Economics: Turn Around is Fair GameAmerica’s size and prosperity have made it the largest consumer ofimported products in the world. Brightly lit shopping malls adorned with thelatest foreign-made apparel, gadgets and trinkets, testify to the vast selectionof goods available for purchase. There is a dark side to this enormous quantityof choices: a hefty price tag – the federal deficit. Unfair trade agreements,and, predatory pricing strategies and practices from abroad, placed those goodson the store’s shelves.
The United States Trade Representative (USTR), who isdirectly responsible to the President and Congress for trade negotiations; isforecasting a two hundred billion-dollar trade deficit for fiscal year 1996.The American people must demand reciprocal trade agreements for overseasbusiness competitors. Complimentary trading would; put an end to subsidizeddumping, curb the loss of manufacturing jobs, and, tear down the barriersassociated with free trade.The practice of selling items at a price less than what it costs to makethem is called dumping. Foreign governments subsidize the manufacturingprocesses of certain industries so their companies can displace thecompetition’s industry.
The television industry is a perfect example ofsubsidized dumping. The post World War II infusion of subsidized Japanese-madetelevisions, terminated the United States(U.S.) television manufacturingindustry. In the late 1950’s, half a million units crossed our borders, tax andtariff free.
These television sets were made using cheaper components andcheaper labor. However, the cost of transportation, which would normallyescalate each individual price, was paid for by the Japanese government. Thepioneering inventors of the electronic marvel were forced out.
No longer ableto compete by meeting rapidly declining prices, companies had to stop production,liquidate all available assets, and release their entire work force.Unemployment figures for 1996 are predicted to be at seven percent (USTR,1996.) This equates to nearly twenty million skilled American workers withoutjobs. The math is simple; imports cost an economy jobs, exports produce jobs.
Reciprocal trading contracts would definitely curb the exponential loss ofmanufacturing jobs.Trade barriers are the largest problems facing American companies inoverseas markets. The obstructions are sometimes overt, sometimes hidden andusually extremely complex. Deals are covertly impeded with complicatedlicensing and import procedures. Regulations concerning special specificationstandards and testing of American goods are hurdles deliberately enacted toblock fair trade. If foreign governments were mandated to treat Americanbusinesses the same way native companies were treated, free commerce would trulybe achieved.
The U.S. has used an arsenal of tools to try to mitigate unfair tradepractices and enhance U.S. access to overseas markets. These include: Section301 of the 1974 Trade Act – Section 301 serves as the flagship of thePresident’s fleet of trade remedies aimed at unfair trade practices.
It callson the USTR, subject to the specific direction (if any) of the President, toenforce U.S. rights under any trade agreement. It also allows the USTR torespond to any act, policy, or practice of a foreign country or instrumentalitythat is unjustifiable, unreasonable, or discriminatory and that burdens orrestricts U.
S. commerce.Under Section 301’s broad mandate, the USTR may take any appropriate andfeasible action to enforce U.
S. trade agreement rights or eliminate tradepractices unfairly burdening U.S. commerce. If the foreign country does notmodify its practices, the USTR may deny it U.S. trade benefits or impose duties,fees, or other import restrictions upon that nation’s goods or services. UnderSection 301, retaliatory action has been taken by the U.
S. to eliminate unfairtrade activities of countries such as Japan as well as European Communitycountries. In other cases, its credible threat has been sufficient to achievemarket-opening, trade-liberalizing results without imposing sanctions.
Unfortunately, it is seldomly used. In most instances, Section 301 is used onlyas a last resort when all other available remedies have been exhausted. Often,bilateral negotiations and dispute-settlement procedures under the GeneralAgreements on Tariffs and Trade (GATT) are used to resolve trade disagreementswithout resorting to Section 301.
For example, bilateral negotiations have beensuccessful in improving access to Japan’s market for U.S. products, resolvingSouth Korean unfair trade practices affecting intellectual property rights andinsurance, and eliminating tariffs and import bans on several U.S. items inTaiwan.Economic principle tells us that free trade or freer trade will meanlower consumer prices, and, in the long term, job security in a stable,competitive economy. However, in the real world, the short term world, jobs arethreatened by competition from abroad – no matter how fair that competition maybe. The only way to achieve freer trade in the complex and delicate world ofglobal business, is for the elected officials of America, to decree reciprocaltrade agreements at the international bargaining table.
These agreements willopen doors for new economic opportunities in all nations. The agreements couldeliminate all tariffs, reduce or eliminate most nontariff barriers, liberalizeinvestment practices, cover trade in services, and support efforts atmultilateral trade liberalization. As a result all nations’ internationalcompetitiveness and living standards should markedly increase. Business