In the Will Farrell movie “The Campaign,” both candidates find themselves heavily pressured by a shadowy company that seeks to bring Chinese companies to America, paying workers only a few cents an hour (Yahoo Movies, 2012). Is international trade a serious issue in the 2012 election? What are the benefits and drawbacks of globalization for America? And do President Obama and Governor Mitt Romney have solutions to deal with the high costs of globalization?
In 1776, Adam Smith published The Wealth of Nations, where he outlined the case for free trade. “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The taylor [sic] does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a taylor.” This is why “the economic fortunes of countries are intertwined via trade, foreign direct investment, and financial capital flows (Helpman, 2011, 1).” But Helpman also notes that such interdependence can enhance or weaken a country’s economy.
According to the office of the U.S. Trade Representative “The United States is the world’s largest economy and largest exporter and importer of goods and services….U.S. goods and services exports supported an estimated 9.7 million jobs in 2011 (USTR, 2012).”
But international trade is not without its costs. According to the American Federation of Labor and Congress of Industrial Organization (AFL-CIO) we have been importing more from China than we have exported there. “Trade deficits matter: 2.7 million U.S. jobs have been lost over the past decade due to our nation’s growing trade deficit with China,” Connell (2012) writes. These losses occurred all over America, in a variety of sectors.
How can Americans reap the benefits of international trade, while offsetting the job losses that come with it? President Obama and Mitt Romney both propose confronting China about their financial and commercial practices, but propose different ways of tackling the problem.
President Obama has taken its case against Chinese tariffs (taxes on foreign trade) and dumping policies (flooding the market with cheap goods) to the World Trade Organization on several occasions, on cases ranging from tires to auto parts (Fox Business.com, August 16, 2012; Mason, 2012), and won. He also achieved congressional ratification of several international trade treaties signed by former President George W. Bush which had been languishing in the legislative branch (Fox Business.com, August 16, 2012).
As Gerard Dumenil and Dominique Levy of Le Monde write “President Barack Obama has made it a key issue of his reelection campaign. There is a new word, “insourcing,” the opposite of “outsourcing” or sub-contracting. The idea is to return industrial production to national territory (Dumenil and Levy, 2012).”
Obama backs the “Bring Jobs Home Act [which] would provide a 20 percent tax break for the costs of moving jobs back to the United States and would rescind business expense deductions available to companies that are associated with the cost of moving operations overseas (Barrett, 2012).” This would amend the tax code to end tax breaks for companies that outsource American jobs.
Governor Romney has promised to designate China a “currency manipulator,” accusing Beijing of artificially lowering its yuan to make its products cheaper than those made in America (Kitfield, 2012; Lynch, 2012).
Romney also hopes to expand free trade to the Middle East, allowing more Muslim countries to trade with Americans (Romney, 2007). On his 2012 campaign website, Romney calls for free trade, including getting Trade Promotion Authority (the ability to fast-track free trade negotiations without Congressional input), and supporting more trade with Asia in the Trans-Pacific Partnership (www.mittromney.com/issues/trade). He does not support the “Bring Jobs Home Act” as some business groups fear it would reduce our competitiveness in the international arena and complicate the tax code (Gerard, 2012; Barrett, 2012).
In conclusion, both candidates are both advocating aggressive international trade positions, though they differ on the specifics. The two nominees have a plan, but both can take positions as divergent as the candidates in the movie “The Campaign.”
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Dumenil, Gerard and Dominique Levy, “Return to Industrial Production May Be the Way Ahead; Does It Matter Where the Factories Are?” Le Monde Diplomatique, April 21, 2012, accessed August 28, 2012 http://www.counterpunch.org/2012/04/06/does-it-matter-where-the-factories-are/.
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