Can trade agreements be renegotiated in any way that actually works to the US's benefit

Great Debates
1

Is that even possible? There has been talk from both Trump and Sanders about trade agreements (I think even Obama discussed renegotiation in 2008) but is there any realistic way to do that that would benefit people in general, or make the US more competitive?

For example, can trade agreements stipulate minimum labor and environmental laws to drive up costs overseas, making the US more competitive while also (in theory) lifting foreign nations out of poverty faster due to higher wages and less environmental destruction? Of course if that approach works, why hasn’t it been done yet?

2

Current and pending trade agreements *are *massively to the US’s benefit. What they are not is massively beneficial to all Americans equally.

Making arrangements to rearrange the domestic benefits amongst the domestic constituencies is a chore for domestic politics, not the trade agreement itself. Certainly domestic politics and law could be arranged to make passage of suitable domestic legislation a requirement for the external trade treaty to take effect.

3

There is no particular reason to believe that existing trade agreements are not to America’s benefit.

There is nothing unfair about trading with countries with much lower wages. The flip side is richer countries have more productive workers who on average are better educated, have better equipment and access to better infrastructure.

The purpose of trade is widen access to goods and services, not to run a trade surplus. The trade balance isn’t a scorecard telling you who is winning and losing. A country can run persistent trade deficits and still benefit from trade.

4

What do you consider beneficial to the US? More jobs in the US? More US product being sold outside the US? Lower costs on items imported into the US?

This approach would increase the cost of items being imported into the US. Which benefit is more important, selling more US manufactured stuff, or allowing people to afford more phones/TVs/cars/cloths?

5

It’s probably useful to step back to the ideas of Pareto efficiency vs Kaldor-Hicks efficiency.

Pareto efficiency “is a state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off.”

The goal of trade deals are Kaldor-Hicks improvements.

Further constraining the trade agreement, as you propose, will generally move away from Kaldor-Hicks efficiency unless the constraint is to address a market failure. A different method is to keep the Kaldor-Hicks improvement and actually do the redistribution. That moves the combination of the trade deal and the redistribution towards Pareto efficiency. Of course that other piece, how to help the losers under the trade deal, isn’t directly a part of the international agreement. It frequently isn’t done. Theoretically it’s the way to maximize the benefit though.

6

There seems to be a pervasive suspicion that the US (at least under the Muslim) has been “negotiating” with a view to explicitly harm the US and/or large sections of its population.

I don’t watch TV, so I have not had the opportunity to avail myself of Fox. I don’t listen to “Talk Radio”.
In short, I am way behind in my Conspiracy Theory studies.

If your mouth-breathing cousin can figure something out, it is likely that the people negotiating trade deals can also see the blindingly obvious.
And: trade agreements are generally not a race to see how many of your citizens you can throw under a bus.

An observation: The election of Trump is being compared to Brexit.
One big difference: even the idiots n UK realize the value of the trade agreements (“Single Market” = no tariffs or taxes on exports OR imports); the Americans backing Trump want to destroy trade deals older than the EU market.
Even the UK realizes the old textile jobs are gone; nobody thinks coal mining is a growth industry.

If nothing else, this election should give impetus to the “Free College for All” movement. Educated people do not see conspiracies simply everywhere.
They are also (generally) secure enough to NOT need to claim superiority based on accident of birth. “I’m better because of my skin color” or “I’m better because of my chromosome pattern” do not make sense to anyone but the most ignorant.

7

The biggest problem we as voters have with this concern, is that the people in power have SO politicized everything about this (read: lied like crazy for personal short-term political gain), that we actually don’t KNOW what has, or hasn’t been “good for the US” about any of our trade deals.

But so far as I know, we aren’t restricted in how we make deals, except in so far as we restrict ourselves, or we make new deals that are contradicted by existing deals.

Since they all ARE “deals” though, we can’t operate entirely in a vacuum.

No matter what you set out to do, as with any “deal,” people will look for ways after the fact, to game the system, and to take unfair advantage by means not a part of the deal.

But again, it’s the local politics that makes it tough for us as voters.

Classic example: NAFTA. Recent Republican politicians have pretended that NAFTA was an example of Democrats writing bad trade deals to destroy America. This, despite the fact that NAFTA was a REPUBLICAN trade deal, supported by more Republicans at it’s signing than Democrats. Again, lying gets in the way of us knowing what is or is not a “good” deal, and why.

My own thinking is, that we need leaders who look at the bigger picture with trade (and everything else, but that’s for another thread). In particular, whenever a big trade deal is made and then ratified, the people making it do know many of the likely “side effect” results that will come of it. They know that if we agree to eliminate some trade barriers or protections, that some Americans jobs will be lost. They COULD make sure to make other changes to compensate for that, but so far, no leader of either party has ever stepped up to the plate to even try to do so. Instead, the most popular recent game to play, has been to make some pejorative reference to Americans who object, to being anti-capitalist traitors or weaklings of some kind.

