OldVet: The Train Collision With China

This one is by OldVet…

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The Economist has a small business story titled Inevitable Collision. It outlines a recent WTO ruling in favor of US and Canadian car parts makers against China. The cause of the suit? Barriers to trade erected by China, meaning unfair trade practices. China agreed in 2001 to abide by WTO rules to much support from the Bush administration, hordes of businessmen, the Chamber of Commerce, and a vast array of pundits and “free trade” economists. There was much rejoicing and back slapping.

Seven years later, China remains protectionist and uses blatant tariffs to bar entry of American manufactured goods: automobiles and auto parts, pharmaceuticals, food, cosmetics, and chemicals. The tariff on American car parts is a 25% tax.

Our trade policies are a train wreck. This has nothing to do with “environmental rules” or “labor policies” which are the most often used phrases of complaints by American producers and union workers.

Our trade policies are no good because they are unfair, and blatant tariff protection and currency manipulation shoot American prices up in foreign markets, which favors foreign domestic producers in their home markets. This is basic price manipulation against American goods and American interests, as in the sort that shatters all talk of “supply and demand at any given price” and makes a mockery of the Invisible Hand of our often quoted Adam Smith.

What about “free trade” and the benefits of trade? First, to what free trade do you refer? In fact our entire structure of trade policy and foreign exchange policy and business relationships across borders are built on mere theory and feckless optimism, plus a very large dose of “global citizen” philanthropy and a perfect willingness by some to impoverish large swaths of American society so that “the world” can prosper. Also prospering are the bosses of capital and corporations, including mainly US and European multinational corporations, of course. What good is unfair trade without cigars and champagne for the benefit to the elites who make the system what it is?

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This one was by OldVet.