The House voted today to expand trade with Peru. Good for them, and good in particular for those Democrats who voted for openness, competition, and improved international relations.
Trade is progressive: it builds bridges between communities, creates jobs, and frees people to do what they do best. The history of Massachusetts from the Boston Tea Party, held not coincidentally in our port; to our whalers, and the clipper ships that pioneered trade with China; to our global leadership in finance, technology, education, and health care, among other industries, is a history of trade. Exchanges have made us the second richest state in America, and one of the most prosperous communities in the world.
There are costs. Competition produces losers as well as winners. The constructive response, however, is to figure out how to improve one’s game, not stick one’s head in the sand. Ask any ostrich: the real world catches up to one.
The NYT reported on the vote as follows:
Defying appeals from labor leaders, environmentalists and foes of free-trade, nearly half the Democrats in the House joined today with the Bush administration’s backers to support a trade liberalization agreement with Peru that the White House hopes will lead to the approval of future trade deals.
The vote came this morning and followed several hours of debate that exposed a deep fissure among Democrats. On one side were veterans from declining industrial areas of the Northeast and Midwest and younger critics of globalization.
On the other was the House Speaker, Nancy Pelosi, and other leaders arguing that trade brings benefits to many Americans and that the deal was worthy of Democratic support because it requires Peru to protect labor rights and the environment.
Pelosi is right. The sooner those Democrats who voted against this agreement realize the best response to globalization is to rise to its challenges, rather than run from them, or pretend they will go away, the better. [You can find links to the roll call in this post from esteemed BMG contributor gossage.]
I guess its safe to say that your job is safe. Education or government? If your not in one or the other you would have no taste for FREE AND UNFAIR trade after 20 years of lies and distortion. Go Wall Street!
I’m just saying that we have to face facts, not ignore them. If there are people in Peru who are willing to do a job, great. Let’s put them to work. The point is that we don’t want to put ourselves out of work at the same time. I think our history suggests it is not a zero-sum game. (In fact, I argue, trade has been very good to us, especially in Massachusetts.) What do we do need to concentrate on is the things we do best. Sure, that includes education, but my list wasn’t exhaustive. It includes lots of other things as well … and jobs still to be invented, new companies to be launched, new initiatives to be pursued. That’s part of our challenge.
If I didnt know better I would swear you had to be 12 years old. Actualy I dont know better. Are you?
Too funny. I’m still smiling. I wish I was 12 years old. Your average 12 year old has a very clear-eyed view of the world.
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To your point, it is pretty rich for someone who thinks a sales tax is a form of export subsidy to bandy around words like “naive,” but thanks for the suggestion.
What am I to make of a statement like yours ..
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” … and jobs still to be invented, new companies to be launched, new initiatives to be pursued. That’s part of our challenge.”
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To summarize, it appears that you visualize that the benifits of more “free trade” far outweight the real negative consequence, even though you can not see any of the benifit because it does not YET exist.
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Great theory BOB. If you arent 12 years old then certainly you must be an educator or employed by government. I notice you ignored every post that shot down your idea that Peru’s 19& VAT warped the playing field .. ah well; rose colored glasses and all.
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The real challenge is enduring your glassy eyed admiration of those who pervert the concept of comparative advantage as it relates to trade. This warping of basic economics is exactly a paralel to the beloved “trickle down” which is now wodely ridiculed after decades of urinating on the working class. Were you also an ardent supporter of trickle down?
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Our only role in this entire charade labeled as “free trade” is to continue borrowing and spending in order to feed the runnaway spiral of endlessly inflating currency. Your labor is not needed, your mind is not needed, you are a pinpoint in a demographic chart.
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BORROW, SPEND; BORROW, SPEND repeat as needed …
No need to worry, the fed will be there like a pusher in the projects with your little brown envelope. Relax.
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What would lead you to assume that these hypothetical industries of the future wouldnt also be immedietly offshored if you are still naive enough to believe it is somehow possible that they would be created here? Last I checked capital is LEAVING country and in a hurry.
