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Protectionism Will Not Make America Great – Article by Pierre-Guy Veer

Protectionism Will Not Make America Great – Article by Pierre-Guy Veer

The New Renaissance HatPierre-Guy Veer
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At the end of June, presumptive Republican nominee Donald Trump made a fiery speech about trade in Pittsburgh. Using many of Bernie Sanders’ talking points on the subject, Trump said, among others, that he would hold China accountable for the manipulation of its currency and unfair trade practices, withdraw from the Trans-Pacific Partnership, and renegotiate the North American Free Trade Agreement with Mexico and Canada.

Trade vs. Trade Treaties

There is some wisdom on Trump’s part about NAFTA. This agreement would deserve the label “bureaucratic agreement on trade” rather than “free trade agreement.”

For example, Annex 313 states that Bourbon and Tennessee Whiskey can only be called as such (and be sold) if they are produced in Tennessee “in accordance with the laws and regulations of the United States governing the manufacture of Bourbon Whiskey and Tennessee Whiskey.”

The same rule applies to Canadian Whisky in Canada and Tequila and Mezcal in Mexico. Annex 703.2.A.4, on its side, contains a truckload of products which are exempted from free trade, including Canada’s milk supply management which may cost the average family $267 a year.

Trump is also right about being hesitant to support the TPP. What has leaked out of it shows that the agreement has more to do about protecting intellectual property rather than genuine trade liberalization. Such protection would stifle innovation and slow economic growth – just imagine if there had been a patent on the wheel or iron casting when it was first invented.

Fairness is Buying What You Want from Wherever

However, Donald Trump is wrong to advocate for “fair” trade. In his platform he calls for a level playing field in order to have a “fairer” trading relationship with China, known for its heavy top-down approach on foreign businesses.

This amounts to protectionism that could set off a very costly trade war. American consumers will pay the price – a form of tax. It could set off a deep recession. When you consider the stakes here, you see that all of Trump’s valid complaints about trade treaties are designed to bring about something that is even worse.

If, however, Trump’s goal is really to “make America great again,” then he should not be caring about China’s trade practices, but embracing unilateral free trade.

Of course there would be unavoidable, short-term pain with job losses in industries that cannot compete with China and other industries. The steel industry, for example, would not be protected by the recently enabled 266-percent tariff imposed on Chinese steel and would shed many jobs.

However, people using steel (for construction, manufacturing, etc.) would save so much money by being able to import cheaper steel. This surplus money will not evaporate; it will return in the economy in the form of savings, job creation, and economic growth.

This is not trade theory: unilateral free trade has successfully happened. Famous French liberal Frédéric Bastiat has abundantly talked about England turning to unilateral free trade and how it helped the country become even richer.  It even “gave them bread” during a bad harvest 1847 thanks to wheat imports.

By walking down this “bold path,” to quote minister Peel who enacted free trade, America would truly be great. Government would stop subsidizing agriculture in every single form, thereby not only improving the quality of the water supply, but also reversing the contentious debate about undocumented Mexicans whose livelihood was destroyed by U.S. corn subsidies. Capital resources would be allocated in a more efficient way according to supply and demand – it might still be farming, but it could become manufacturing, mining, or even services – and save an average of $6.1 billion per year until 2019.

Trade liberalization, combined with Trump’s promises to lower business income tax to 15 percent and tackle the deficit and debt, would truly “make America great again.” Because after the unavoidable short-term pain of adjusting to new incentives, Americans will get back to work and better supply the world’s demand on their own.

Pierre-Guy Veer


Pierre-Guy Veer

Pierre-Guy Veer is a Linguistic Reviewer at Lionbridge

This article was originally published on FEE.org. Read the original article.

The Poison Apple Called TPP – Article by Jeffrey Tucker

The Poison Apple Called TPP – Article by Jeffrey Tucker

The New Renaissance HatJeffrey A. Tucker
October 14, 2015
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Let’s say you have a trade deal that completely eliminates 18,000 existing tariffs between 12 countries that are otherwise hectoring each other with punishing trade barriers. To a person with a brain, this sounds amazing. Unless you are a luddite, a nativist, or a unionist, there seems to be every reason to support it. Trade is good. Global commerce is good. Fewer trade barriers are a good thing.

But let’s say that this same treaty binds all 12 signatory nations to an egregious imposition of government privileges for reactionary corporations who are paying to keep their cartels in place. I’m speaking here of big media, big music, and big pharma. They all live and breath to keep their “intellectual property” and to crush and destroy what they call “piracy,” which is actually the same thing as free-market competition.

What if this wonderful trade treaty was just a stalking horse for the dramatic expansion of these corporate monopolies? What if the whole point of the treaty were to use the language of growth and globalism to fight and crush the pressures toward universal information sharing that are inherent in the digital age?