The thing is, no matter what problem you want to address, figuring out the most politically rewarding snotty name to call at your opponents doesn’t do a damn thing to address that problem.

Personally, I would like to see a few things in particular.

A sort of morality rule, for one thing. That is, that any nation which does NOT allow it’s workers to unionize and have a say in their working conditions, should have to pay an uplift to market their products here. Any nation that tolerates slave labor, should be banned altogether. Any PRIVATE COMPANY or COMPANY OWNER who has been found to have used slave labor, should be personally banned from serving in any capacity in any entity trading with the US. That sort of thing.

We should have MECHANICAL clauses concerning things like currency manipulation. Rather than waiting for Congress or the President to act, if a nation uses currency manipulation tricks to gain a competitive edge, OR use any artificial means to lower the price of products being sent to US markets, should result in equal and opposite tariffs being installed instantly.

Some people like to talk in a lofty manner of competing on an even playing field, but not all of them actually mean that. Too many want to completely ignore things, such as that foreign nations can pollute the same air that eventually comes to our part of the planet, and save costs that way. We can’t tell other people how to run their economies, or manage their resources, but we can specify product content that we will accept, including toxicity, and production values.

But again, our biggest problem hasn’t been our trading partners. It has been our local politicians, using trade policy to play games to get themselves into power here.

8

Leaving just “I’m better because I’m more intelligent.”

9

Seeing how offering people who had their jobs outsourced or automated was a big part of this election, I’m curious as to what, if anything, could be done with trade policies to make their old jobs competitive.

I really don’t know anything about trade. I am under the impression most of the job losses were due to automation rather than outsourcing.

But as far as outsourcing goes, what is wrong with demanding mandatory labor and environmental standards in foreign nations?Wouldn’t that both make western nations more competitive and also speed up economic growth in developing nations (arguably by speeding wealth transfer from western nations that buy their goods though).

I guess I don’t understand the people who wanted people like Trump, Sanders, and even Obama to renegotiate trade agreements. How would they do that, what could they change?

10

Good points all.

But this last part is where it gets problematic again. Honest rules cannot be operated honestly by a dishonest system. Said another way, trying to cure a dishonest system by signing it up to honest rules is a guaranteed failure.

Right now there are many rules the EU has about exactly this sort of stuff: content, production values, etc. Which just happen to be rigorously enforced to the advantage of French cheese makers, not German, and simultaneously to the advantage of German beer makers but not French.

The problem of “moral” or “precautionary” trade rules simply being used as a protectionist barrier (“Yaay Us! Booo Them!!”) has a long and storied tradition.

All having nothing necessarily to do with current US partisan BS. Which as you rightly say is a huge curse. My point is that somehow magically draining the curse would simply expose the baseline clientele-ist instincts to protect local businesses and local jobs from external competition by any and all excuses available.

The mere fact we/you are starting the entire crusade with an eye to protecting US jobs is the Original Sin of the whole enterprise.

11

I once ran an antique production lathe turning out collars for circular saws.
This was a tiny bit of work - one person on one machine for a few months.
And it had to be a cheap worker - a summer hire.

The next year, I asked about those collars. The foreman was a bit bitter - they lost the contract to somebody who had set up shop on an Indian Reservation*, thereby getting even cheaper labor.

I can’t imagine how he would have reacted to “they set up shop in China, where they pay a nickle a day”.

Those jobs aren’t coming back. More recently - as late as the 1980’s Levi Strauss was making jeans in the US.
Sewing machines are the very first work to go into a newly-opened labor market - they are cheap, require about an hour’s worth of training, and, if the country gets uppity, can be thrown away.
Note: the North Koreans working for SK businesses were running sewing machines. NK wants to seize the factory? Fine - those were ancient machines, completely depreciated. The light bulbs were probably worth more than the sewing machines.

    • this was before somebody realized that Reservations, being Sovereign, could have casinos. At this time, they were making a few bucks selling untaxed cigarettes.
12

Trump and Sanders are both populists, so their opinions on this sort of thing is…flawed…IMHO anyway. Basically, it depends on what you (or they) actually mean by ‘make the US more competitive’. The way THEY mean it is the standard populist refrain that those low wage low benefit high work place risk SHOULD be done here, in the good ole USA by hard working (and high paid, good benefitted and OSHA regulated) Americans and that it’s evil corporations who have tookin dem away for profit and fun.

But if those jobs weren’t done in China or somewhere else by those low wage, etc workers they wouldn’t be done here by US workers either…they would be done by robots and expert systems. In many cases they ARE being done just that way right here in the good ole USA. And the US IS competitive…that’s why our manufacturing productivity is so high, the highest in our history. It’s manufacturing JOBS that folks like Trump and Sanders and the folks who listen to them really mean, and those jobs are not coming back, no matter what Trump et tries to do. From what I’ve seen he, like Sanders is totally against the TPP…and this stance, along with the others on tariffs and the like is going to hurt the country as a whole, and make the US less competitive.