For innovation I would look to the Saudis or China. Thats where the cash is and they seem to be better iatuned to good ways to use it.
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or just a treaty that legally writes lots of great benefits in for donors to their campaigns?
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You know, Tom Friedman once said he didn’t care what the treaty’s wording included, if “Free Trade” was in the title, it was a good thing. And that leads me to think that any “Free Trade” agreement should be viewed skeptically.
You mean sink to its depths, don’t you? Free trade is all too often a race to the bottom.
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I freely admit I’ve not read the Peru agreement, so what I say here need not necessarily be about Peru specifically…
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…but true “free trade”, unfettered, is always going to be a race to the bottom. The plutocratic ownership class will control all the resources, and everybody else will be as good as chattel.
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The basis of capitalism is that the cheapest possible resource to do a job will generally be the one chosen. (Except for companies that pride themselves on nationalism (“Made in the USA”) or being ecologically friendly. They choose more expensive alternatives in the hopes that that will get them more business and justify higher rates.)
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The reason that this has not resulted in the above-described chattel situation in this country is because we have extensive regulations (e.g. no dumping toxic chemicals in the water supply, no child labor, reasonable work weeks). These regulations make some resources more expensive, to the point that companies will not hire 8-year-olds or pollute the environment extensively; paying the fines involved makes this an expensive proposition.
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But if you open up free trade with countries lacking these regulations, suddenly there’s much cheaper labor and a place to build your factory where they’ll look the other way if you have some inconvenient chemicals.
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We need fair trade treaties, not free trade treaties. We need treaties that put at least some onus on the other parties to implement responsible regulations. Do they need to match all of our regulations? Of course not; and how much gets imposed on them should be judged on a case-by-case basis. But free and unfettered trade is not the way to go.
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Having said all that, I note that your quote says that Pelosi claims that “it requires Peru to protect labor rights and the environment.” How much is this actually the case? I need to investigate this treaty before deciding how I feel about this specific case.
Completely free trade makes about as much sense as a completely free domestic market. The Great Depression, among other tragedies, established that is a bad idea. We need a global market with regulation (of course, there are few effective global regulators at present, but that’s a different discussion). It may be that there is not enough regulation in the Peru agreement, but at the moment, given the world we live in, I’ll take more trade and closer international relations, and the other benefits I described, rather than less.
So much to say but need to be brief-
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First, the assumption that everyone in the world needs to share our ideas of environmental and labor fairness is potentially flawed. Maybe, just maybe, our labor laws are far over-tilted in favor of the worker. And maybe that’s why any possible labor that can be outsourced, well, is. And who are we to dictate what China’s (local!) environment ought to look like? (Seen it?)
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Maybe this is the world’s way of bringing about federalist corrections that federalism would have brought about had we not squashed it ourselves. In any case, to think that you can stop it is to think that you can control the world. Arrogant much? Good luck.
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Second, Bob – I think you are great, I really do and I appreciate that you haven’t been quite as cold to me as others here, and I don’t at all gloat in the fact that you are now getting a taste of what I regularly get but – (wow, big caveat huh?) – what on Earth are you talking about with the depression?
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My understanding is that the constriction of the money supply, brought on mainly by the gold standard, caused and perpetuated the depression. Much of this was precipitated by PROTECTIONISM, as a reaction to free trade. So it wasn’t free trade, it was precisely the curtailment of same.
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Because I don’t even pretend to know everything, I checked wikipedia for alternate explanations and came up with basically nothing to support you:
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(Granted that wikipedia is not 100% reliable, show me another source and I’ll take it. I have several within arms reach but can’t easily link them.)
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I’m going to omit the “third” marxist explanation because it is so incredibly, repetitively, naively cliche and also it doesnt help you I dont think, and also because I’m constantly calling you guys marxists and I’m trying not to be a jerk. Heh.