I’m speaking here of the Trans-Pacific Partnership. Like the Nafta and WTO battles before it, the TPP is being marketed as a free-trade agreement. The partisans have lined up for and against it on that basis. But this is all so much distraction. The true core of the treaty is protectionist in the extreme. It protects a handful of powerful industry players against genuine market competition.

The rumors about the Intellectual Property provisions have been flying for years. But no one had seen the results of the endless and secretive negotiations. Then Wikileaks got involved. It released the full draft text of the IP sections. It turns out to be far more than the usual prattle and the expected sop to a few deep-pocketed industries.

The IP sections of the TPP attempt to impose — by force of blackmail  — the worst of American law as it applies to copyright, patent, and trademark, and do so in industries where there is otherwise some freedom left in the system.

The Digital Millennium Copyright Act, for example, puts the burden of proof on websites and internet service providers to make sure their content does not violate copyright. The book could be 75 years old and completely out of print but if a web bot discovers a PDF on the site, the government can force its immediate shutdown. This system pertains in the US right now but the TPP guarantees its enforcement in 12 countries in the Pacific Rim — some of whom host sites that are major sources of free information on the planet today.

The biggest revelation from the leaked document concerns big pharma. Their dream is pretty simple: they want to end generic drugs and the manner in which they distribute copies of named-brand products at much lower prices. In foreign countries, generics are a key to life. They are the way that people benefit from improved medical technology without paying exorbitant US prices.

The TPP would go a long way toward illegalizing generics for a whole class of pharmaceuticals. It all comes down to the rules that are used to decide whether generics can be produced at all. In the US, there is a practice called “linkage” that makes it impossible to produce drugs if there are any unresolved patent disputes. Linkage does not apply in most nations party to the TPP.

Politico explains:

Some of the most contentious provisions involve “patent linkage,” which would prevent regulators in TPP nations from approving generic drugs whenever there are any unresolved patent issues. The TPP draft would make this linkage mandatory, which could help drug companies fend off generics just by claiming an infringement…. In an April 15 letter to Froman, Heather Bresch, the CEO of the generic drug company Mylan, warned that mandatory patent linkage would be “a recipe for indefinite evergreening of pharmaceutical monopolies,” leading to the automatic rejection of generic applications. The U.S. already has mandatory linkage, but most other TPP countries do not, and Bresch argued that U.S. law includes a number of safeguards and incentives for generic companies that have not made it into TPP.

What’s even more remarkable is how the TPP would actually expand linkage to cover new classes of drugs in the US.

Politico explains again:

The opponents are also worried about the treaty’s effect on the U.S. market, because its draft language would extend mandatory patent linkage to biologics, the next big thing in the pharmaceutical world. Biologics can cost hundreds of thousands of dollars a year for patients with illnesses like rheumatoid arthritis, hepatitis B and cancer, and the first knockoffs have not yet reached pharmacies. The critics say that extending linkage to biologics—which can have hundreds of patents—would help insulate them from competition forever.

The costs of this treaty, then, will not just be felt abroad. The costs will further institutionalize the pharmaceutical monopoly in the US, making people pay far more for drugs than they currently do, and even curbing research and development beyond what the major industry players are willing to endure to bring a product to market.

And it’s not just about the US. It’s about the countries party to this agreement. They are being blackmailed by the American ruling class, badgered and bribed to accept bad law in exchange for market access. This is not how trade is supposed to work.

But from the ruling-class point of view, this is the whole point of trade treaties. Any country can have free trade anytime it wants. It only needs to stop punishing imports and start making good stuff that others want to buy. You have to ask yourself: what is the real point of these thousand-page documents, the years of negotiations, and all this secrecy? Why did the first public appearance of any aspect of the TPP have to be released on Wikileaks?

What is it that they don’t want us to know?

Patent attorney Stephan Kinsella explains: “What is happening here is that the US, at the behest of the American RIAA (music industry), MPAA (Hollywood), and Big Pharma industry, is using its hegemonic/superpower status to foist American-style IP law onto other countries, for the benefit of these special interests. This has been going on for decades now… Once TPP is ratified, as I expect it will be, US-style draconian IP law will be put into force in countries that comprise about 40% of world GDP.”

Adam Smith nailed it: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Those who have watched these negotiations say that the American negotiators have basically operated as lobbyists from the American pharmaceutical industry. This is why Doctors without Borders has come out so strongly against TPP. And this is also why the Electronic Freedom Foundation has come out so strongly against it as well.

The best case for the TPP is that many bad guys are against it. But that doesn’t mean that true liberals should be for it. In politics, what looks like a shiny red delicious apple can be poisoned to the very core.

Jeffrey Tucker is Chief Liberty Officer of Liberty.me (http://liberty.me/join), a subscription-based, action-focused social and publishing platform for the liberty-minded. He is also distinguished fellow of the Foundation for Economic Education (http://fee.org), executive editor of Laissez-Faire Books, research fellow of the Acton Institute, founder of the CryptoCurrency Conference, and author of six books. He is available for speaking and interviews via tucker@liberty.me.