October 17, 2008

Free Trade? Obama Doesn't Get It

By Julian Dunraven, J.D., M.P.A.

Honorable friends:

Several months ago, we heard Sen. Barack Obama mention that he might like to renegotiate NAFTA. This caused such a panic in Canada that his campaign called to assure them that Obama was just spouting campaign rhetoric, and should not be taken seriously. Though this is disturbing enough, the topic of free trade agreements came up again at the final debate, and it sounded like the Canadians have good reason to be concerned. Obama stated:
“I believe in free trade. But I also believe that for far too long, certainly during the course of the Bush administration with the support of Senator McCain, the attitude has been that any trade agreement is a good trade agreement. And NAFTA doesn't have -- did not have enforceable labor agreements and environmental agreements.

“And what I said was we should include those and make them enforceable. In the same way that we should enforce rules against China manipulating its currency to make our exports more expensive and their exports to us cheaper.

“And when it comes to South Korea, we've got a trade agreement up right now, they are sending hundreds of thousands of South Korean cars into the United States. That's all good. We can only get 4,000 to 5,000 into South Korea. That is not free trade. We've got to have a president who is going to be advocating on behalf of American businesses and American workers and I make no apology for that.”
Obama should apologize. He does not believe in free trade any more than he does in domestic capitalism. The concept of free trade requires that one reduce or eliminates tariffs and other government interference from the international market to allow producers to compete so that each nation can find its own competitive advantage and the consumers benefit across the world. It does not mean that you use trade agreements as weapons with which you bully or beat any competitive advantage out of your trading partners.

Obama is upset that our regulations and taxes have made it more expensive to produce cars here in the U.S. than in Korea. Thus, rather than reducing our own costs, he favors tariffs and additional labor regulations that will increase foreign costs and remove any advantage they may have. All this does is make things more expensive for the U.S. consumer, who then cannot afford to buy as many things, causing a net loss in our economy. Removing the tariffs does give the Koreans an advantage in cars, but our gain in lower prices is greater than our loss in jobs. Americans will focus on other industries, which we can produce better here. Over and over, we have demonstrated that free trade produces huge gains in our economy, but Obama wants to replace free trade with universal overregulation and American citizens will pay the price for it.

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