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What I meant when I referenced the Depression, was that, to my mind, it is a lesson in the value of a certain amount of government regulation. Seen in broad strokes, the depression was a failure of our capitalist system. The New Deal was a response: introduce additional regulation, to help businesses operate more effectively i.e. with some rules, and fewer wild swings in the business cycle. Result: a system that is fundamentally capitalist, but has important social (i.e. decided by all adults who vote, rather than by the much smaller number of people who control the corporations) controls. That’s the basic system we still live with. My point was that that is also the system we should follow for world trade, not a pre-Depression-style absolutist laissez-faire. The latter, I think, is the, “complete free trade,” system DC criticized. As to a diversity of views, you’re welcome! đŸ™‚
I think you’ve got the DP analysis not-quite-right.
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While I’d certainly agree that heaps and heaps of government regulation came from attempts to fix the depression, I’m not aware of any current theories that say either a.) lack of government regulation was a main fundamental cause or that b.) the advent of government regulation fixed it.
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Many people believe that the various government interferences of the new deal actually worsened or prolonged the depression, although I still believe it was fundamentally related to the money supply. (alternatively if you are a Keynsian the government should have deficit-spent more)
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I think the depression gave our government (and many others) the impetus to create a ton of disastrous social programs and meddlesome interferences, many of which are still around today, which are hard to eradicate and have done us harm. In any case the new deal etc. had no bearing on the end of the depression but was an independent phenomenon caused by wrongheaded attempts to fix it. (Which never worked as a fix, regardless of whether you believe the new deal was good or bad)
…the Federal Reserve, in its infinite lack of wisdom, withdrew liquidity from the financial system in the early 1930s. Why would they do such a stupid thing? To fight inflation, of course.
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If the Fed had done something similar following the stock market crash in 1987, we’d probably still be living with a similar effect as in the 1930s.
Let me get this straight — invading Iraq because Saddam was a bad man is just fine, but advocating for a treaty that imposes some of our ideals of environmental and labor fairness… well, that’s just beyond the pale! How arrogant!
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Maybe, just maybe, our labor laws are far over-tilted in favor of the worker. I’d disagree, and I’d argue that our labor laws are the reason we work in relatively comfortable situations while Indonesians work their fingers to the bone in sweatshops.
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You want to see Americans race them to the bottom? Sweatshops for all?
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Look, I’m not advocating that we “dictate” anything to anybody. Invading a country because we don’t like the leader — that’s dictating things to people.
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Offering free trade if they meet some pre-conditions isn’t dictating anything to anybody. They don’t have to accept the treaty.
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Furthermore, I’m not suggesting we try to change all their laws overnight. But it’s not unreasonable for us to encourage “harmonization” of ecological and labor laws, in the interest of balancing the scales.
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Money will flow to the place with the cheapest labor and resources. We can let it drag America down, or we can try to lift our trading partners up. What’s your choice?
Exactly what do you think you can do to make China care about the environment? I’d be interested to see expected results vs. actual results on that one, no matter how much effort and resource you put into it. Use the stick instead of the carrot? Yea right.
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Iraq war noun verb iraq war.
Getting other countries to change via diplomatic means (trade agreements being a very important example) is the carrot, not the stick.
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I may not be able to get China care about the environment, but they sure do care about trading with us. If we put a condition on such trade (“we’ll give you extra-favorable trading conditions if you cut your CO2 output by 5%”), then both sides win.
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Both sides winning — that’s what diplomacy is generally all about achieving.
First of all China already has most favored nation trading status. Its going to be difficult to out-carrot that very much. Also, when you do, you’ll further crush whatever domestic operations are benefitting from whatever vestiges of protectionism (if any) that you remove. Is it worth it to you to put a domestic operation out of business in order to incent a CO2 cut in China?
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Secondly, how much do you think it would cost in dollars and lost output to cut CO2 “emissions” by 5%? (note: most people are talking about reducing the rate of emissions growth, not actually cutting emissions). Would we be willing to make trade agreements that essetially give away that much value in real terms? Why? I dont know if you’ve noticed but money and goods are generally scarce resources.
