Why You NEED Free Trade and My One Issue with Barack Obama

As the latest meetings in the Doha Round of the WTO came to crashing halt on a relatively fickle argument and America looks to elect a new president in November, an examination of free trade and its importance is needed. First I want to look at why and what the cost of Doha failing mean, and then look at the issue I have with Barack Obama.

The WTO attempts to lower or remove tariffs and quotas established by member countries. Tariffs and quotas make it more expensive or limits imports of certain goods in order to protect a countries own interests. While tariffs and quotas save jobs for a time, they really cost you, the consumer, more money to purchase goods and services. With increasing energy prices all products are increase in price, and the extra cost of these tariffs and quotas are passed onto you the consumer. This is why the failure of the recent WTO talks hurts everyone. An Economist article on the WTO failure says that it will only cost the world economy $70 billion, not really that much, but in a slowing world economy and increasing energy cost Doha’s success would have lowered prices. The failure came developed on a fairly small issue. The argument was over protecting developing counties’ farmers. The draft asked for a “special safeguard mechanism” allowing developing nations to raise tariffs to protect farmers from imports. The U.S. wanted the import volume to be high before the tariff kicked in while India and China wanted it low. This caused an impasse leading to an end of negations. The failure of Doha only shows how far apart the world really is, and if we cannot agree on trade, how are we going to discuss the challenges and make agreements on the issues nuclear weapons and global warming.

Now on to Mr. Obama. Barack Obama’s website states that he will only, “fight for a trade policy that opens up foreign markets to support good American jobs.” This is especially noticeable on his stance for NAFTA in which he wants to, “work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.” NAFTA is a hugely controversial topic especially in the Rust Belt which is where I live, so I understand the effects of liberalizing trade. I know what it is like to have a city full of empty factories, but that doesn’t mean that free trade or NAFTA is bad for the U.S. During its initial introduction, employment and GDP booth increased by the largest percentage in US history. Other say look at the increasing US deficit which shows that NAFTA is a failure. Well I do not believe that the deficit is a problem, we should be more interested in balancing the budget and removing earmarks and pork barrel projects buried in congressional legislation. The trade deficit will always even out. For anyone who has studied economics, you know that one day the U.S. will again become a net exporter, but this will most likely come in the service industries. not manufactured goods. The U.S. is a service based economy now, and manufacturing jobs will only increase when labor becomes cheaper in the U.S. Free trade saves the American consumer thousands of dollars every year whether you are purchasing a car or fruit from Mexico, lumber from Canada, or electronics from Japan, those prices will only increase with the removal of NAFTA or other trade agreements.