It Ain't Free Babe

The president just announced a tariff on tires imported to America from China. (Link right below).
Obama Opts for Import Tariffs on Chinese Tires...

The Stoop gives a shout of approval to the president and supports his standing up for America's workers in this move.

A little background:

Remember the early '90's, and the debates over NAFTA & the merits of the U.S. being a member of the World Trade Organization?

Two men stood up to warn America about the evils of NAFTA & the WTO. Ross Perot & Pat Buchanan.

It turns out Perot and Pitchfork Pat were correct.

I got to test Perot's & Pat's theories when I took an International Trade class in law school. From reading the NAFTA and WTO agreements, I came to the conclusion that there was no such thing as free trade, and that NAFTA & the WTO were more rigged that Boston College basketball games were in the late 1970's. (Admittedly, my law professor did not share the same conclusion.)

In a nutshell: to have free trade you need trading partners that operate under the same rules. In America we have laws that guarantee a living wage, health and safety standards, union protections, pensions and so on. Mexico does not have any of these things. How can we enter into an agreement when there is no similar starting line?

Moreover, American industries were created by free enterprise. In contrast, most WTO countries/governments heavily subsidize their industries and some engage in practices like "dumping" which is designed to put American workers on the endangered species list.

What is dumping? The best way to define it is to show you an example. Take the steel industry. Japan & Brazil are known for dumping steel into the U.S. What happens is that Japan will sell steel in the U.S. for less than what it costs Japan to make steel.

You may ask, what kind of business plan is that? How can you survive when you sell a product for less than what it costs to make that product? And you would be correct. But what Japan does is have the Japanese government subsidize the steel companies to cover the losses.

Why does the Japanese government subsidize its steel industry to cover the losses? Because the whole idea driving this thing is to force U.S. steel mills to close down, because they are not able to compete with the Japanese steel prices. Which is exactly what happens. Once the U.S. steel mills close, and the American worker gets the pink slip, the Japanese jack up the price on steel.

How can an American steel industry compete on its own against foreign companies that receive massive subsidies from their sponsor governments?

It can't. And what is so free about that?

Finally, I knew free trade was a total bullsh*t concept when I asked my law professor why are the OPEC nations allowed to get together and agree to limit the amount of barrels of oil to be produced during a certain time period? Under free trade agreements, why don't they have to act individually as nations, to establish a free market, as opposed conspiring together to limit production?

Great question, was the professor's reply. Oil is excluded under the WTO because it is a product that comes from the ground, he explained. Then and there, I knew free trade was an illusion. Because it comes from the ground ? I don't care if it comes from a horse's ass, its still a product, that is bought and sold. The exclusion did not make sense to me.

And neither does free trade.