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Finally, as for pollution in China I’m under the impression that CO2 is the least of their worries.
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I believe you want a better world, you just don’t really understand the real limitations, costs and tradeoffs in even attempting your pie in the sky ideas.
1) We just “out-carroted” MFN status with Peru, for what it’s worth.
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2) I really don’t care about Chinese pollution, for the purposes of this thread. You brought China up, and I went along with your example. I would tend to agree that, with China specifically there are probably other ways of addressing this issue. But then, we started off talking about Peru, not China. I don’t know why you brought China into this.
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My original comment in this thread was about generalities rather than specifics. Again: We should be using diplomacy and trade agreements to further a better world for all, not just enabling our ownership class to own more stuff.
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3) As an aside: Most people are not actually talking about reducing the rate of emissions growth; there’s plenty of talk of actual cuts. Hence all the verbiage about “returning emissions levels to 1990 levels by 2020” and such. That’s a cut, unless that language was actually written in 1990, in which case it means to maintain the status quo (obviously).
May the class struggle continue! Someday you should check out where all the big billionaires come from – you might find that a surprising amount of them are self made.
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Feel free to source the reduction talk, I’ll check it out if you do.
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As for China as an example, well, their products are pretty much gobbling up our markets at an unprecedented pace that if I didnt know better would seem to be destined for monopoly. (Maybe Peru could help? đŸ™‚ ) Specifics are often superior to generalities and in any case are useful in bringing theory some small degree closer to reality. I figure China is as good an example as any.
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http://www.uschina.o…
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http://www.census.go…
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http://www.census.go…
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Looks like we are importing $2B of goods annually from Peru approaching $3B and from China the last 3 full years have gone $196B, $243B and $287B of goods.
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Imports from China are growing at a rate of roughly 20 Peru’s per year.
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I’m just sayin is all.
when there was more in eastern Mass than financial services, retail and medicine.
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Yet Bernanke says the economy is resilient.
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I must be simple or something.
Here is an interesting company, for example. There are even more smaller ones.
Your counter-example to “more in eastern Mass than financial services, retail and medicine” is to point out a child daycare provider??
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I’m not sure I see the relevance. Of course there are daycare providers here; they’re everywhere. They’re hardly an economic base, though…
BOB is demonstrating for you the progress that is being made. Without the decline in real wages and in the general standard of living that FREE trade has brought, two income households would not have become the norm and there would not be such great demand for daycare facilities.
Presto. A new INDUSTRY is born.
Modern society has brought us many new industries that help us compete in the new world order. Here is another example
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http://www.goodjobsf…
If it weren’t for these damn DLC Democrats and Republicans, women wouldn’t be working but would be back in the home where they belong!
The company I referenced employs 14,164 people in this country. They are headquartered in Watertown MA. They provide full benefits for all full-time employees. Their most common salaried job pays $53,000. Their most common hourly job pays $24,675. What have you got against people who work in day care, or companies that build large businesses out of day care?
$24k is like 10 bucks an hour isnt it?
That puts them right up there with Home Depot and Wal Mart. Do they offer their employees any benifits, like daycare maybe?
Just wondering …
What have you got against people who work in day care?
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Huh? Where the —- did this come from? What on earth makes you think I have anything against anybody?
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That’s a very Republican sort of tactic, Bob — taking my point as some kind of smear against daycare providers. Frankly, I’m disappointed; I would expect more from a guy whose sig touts Reality-based commentary.
My comment, “What have you got against people who work in day care?” was directed at your claim: “Of course there are daycare providers here; they’re everywhere. They’re hardly an economic base, though…” That seemed sort of derisory to me, which is why I asked what you have against daycare.
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For 15,000 or so people, Bright Horizons is their economic base.
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As to nomad’s point that the hourly workers don’t make very much, I think that’s a fair comment. On the other hand, this company is producing a lot of full-time salaried jobs with benefits in Massachusetts, and we should acknowledge that.
