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Why should the US sign free trade agreements? The US was screwed by signing NAFTA (the North American Free Trade Agreement between Canada, the USA and Mexico b
by csense 13y ago
Why should the US sign free trade agreements?
The US was screwed by signing NAFTA (the North American Free Trade Agreement between Canada, the USA and Mexico beginning in 1994).
A bit of history: From c. 1950-1980, unions had a monopoly on labor supply in many industries. This allowed them to charge monopoly pricing, so employees gained a greater share of the wealth generated by their businesses.
With the opening of US borders to foreign trade (NAFTA was a part of this trend, but I mark its beginning with President Nixon's visit to China), elimination of most tariffs, and lower worldwide shipping costs due to improved logistics and technology, manufacturing became fungible between countries. So manufacturers largely relocated to other countries like China or Mexico with lower wages and laxer regulations.
I grew up in a manufacturing-heavy area that was economically devastated by these changes, and only now, decades later, is starting to recover. So I was exposed to the anti-free-trade position quite a bit, and I'm familiar with all its arguments; they sound convincing. And free trade's results look awfully poor.
So can anyone explain to me the incentives of free trade agreements from the US's point of view? Or if there aren't any, the political or strategic reasons they've gotten signed regardless of their drawbacks?
- deleted 13y ago[deleted]
- ihsw 13y agoIf there is sufficient economic competition then free-trade agreements have limited economic impact, however the non-economic benefits are numerous. I'm not going to debate the legitimacy of 'monopoly pricing' and unions because that debate will degenerate quickly. In addition to elimination of tariffs, import quotas, and preferential sourcing of goods and services, FTAs enforce/encourage open-border policies that enable the free movement of people between different jurisdictions. FTAs are a step towards greater integration with other nations.
- saosebastiao 13y agoThe answer is simple. Imagine how successful your manufacturing union would be if it had a monopoly on manufacturing labor within your state. Now imagine how successful it would be if your employer couldn't sell the products you manufactured to anyone outside your state. Free trade gives American companies access to markets to sell their products, and it gives citizens (and not just those lucky enough to be in a union), access to products that would normally be more expensive if they were forced to buy from a monopoly (either on labor or on capital). That argument is strong enough that 87.5% (in other words, a supermajority of economists on both the right and left) would abolish trade restrictions altogether if they had their way. http://ew-econ.typepad.fr/articleAEAsurvey.pdf http://ew-econ.typepad.fr/articleAEAsurvey.pdf
- queensnake 13y ago> imagine how successful it would be if your employer couldn't sell the products you manufactured to anyone outside your state. Well, but that's imaginary. We have free trade within all 50 states. That's reasonable, for what you get in return - greater equality (wages for the less skilled), happier people.