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Free trade is a pipe dream

Stephan Helgesen

In a recent editorial published by NMPolitics.net, a former Bush Administration appointee trumpeted the necessity of passing a number of free trade agreements when instead he should have been focusing on promoting fair trade – a totally different concept.

In my 25 years of working in overseas markets as a commercial diplomat for the Commerce Department, I dealt with hundreds of American businessmen and women in 24 different countries from Russia to Southeast Asia. During that time, I rarely heard, “If only a free trade agreement is signed, I’ll be able to sell my products here.”

The fact of the matter is that U.S. companies have had a presence in most of the world’s major markets for generations, and when left largely alone will continue to do well. Granted, there are markets where a lack of transparency and byzantine local regulations create an unlevel playing field (and we need to do more to correct them), but those can be hammered out without complex “feel good” FTAs. Businesspeople are resourceful and will use other means to succeed.

The other argument, “We must have lower tariffs and duties,” is a specious one; in most countries, the tariffs and duties on our products are miniscule (single digits) and are not impediments to our exports.

The debate on exports should be about readying our companies for the markets, not creating elaborate trading regimes that demand battalions of policy-makers to write them and monitor them. Anyone whose lived and worked overseas with American companies like I have knows that the real impediment to fair trade is the shape-shifter of free trade.


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Indeed, the subject of exporting deserves a lot more ink than it’s currently getting, and having these discussions serves a very worthwhile purpose because it helps us see how the ideas of the policymakers stack up against those of the profit-makers. For me, the bottom line is that we need a moratorium on FTAs until we decide what kind of trading world we really want to create for the United States (something the current administration seems far from doing).

While we’re waiting – and working – for that to happen, we could start by eliminating some of the dozen or so U.S. government agencies that are stepping all over each other to “help” us poor businesspeople succeed overseas. In the meantime, if we need a poster child to illustrate how an agreement shouldn’t work, there is no better example than NAFTA… and we don’t have to travel far to see that in inaction.

Stephan Helgesen is a former U.S. diplomat. He is currently honorary consul for Germany in New Mexico and CEO of 2nd Opinion, an export consultancy firm. He can be reached at helgesen@2ndopinionmarketing.com.

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4 comments so far. Scroll down to submit your own comment.

  1. This commentary reminds me of my days as a former diplomat when these so-called experts would try to advise me and my senior staff on our supposedly misguided policies. It was these know-it-all bureaucrats who had never spent any actual time in the real world who would annoy me the most because they just wanted to hear themselves talk. I’d usually say “thanks for your input” and then promptly throw them out of my office.

    Helgessen misses the point. Completely. FTAs do much more than lower tariffs. They also lower non-tariff barriers like onerous regulations and inspections, etc. that are the most annoying and troublesome to U.S. business. The Korea FTA, for example, would eliminate protectionist non-tariff barriers to U.S. autos that have prevented U.S. automakers from exporting their largest vehicles to that country.

    If FTAs don’t help U.S. business become more competitive abroad, then why is it that our exports to FTA countries make up a disproportionate share of our trade? For several years now, although our FTA partners only make up about 7% of world GDP, they make up over 40% of our exports. That proves when we open a market through an FTA, then U.S. businesses succeed.

    Those who suggest that the U.S. take a “time out on trade” are either pandering to people’s fears (Hillary Clinton to labor unions in 2007) or just don’t have a grasp of reality. As Mr. Estrada rightly pointed out in his commentary, the rest of the world isn’t standing still; in fact, they are moving forward with negotiating favorable agreements while we do nothing. Tell me, is it “fair” for American manufacturers to encounter double-digit tariffs when the Europeans and Canadians encounter zero? When exporting a piece of farm equipment, for example, the difference can be millions of dollars. But to this guy, that must be “miniscule.”

    I appreciate it when commentators back up their assertions with data and evidence vs. supposition (like this one, for instance his open-ended attack on NAFTA).

  2. The finance industry wants Panama to launder dirty money.
    http://www.huffingtonpost.com/dylan-ratigan/panama-free-trade_b_902527.html
    “The Panamanian “incorporation regime ensures secrecy, avoids taxes,and shields assets from the enforcement of legal judgments. Along with its sophisticated banking services, Panama remains an environment conducive to laundering the proceeds from criminal activity and creates a vulnerability to terrorist financing.”
    “Panama is the second largest tax haven in the world”
    http://wikileaks.org/cable/2006/09/06PANAMA1793.html

    Columbia has a history of deadly brutality against labor.
    http://www.huffingtonpost.com/2011/07/20/colombia-free-trade-agreement-violence-jobs_n_904495.html?
    “Colombia remains by far the world’s most dangerous country for union leaders and members. Nearly 3,000 activists have been murdered there in the last 25 years, with convictions resulting in a paltry 6 percent of the cases. According to the non-profit labor rights group U.S. Labor Education in the Americas Project, 51 Colombian unionists were killed last year and 338 received death threats. The country generally accounts for about half of the unionist murders worldwide these days.”
    “There’s already a scarcity of legal, safe work in Colombia, and we’ll see some of the smaller-scale farming enterprises plowed under,” says Tucker. “What we’re likely to see … is an increase in displacement in the agricultural communities. They’re going to face some stark choices.”

    http://www.huffingtonpost.com/2011/07/25/free-trade-agreements-lobbying_n_906623.html
    “what’s particularly troubling about the Korean deal is that it would allow products with as little as 35 percent of their content produced in the treaty nation to be exempt from tariffs. That means 65 percent of the product could be sourced from, say, China — but it could still be brought into the U.S. duty-free. Current tariffs on Chinese textiles, for example, are about 15 percent.

    “It’s a dream treaty for multinationals, but for domestic manufacturers — and particularly the textile industry — it’s a nightmare,” said Johnson.

    It’s basically a trade agreement with China, without any concessions by China,” said Stumo.”

    “The trade deals with Colombia and Korea will in fact kill more than 200,000 American jobs through outsourcing in the first seven years after the plan is enacted”.

  3. NAFTA seems more like a last-best option to me. It was hastily conceived and needs to be retired.

  4. I agree with parts of what Mr. Helgesen writes here. True free trade is simply having free trade. There is no need for agreements like NAFTA or anything else. I prefer this, but am not convinced it is politically-realistic. A second-best option includes the WTO and agreements like NAFTA and the trio of trade agreements now awaiting a final push from President Obama.

    It is simply not true that tariffs are not an impediment to our exports. While the US has been relatively open to trade from overseas (less so in terms of agricultural products), other countries have not been as welcoming. The Columbia trade agreement is one great example.

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