If we still worked in a manufacturing economy, then we would all be unemployed, because we can’t do that competitively here any more than we can grow coconuts for export.
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You really do sell the region’s economy short.
Creating trade alliances and opening markets absolutely makes sense, but only when we demand fair principals on both sides. Removal of tarrifs and other things holding countries back is great, but only if both sides are operating under the same principals: everyone should have the easy ability to join unions, we should demand of all countries (including our own) fair environmental practices and we should demand that decent standards of labor exist with any country we trade with, especially those we give added status too.
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So, just like we try to make America a free and fair society, we ought to only negotiate with countries for trade agreements that are both free and fair. One without the other is, quite honestly, an oxymoron.
Usually your knee jerk far left liberalism comes out but its good to see that you acknowledge the benefits of free trade.
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Your analysis of the Great Depression is flawed though, protectionist tariffs and a tariff war by several great nations in fact caused the Depression not free trade but rather protectionism was the big enemy.
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This deal with Peru helps everyone, lets face it we cannot artificially retain factory jobs, we can’t make outsourcing illegal especially if we want our companies to remain competitive just look at the dying Big Three auto companies and you’ll see what protectionism has done to them. Instead progressive reforms like wage insurance, universal healthcare, and an aggressive push for better new economy jobs, and improving access to college education, will all do what protectionist policies have failed to do and that is protect the real losers from free trade.
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“Fair trade” is a misnomer since it hurts third world countries by leading to less job creation there and defends very few jobs here at home since its a voluntary process and companies will just outsource everywhere. Making “fair trade” the law will not benefit America that much while hurting and stalling the economic growth of developing countries and no good liberal should support that kind of economic imperialism. To be liberal means to support the exchange of ideas, culture, and yes goods across international boundaries and its a fundamental tenent of liberalism.
But keep trying.
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Since you appear to be interested in U.S. history, here is a site you might find helpful. Let us know how you progress. We’ll be rooting for you! đŸ™‚
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I’m glad that we agree, more or less, about the Peru legislation.
Sometime in the last two decades, there was an article in the Wall Street Journal on the issue. According to the article, the nervousness in the stock market began when it became clear that Smoot-Hawley would pass and be signed into law.
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The crash may have begun before the tariff was actually implemented but the relative points in time is largely irrelevant.
but I think the argument that jconway was alluding to, but failed to flesh out, is that the stock market crash was just a “correction”‘ for an overheated economy and everything would have been fine if lawmakers hadn’t panicked and passed protectionist tariffs that launched us into a trade war that was the “real” cause of the Great Depression.
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This argument is frankly not very convincing because foreign trade made up such a small percentage of the US economy at the time. (<5% according to Wikipedia) Other factors, like the the tightness of money supply that led to the bank failures were far more relevant.
An interesting point about globalization: The world was more globalized,(measured by foreign trade as a percentage of GNP) in 1913 than it was in 1999. So the whole post war “globalization” of trade, took fifty years to undo the deglobalization caused by World War One.
Thanks for implying I’m illiterate Bob real classy
…if I’m skeptical about a trade bill supported by an overwhelming number of Republicans and the President, who over the last 7 years has shown nothing but contempt for workers and the environment.
I too plead ignorance about the details of this agreement, but let’s at least consider the context. It’s difficult to imagine that fair trade can exist with the enormous agribusiness subsidies and protectionist measures that are politically untouchable in this country.
We certainly should end protectionist tariffs in the US, i.e steel and hardwood lumber while also ending agricultural subsidies that artificially benefit our farmers.
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What I do not understand though is why you oppose this agreement. Simply because Republicans proposed and supported it does not make it a bad idea, and to be honest Democrats will not only continue to lose elections but they will hurt their country if they oppose free trade. It is vital that we have bi partisan consensus on free trade and globalization being positive things for our country because the tides have already turned in that direction.
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Peru is still industrializing so of course they must be held to less vigorous environmental and labor standards, and free trade gives them the capital to eventually be able to institute higher standards down the road as everybody gradually progresses.
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