Eagle Forum Legislative Alerts

Wednesday, February 17, 2010

What's Wrong With Free Trade?

American citizens have been deceived for years by the slogan "free trade." Not only is there nothing free about it, there's nothing fair about it. It does not create a level playing field. International trade is a good thing, but there's nothing good about it when the United States is on the losing side of discriminatory trade agreements and the World Trade Commission, which meets in secret and from whose decisions there is no appeal, nearly always rules against the United States.

Free trade is supposed to bring about a reduction in tariffs so that goods can move freely across international borders. The deceit in the free-trade slogan is epitomized by the way foreign countries blatantly discriminate against the United States by using a Value Added Tax (known as the VAT) both to subsidize their exports and to penalize their imports. The way this racket works is that China reimburses taxes paid by manufacturers in China who export their goods, but imposes border taxes against American companies trying to sell their products in China. The tax barriers imposed on U.S. goods by foreign countries amounts to about as much as the tariff that was supposedly abolished or reduced under the phony name of free trade.

The United States welcomed China into the World Trade Organization in 2001 knowing that free-trade agreements with China were unfair to America, and that even the expression "free trade," as applied to China, is a fraud. China uses near-slave workers paid less than a dollar an hour with no benefits, sends us children's toys with lead paint, plus poisonous foods and medicines, and keeps its currency artificially cheap to unfairly advantage its exports.

It's time to face the fact that free trade doesn't abolish tariffs but just calls them by another name, and the trade agreements that permit this racket are a very bad deal for the United States.

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1 comment:

Anonymous said...

A VAT, like a revenue tariff, is not a "racket"--it's a perfectly legitimate method of feeding government coffers, one that the vast majority of countries use. America has never used VATs because historically our taxation was based on the revenue tariff. (One way) free trade gets rid of the latter without implementing the former, which is very deadly for American manufacturing. America needs to resume the revenue tariff, and to use the incoming tax revenue this generates to reduce taxation on domestic manufacturing, giving it more breathing space. The problem with exemptions on tariffs on foreign products--aka "free trade"--is that you need to burden domestic manufacturing with more taxation to make up the lost tax revenue, pricing domestic products out of the market. Because of the shifting of the tax burden from foreign to domestic, what we call "free trade" here in America is really just reverse protectionism of foreign products over American ones.

To successfully fight free trade, we need to hit head-on the argument that it benefits consumers. It does not. Every tax dollar not collected from the revenue tariff needs to be collected elsewhere (such as the income tax), and because of the unemployment and resulting expensive social problems free trade creates (welfare, crime, etc.), you need to collect even MORE tax money as a result.

The revenue tariff is the most efficient form of taxation around--$1 collected that way does as much good as $3 collected elsewhere.

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