Monday, January 07, 2008
Ken Arnold Issues Paper on Foreign Trade
THE FAIR TRADE ACT (FTA)
BACKGROUND AND PROBLEM:
For far too long, the United States has allowed itself to agree to trade treaties that are CLEARLY lopsided in their terms and lack of mutuality and fairness. During the Soviet menace period, perhaps one could argue such was necessary to get certain countries into our “sphere of influence”. But those times have passed and America is not economically as able to give away all of the consequent jobs it once did – particularly in the manufacturing area.
There are many problems with the decline of our manufacturing base which results from trade terms that don’t apply equally between countries. Besides the massive loss of jobs overseas, there is the increasing tax burden to both retrain and provide welfare to those unable then to find gainful employment. And these negative fiancial impacts say nothing about the negative social impacts of lives disrupted, families shattered, and other social events.
Of last note is that the quality of our college systems in this country will decline as one of the major sources for its revenues moves overseas – research and development dollars from manufacturers such as DuPont and General Motors. Such quality decline in education can have “downward spiral effect” in the coming decades regarding our even retaining the jobs we have.
ANALYSIS AND SOLUTION:
The key areas of current disparity among most of our trading partners overseas are in three areas:
1) Enforcement of our Intellectual Property Rights.
2) Labor Laws.
3) Pollution Laws.
The first of these (i.e. enforcement of intellectual property rights) is a simple matter since most all countries have laws on the books now to prevent such behaviors that undermine risk taking and research and development because the rewards for such would be greatly diminished. Countries need only enforce the laws they have.
The last two above are ones where several countries may need to enact more stringent laws or greatly increase the enforcement of what is already on their books. But whereas today they, of course, can make lower cost goods because they dump their effluents and employ child / slave labor; the trade environment of tomorrow would simply demand that developing countries merely have 70% of the level of such labor law and pollution protections that we ourselves have.
Failing to comply with the above standards would NOT bar a country's goods from our Nation. They are still free to conduct commerce. However: Not being declared a “Fair Trade Partner” can potentially have its negative aspects. If a country, because of disparate provisions between we and their country, runs a material trade surplus in the prior year (say, 20%), then their “Trade Equalization Tax” applied to all goods the following year is – you guessed it – 20 percent.
This “Trade Equalization Tax” is not only any incentive to comply with these very minimal and fair terms – but would compensate government for all the costs of retraining and welfare payments that would be made on account of the disruption and unemployment to the American worker.
CONCLUSION:
The above Fair Trade Act (FTA) is a modest proposal. It only asks of others SEVENTY PERCENT of what we ask of ourselves. And it appeals to our American sense of fairness. Yes, we will lose jobs – and win jobs. But do we presently have to give away jobs?
Our country is late in “setting the culture” among all Nations of the world regarding foreign trade. To date, we have been played for saps. We can wait no longer. If America does not immediately set the culture and terms for such world trade – it will shortly be CHINA who does so. And given China’s past behaviors in the trade area – their terms will be far less fair to all parties concerned than America with her even-handedness and good will she as always exhibited among the Nations of the world.
Ken Arnold – Republican Candidate for U.S. Congress
8th District of Illinois
Written: March 20, 2006 Updated Publication: December 26, 2007
ARNOLD FOR CONGRESS
D:\Congress\Issues\Trade\Fair Trade Act.doc
Labels: 8th Congressional District, Fair Trade, Ken Arnold
