Third World is destroying
the livelihoods of millions of farmers, many of them women, who simply cannot compete. The free market model which the US
so ardently supports is behind much of the social and economic injustice which underpins food insecurity – not inadequate
access to biotechnology.
The US backs international institutions like the IMF and the World Bank which force countries to deregulate
and open up their economies, and reorient their agricultural production away from meeting domestic needs to
growing cash crops for export. Via Campesina is campaigning to get the WTO out of agriculture altogether. The
fact that an official meeting and a business expo are taking place side by side in Sacramento neatly illustrates
the cosy relationship between the US administration and big business. Secretary of Agriculture Anne
Veneman is a former director of Calgene (now a Monsanto subsidiary) the first company to bring genetically-
engineered food, the Flavr Savr tomato, to consumers. When Veneman recently proclaimed that the WTO case against the EU
represents “fighting for the interests of American agriculture†she clearly means US agribusiness. It is merely a different
way of saying what Robert Fraley (co-president of Monsanto’s agricultural sector) told the Farm Journal in 1996 –
“What you are seeing is not just an consolidation of seed companies, it's really a consolidation of the entire food chain."
While the Expo will promote US corporate agriculture products and technology, the Ministerial allows the
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Bush administration and US biotechnology/agribusiness corporations to lobby and bully officials and
ministers of other governments to fall into line with their pro-biotech, industrial farming, agricultural trade
and investment liberalisation agenda before Cancun.
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In the late 1960s, most experts were speaking of imminent global famines in which billions would perish. "The
battle to feed all of humanity is over," biologist Paul Ehrlich famously wrote in his 1968 bestseller The Population Bomb. "In the 1970s and
1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now." Ehrlich also said, "I have
yet to meet anyone familiar with the situation who thinks India will be self-sufficient in food by 1971." He insisted
that "India couldn't possibly feed two hundred million more people by 1980." But Borlaug and his team were
already engaged in the kind of crash program that Ehrlich declared wouldn't work. Their dwarf wheat
varieties resisted a wide spectrum of plant pests and diseases and produced two to three times more grain than the
traditional varieties. In 1965, they had begun a massive campaign to ship the miracle wheat to Pakistan and
India and teach local farmers how to cultivate it properly. By 1968, when Ehrlich's book appeared, the U.S. Agency
for International Development had already hailed Borlaug's achievement as a "Green Revolution." In Pakistan, wheat yields rose from
4.6 million tons in 1965 to 8.4 million in 1970. In India, they rose from 12.3 million tons to 20 million. And the yields continue to increase. Last
year, India harvested a record 73.5 million tons of wheat, up 11.5 percent from 1998. Since Ehrlich's dire predictions in 1968, India's population
has more than doubled, its wheat production has more than tripled, and its economy has grown nine-fold. Soon after Borlaug's success with
wheat, his colleagues at the Consultative Group on International Agricultural Research developed high-yield rice varieties that quickly spread the
Green Revolution through most of Asia. Contrary to Ehrlich's bold pronouncements, hundreds of millions didn't die in massive famines. India
fed far more than 200 million more people, and it was close enough to self-sufficiency in food production by
1971 that Ehrlich discreetly omitted his prediction about that from later editions of The Population Bomb.
The last four decades have seen a "progress explosion" that has handily outmatched any "population
explosion." Borlaug, who unfortunately is far less well-known than doom-sayer Ehrlich, is responsible for much of
the progress humanity has made against hunger. Despite occasional local famines caused by armed conflicts or
political mischief, food is more abundant and cheaper today than ever before in history, due in large part to
the work of Borlaug and his colleagues. More than 30 years ago, Borlaug wrote, "One of the greatest threats to mankind today is that
the world may be choked by an explosively pervading but well camouflaged bureaucracy." As REASON's interview with him shows, he still
believes that environmental activists and their allies in international agencies are a threat to progress on global food security. Barring such
interference, he is confident that agricultural research, including biotechnology, will be able to boost crop
production to meet the demand for food in a world of 8 billion or so, the projected population in 2025.
Meanwhile, media darlings like Worldwatch Institute founder Lester Brown keep up their drumbeat of doom. In 1981 Brown declared, "The
period of global food security is over." In 1994, he wrote, "The world's farmers can no longer be counted on to feed the projected additions to our
numbers." And as recently as 1997 he warned, "Food scarcity will be the defining issue of the new era now unfolding,
much as ideological conflict was the defining issue of the historical era that recently ended."
