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Free Trade: Is It Desirable?

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Many Americans have started questioning the wisdom of free-trade accords at a time when the U.S. government is all set to push free-trade agreements with Colombia, Panama, and South Korea.

Recent surveys have revealed that a large number of Americans hold free-trade policies responsible for the loss of millions of manufacturing jobs that have moved overseas.

High Cost of Free Trade



Many critics refuse to find any fault with the concept of free trade itself. Instead they blame the government’s approach in enforcing the free-trade agreements with other nations.

While free trade has been able to bring down the prices of household goods in America, the cost of these deals has been borne by exploited laborers overseas. According to numerous recent reports, some workers in Jordan’s apparel factories were toiling under slavelike conditions. Sadly, Jordan may not be the only country where the government is indifferent to the plight of workers.

Americans’ Fears

Americans who not long ago took pride in the status afforded by their nationality are increasingly feeling like losers and victims due to free-trade policies.

A Fortune survey of 1,000 adult Americans conducted in January found that 68% of Americans believe that it is their trading partners, not they themselves, who are benefiting the most from free trade. Moreover, 78% think that free trade has made things worse for American workers.

Americans’ fear has resulted primarily from the loss of jobs and reduction in wages. But it is also fueled by the flood of cheap products from China, illegal immigration from Mexico, and the housing bubble and credit crunch at home.

Economists’ Observations

While average Americans have long been skeptical of the benefits of free trade, American economists have typically viewed free trade as a force to up productivity and create higher-skilled jobs offering better pay. The academic establishment’s unabashed support for globalized commerce has led all recent U.S. presidents to pursue a free-trade agenda.

Doubts, however, have even started creeping into academic circles, and many economists are rethinking the impact of globalization on domestic markets. Economic observers are increasingly concerned about the minute number of individuals who clearly gain from free-trade policies. It is feared that only a small group at the top is not affected adversely by the drop in inflation-adjusted earnings.

How Free Trade Harms

Today, corporations typically seek out the cheapest labor and the governments that care least for their workers’ rights. Free-trade agreements with such countries enable them to ship cheap products made by their low-wage workers to the U.S. while simultaneously allowing them to block the entry of U.S. products into their markets. As a result, the U.S. trade deficit has risen sharply — more than $800 billion this year alone.

Moreover, these agreements also compel U.S. workers to accept reductions in pay and benefits. Without such sacrifices, their employers find it difficult to compete with low-wage foreign producers. No wonder, then, that salaries and wages in the U.S. today account for the lowest percentage of the country’s gross domestic product since 1947.

A Challenge to Leadership

About 80% of Americans believe the government has not done enough to help domestic workers in their struggle to hold on to jobs against the onslaught of foreign competition. Though most political leaders will not be able to halt the march of global commerce, leadership is needed to help Americans restore their faith in their abilities and sustain the economic security achieved by centuries of effort since the nation’s founding.
On the net:Economists Rethink Free Trade
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