"When I was younger, so much younger than today", my mother used to pack the same thing for my lunch every day. She would pack a peanut butter and jelly sandwich and an apple. I could always trade my apple for a banana or an orange. Sometimes I could trade half of my sandwich for half of someone else’s. Lunch and recess were my favorite subjects.
Today as a licensed US Customs House Broker, and Ocean Transportation Intermediary, I long for my younger days when trade was so innocent and easy. Yes it is the difficulty that gives me job security. We have a harmonized tariff system. I get calls all the time regarding INCOTERMS and UCP500 rules and regulations. If we are dealing with hazardous materials, the HazMat rules are critical. Then there are agencies like US Customs, the Federal Maritime Commission, US Department of Agriculture, Census, Bureau of Export Administration, Department of Energy, Alcohol Tobacco & Firearms, Department of Commerce, and many others. We must be familiar and work with thousands of forms like bills of lading, certificates of origin, shipper’s export declarations, commercial invoices, phytosanitary certificates, packing lists, dock receipts, bills of sale, titles, power of attorney, and again many others.
Working in trade and transportation will never be as easy as trading an apple for a banana in grade school. However it should not have to be this hard. On the export side we have some countries we can not ship anything to without a license. Please do not be in a hurry to get a license. On the import side it is even worse. Goods must be clearly marked with the country of origin. Some items/countries have quotas. Does a country fall under a special trade agreement or does the country of origin fall under Most Favored Nation (MFN) status?
My perspective is from the United States. I am told we have the most open and liberal trade policies in the world. I would have guessed New Zealand deserves that title. Regardless, barriers are bad and open and free exchange of ideas and trade is good. I will outline some of the benefits of free trade, then counter the arguments against it.
Free trade would make life better for every man woman and child on this planet. Take sugar as an example. It sells in the US for about USD $.50 per pound. On the world market the price is USD $.10 per pound. That means every bag of sugar, cake, cookie, candy, beverage, etc. containing sugar would cost less if the US did not protect the sugar market. If these products cost less, you can either buy more of the product, or have more money to spend elsewhere. In other words, if the cost of goods goes down, a person can buy more with each unit of currency.
There would be more jobs and opportunities in transportation. If I can buy sugar from Cuba for less than the domestic production cost, transportation becomes a bigger factor. Those specializing in freight and inspecting goods would have more work. More work should mean more jobs.
If I am a domestic producer, and I am losing market to imports, I will be forced to become more efficient or find another way to make a living. "Necessity is the mother of invention." If we hide behind trade barriers, there is not as great an incentive to improve.
More trade means more communication and opportunities to learn about new ideas. If I am trading with people in China, I must understand enough about them to conduct business. By visiting and negotiating, we develop relationships. Through trade we can create a global village, whereas with trade barriers, we put up walls between countries.
I can not say for certain our government is the best. I think a democracy is better than a dictatorship. If we open up we could see the advantages and disadvantages of various governments and policies. We could improve and set an example for others.
Finally, if there is heavy trade between two countries, there is interdependency. This relationship lessens the chances of war. If there’s enough going on between two people, there will be differences and arguments, but nothing strong enough to lead to bloodshed.
I'm here to argue that the world would be a better and safer place if we tore down the barriers.
What I want conflicts with the protection and security politics leans towards. Politicians try to please as many people as possible. They comfort their constituents by offering protection from cheap imports. This does not make sense. Some good people might lose their jobs if they can not meet the competition, but that does not offset the benefits of cheaper prices. If company X can produce widgets for $1, and company Y produces the same widgets for $2, company Y needs to change what they are doing, or get out of the business. If company X can only supply so much at $1, maybe there could be a market for company Y. The fear is that once company Y goes out of business, company X is free to raise their price. I would argue that competition would keep company X from raising their price.
Taking this a step further, by having open markets, there is more competition. More competition makes it harder to monopolize and take advantage of a market.
What if an industry is subsidized by a government, and they essentially dump goods on our market? This is the fear politicians thrive on. If Japan subsidizes their steel industry and they can sell steel delivered to the USA for less than it can be produced the Japanese will have to pay for the differential from somewhere. If they honestly can produce cheaper, then we need to learn how they do it. If they are truly subsidized, then in the long run they are hurting themselves. If they give us enough cheap steel to close our steel industry, then cut us off, free trade and competition will replenish our supply (possibly at a more reasonable market level).
The force squelching free trade is fear. The fear of losing your job or being driven out of business is real. Some consider competition as an inspiration. Others stress out over the thought of it. Bottom line, the better you understand free trade, the less the fear.
What I am suggesting would take guts to implement. I am not a political animal. This issue inspires a passion inside me. I will gladly be a workhorse in the fight for free trade.
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