Borlaug, by contrast, does not just wring his hands. He still works to get modern agricultural technology into the
hands of hungry farmers in the developing world. Today, he is a consultant to the International Maize and Wheat Center in
Mexico and president of the Sasakawa Africa Association, a private Japanese foundation working to spread the Green Revolution to sub-Saharan
Africa. REASON Science Correspondent Ronald Bailey met with Borlaug at Texas A&M, where he is Distinguished Professor in the Soil and
Crop Sciences Department and still teaches classes on occasion. Despite his achievements, Borlaug is a modest man who works out of
a small windowless office in the university's agricultural complex. A few weeks before the interview, Texas A&M
honored Borlaug by naming its new agricultural biotechnology center after him. "We have to have this new
technology if we are to meet the growing food needs for the next 25 years," Borlaug declared at the dedication
ceremony. If the naysayers do manage to stop agricultural biotech, he fears, they may finally bring on the
famines they have been predicting for so long.
ADI 147
Free Trade
Technology Bad
Loss of manufacturing jobs is mainly a result of technology and the jobs are declining
globally at an average percent equal to that of the U.S.
Williams ’08 [Dr. Walter Williams, a PhD in economics from UCLA, renowned author, winner of numerous
awards in a variety of subjects including economics, and advisor to the Cato Institute, Landmark Legal Foundation,
Institute of Economic Affairs, and Heritage Foundation, “Anti-Free Trade Paradise”, Capitalism Magazine,
04/16/2008 <http://www.capmag.com/article.asp?ID=4914>]
There's great angst over the loss of manufacturing jobs. The number of U.S. manufacturing jobs has fallen,
and it's mainly a result of technological innovation, and it's a worldwide phenomenon. Daniel W. Drezner,
professor of political science at the University of Chicago, in "The Outsourcing Bogeyman" (Foreign Affairs,
May/June 2004), notes that U.S. manufacturing employment between 1995 and 2002 fell by 11 percent.
Globally, manufacturing job loss averaged 11 percent. China lost 15 percent of its manufacturing jobs, 4.5
million manufacturing jobs compared with the loss of 3.1 million in the U.S. Job loss is the trend among the
top 10 manufacturing countries who produce 75 percent of the world's manufacturing output (the U.S., Japan,
Germany, China, Britain, France, Italy, Korea, Canada and Mexico).
Economist Joseph Schumpeter referred to this process witnessed in market economies as "creative destruction,"
where technology, innovation and trade destroy some jobs while creating others. While the process works hardships
on some people, any attempt to impede the process will make all of us worse off.
ADI 150
Free Trade
When Henry Ford introduced mass production of the automobile in the early 1900s, he changed
transportation. This inevitably caused disruptions. The days of the horse and buggy were numbered. But
those in the dying industry who chose to face the reality of Ford's advance, whether a business owner who
learned to produce gasoline instead of buggies or a worker who learned to repair automobile engines,
prospered.
Later, when men like Steve Jobs, Bill Gates and Michael Dell ushered in the personal computer revolution,
almost no industry was unaffected. The businesses and employees that embraced the new invention, a retailer
that computerized its inventory or a worker who learned to program a computer, prospered.
Labor adaptability key to prosperity. Makes free trade and outsourcing beneficial to the
individual
Ghate ’04 [Dr. Onkar Ghate, resident fellow at the Ayn Rand Institute with a PhD in philosophy, "To Outsource or
to Stagnate?”, Capitalism Magazine, July 26, 2004, < http://www.capmag.com/article.asp?ID=3812>]
Today, as businesses hire white-collar workers abroad, similar opportunities will abound for those ready to
change and grow. As in earlier eras, the capital accumulation made possible by the increased efficiency and
specialization at American companies will fuel demand for employees with new skills, such as managers able
to integrate a company's activities across countries and cultures.
It should not be surprising, for instance, that from 1991 to 2001, 2,500 U.S. multinational corporations added
2.8 million foreign jobs and 5.5 million new U.S. jobs (the latter above the average U.S. employee growth
rate for the period), or that 25 percent of Americans now work at jobs not even listed in the 1967 Census
Bureau codes.
Those who prosper in a free society are individuals who choose, no matter how severe the change, to adapt,
to expand their skills, to increase their knowledge, to grow. For this type of individual, trade and
specialization--across one's city, state, country or globe--are acknowledged as beneficial; the progress of a
global economy, including "outsourcing," is not feared but welcomed.