So, what you want to do is basically stack the deck totally in the US’s favor and take away the only advantage some other countries have to compete for work? Because that’s what you are talking about. And, of course, the reality is you can’t simply impose this sort of thing by fiat. Oh, I suppose we could put tariffs on goods coming into the US (which will be reflected back on us by other countries arbitrarily setting some bar so that our own goods and services cost even more of a premium), or say that goods and services from countries that don’t meet your standard would cost more or be banned…but this would hurt the country as a whole even more.

Personally, I think Trump is clueless about trade (as well as about most other things), especially international trade, and that what he’s going to find out (is probably already finding out) is that the President can’t just wave his or her hand and do this sort of thing by fiat…and that even if he could it would do a lot more harm than good. I know that low or unskilled workers losing their jobs to ‘China’ dont’ want to hear this sort of thing and want a nice, easy source to blame for all their woes, but the reality in the US is that we have priced ourselves out of this sort of job and that it’s never, ever coming back (and that, to the country as a whole as well as those workers this is actually a good thing). If someone actually were able to force, say, Apple to move all it’s plants back to the US it wouldn’t be the same manpower levels that are in China…it would be highly modernized and automated factories churning out iPhones and the like (and probably mean that in the not so distant future Apple would go under or chop several product lines because they couldn’t compete).

13

Our trade deals – and any treaties, agreements or pacts we make with other countries – are initiated, negotiated and written for the US’s benefit. And if for some reason they weren’t, our duly elected Senators wouldn’t ratify them.

Sure, some people disagree with the details, but our elected officials – and their appointees hired to represent them at these talks – are not in the business of fucking over their constituents on purpose or accident. Not if they want to keep their jobs.

And if you want to “bring back the jobs” that we’ve lost since 1960, no new treaty or repealed treaty will do that. No president can do that. Trump might as well promise to restore the French monarchy, or bring back the glory of Old Rome, for all the good he will do. The president isn’t magic. Even a king couldn’t bring back the 1950s.

14

Most of the countries who joined TPP are not sweatshop countries, but are economic powerhouses: Japan, Canada, Australia, New Zealand, Singapore, Brunei (one of the richest countries in the world), Chile (the most prosperous country in Latin America), Malaysia (one of the most prosperous countries in S.E. Asia), the U.S.A., Mexico, Peru and Vietnam.

Vietnam is the only poor country in the agreement and would be a big winner. But it would be required to make massive reductions on tariffs charged U.S. exporters, to avoid bootleg pharmaceuticals, and to improve its labor standards.

I am certainly not an expert on such matters, and I’m sure some of the objections to TPP are well-founded. But agreements like this are a way forward; the U.S. government spent years negotiating TPP and got the best deal it could. Whatever the details, it’s safe to say that the deal is good for the American economy and would increase American employment.

Most important of all: the deal is intended to form a counter-weight to China’s economic (and therefore geopolitical) power. When history books are written 40 years from now, the election of Trump will be treated as almost synonymous with the loss of American prestige and prosperity, and with the rise of Chinese prestige. Failure to ratify TPP will be a noteworthy detail in that unfortunate (for U.S.) story.

Especially ironic is that the pro-business GOP would be enthusiastic supporters of TPP if it didn’t have Obama’s name on it. Trump would support it except that he must dance with the No-nothing rednecks who took him to the ball.

Yes. Many Americans will prosper and be able to go out for pizza more often. A few losers will have to look for work at pizza shops. What they won’t be able to do is to mine coal or build Plymouths and Pontiacs like their daddies or Leave-it-to Beaver’s daddy used to do.

Backing out of TPP is a terrible idea.

15

You know, I don’t always agree with you, but when I do…I have this urge to buy you a Dos Equis.

16

So, I used to run sewing factories. Then I spent a few years buying sewing factories and setting them up in Caribean and South American free trade zones. Then the factories all moved to China. It cost more money to ship the sewing machines than the sewing machines were worth so we sent only the heads and built the tables and pedals in China.

The argument back then was that this was low tech low skill labor. It did not create enough value to really support a modern western lifestyle but could support a good lifestyle in a developing country like China. We told the ILGWU that they were representing the equivalent of buggy whip makers.

Now they make iphones there.

17

So what’s next? Does the First World simply implode into gigantic copies of the Phillippines or Southern Mexico?

If we don’t want that apparently economically inevitable outcome what do we do politically to change it?

18

We reduce the permeability of the borders to trade and labor. Our labor market is taking on water faster than we can bail it out, a little bit of protectionism might provide just enough inefficiency to give us the breathing room to catch up with changes in the labor market.