We claim no expertise in international trade, but found an interesting view on the subject in the July Modern Metals. The author made several points about recent trade deals, and concludes, “the administration’s claims about the pure benefits of TPP (Trans-Pacific Partnership) should be viewed with a great deal of skepticism.
Here are some extracts from this article, and there is a link to the complete text at the end. It is worth noting the author is the president of a steel processor/distributor of metal products.
The VAT tax works to our disadvantage with many trading partners. Governments refund the VAT to exports and charge it to imports. This, for example, makes German autos are subsidized when exported and US autos bear a substantial tax when imported. Is this “free” trade?
Currency manipulation, a favorite Trump gripe, is another issue in trade. As the article reports, “Japan valued its yen at 80 to the US dollar in 2012. The central government later revalued the yen at 120 to a dollar. The yen’s 50 percent depreciation has had the effect of increasing income for Japanese companies that expert to the US. The lower yen discourages investment in the US, lowers the cost of Japanese imports to the US and raises the cost of US exports to Japan.”
“The last “free trade” agreement our government approved was the US-Korea Free Trade Agreement of 2011. The Obama administration pledged this deal would increase exports of American goods by $10 billion to $11 billion and that 70,000 American jobs would be supported by the increase in exports”.
“Before the Korean treaty took effect, the US exported $43.5 billion worth of goods to Korea and Korea exported $56.6 billion worth of goods to the US, for a trade deficit of $13.1 billion.”
“After 3 years under this deal, US exports to Korea last year totaled $44.5 billion (up only 2.3%) while Korean exports to the US were $69.6 billion (up 23%), which nearly doubled the trade deficit to $25.1 billion. This imbalance has likely cost tens of thousands of manufacturing jobs in America. Is this free trade?”
Obviously this author is no fan of “free” trade deals. Is he right or is there a countering view? If you have one, please comment on our blog.
The link to the article: https://www.modernmetals.com/item/12688-what-is-free-trade.html