Is Foreign Trade Getting Better or Worse in the United States - Essay Example

Is foreign trade getting better or worse in the United s? Introduction Life in the US has become very difficult for the commoncitizen. Consumers are currently paying high taxes on automobiles, food, industrials inputs, clothing, and other good and services. As this goes on, their representatives on trade issues are fighting in keeping the policies so that the situation remains the same. The government has tried the much it can in reducing the foreign and domestic taxes, but all are unsuccessful, and this will remain irrational and difficult even in the coming period. The impact of the high cost is because of the American trade policy where they lowered some tariffs but introduced others which overruled. Similarly, the policies in place act as a barrier to imports, hence hindering foreign trade. It also removed the non-tariff barriers on the allegations that it brought unfair trade and remained in place in goods such as chemicals and steel. Therefore, this paper will evaluate the American foreign trade and its progress. US Foreign trade and its Implication The measures undertaken by the US government in establishing a foreign trade policy varies and has their pros and cons. However, one thing remains common, unflinching and staunch defense by the American government in world free trade agreement negotiations. It is observed that gains only come from new access for American investment and export. Imports have unfortunate prices, which Americans have to pay for. For instance, the negotiation for Trans Pacific Partnership (TPP) and Transatlantic Trade, and Investment Partnership (TTIP) gained momentum, and many thought the president was having the will of expanding the Americas exports by supposing free trade renaissance. Unfortunately, it uniformly failed to report that firms resistance to negotiating partners call for lower American trade barriers was a key reason for agreements continued challenges (Nivola, 2012). There were also no reports that such barriers are only helping certain companies in America that are connected and at the same time injuring majority of the American firms and individuals. Trade and reciprocity The US foreign and domestic policies, as well as society and economics, have changed over the years. However, the trade policy remains as mired in the 20th century. It is also evident in TTIP and TPP negotiations and their outcome. Some things such as Americans trade policy can not go well with age. Because of this, there are problems that it is associated with in the international trade. First, US trade policy is an economical ignorant. Adam Smith penned "The Wealth of Nations" which brought nearly economic consensus that supported the elimination of trade barriers regardless whether other countries did the same. This is an indication that there is no policy issue which economist agrees on. There are evidences showing the value of free trade and free markets. Similarly, other organizations have conducted a study, which shows the importance of liberalizing the US market. Many benefits are associated with free trade and markets as per the findings of Brookings, Heritage, AEL among others (Ostfeld, 2011). Currently, the opportunists who are taking advantage of the trade barriers have created myths, which they use in influencing policy makers that liberating the market will kills the US domestic industries (Lyle, 2011). Therefore, imposing trade barriers will work against the US foreign trade as it locks out potential players that can move its economy. The regional and small bilateral deals are not doing well. Recent reports by Asian Development Bank found that the entire TPP is risk of collapsing because various countries are demanding protectionist exemption from the deals general free trade and non-discrimination rules (Kim, 2011). The larger members of TPP such as the US and Japan are proceeding along the bilateral line as they threaten and demand single-undertaking approach that TPP to adopt. The countries involved in the negotiations have vested interests that bring conflict of interest. This paints a gloomy picture on US foreign trade as most of its key players in TPP are developing interests that deviate from the common agenda. It makes it difficult to come into consensus, therefore, posing a challenge. Bloomberg documented the ADB and TPP current problems emanating from the participants. Some of the demands relate to Japan’s agricultural protectionism and Malaysian imposition of discriminatory regulatory barriers on tobacco (Kim, 2011). Despite all these, the demands originate from Washington and they include: Sugar protectionism: the US has resisted calls to liberalize tariffs and quotas on sugar imports and also refused to reopen US-Australia FTA that excludes sugar from the agreement Textiles, footwear and apparel: The Obama administration has refused a request from Vietnam and other exporters for lower US tariffs on clothing, shoes, textiles. The US has demanded complicated rules that narrow the goods qualifying to access the US market. Automobile: US has fought Japan over US tariffs on automobiles. It taxes 2.5% and 25% for cars and light trucks respectively. This has become a problem and delayed US - Korea FTA for many years after being originally signed by the Bush administration. The above issues affect consumers and threaten completion of TPP. They continuously dumbfound the prospect and the gains made in strengthening the trade ties with the US and the other countries. This makes the future US trade policies very gloomy with no expected positive results. Thirdly, the current foreign trade policies are messy and archaic. NAFTA, KORUS and US FTA contain different schedules dictating the timing and level, new market access to individual FTA partners services and goods (Kim, 2011). Rules of origin and other trade commitments also vary across agreements, therefore, creating impenetrable rules and regulations (Cushman, 2006). This makes US tariff code a hard nut that does not allow assimilation and penetration of other countries. It makes the same product be subjected to many different taxes and rules based on its origin and the year it enters the country. US businesses make sourcing decisions on FTA rules, but not products actual value. This makes them spend millions of dollars in determining and evaluating the rules. The process is not only costly and inefficient; it is outdated in the 21st century with the ever-changing global supply chain. Currently, products are outsourced from different locations and assembled in another region. Sourcing patterns also change depending on the market developments (Lyle, 2011). US foreign trade policies prevent such dynamism hence hurting the US companies and consumers. US trade policies reflect vertical manufacturers and old-fashioned notions of bilateral trade of nations, which is surpassed. Fourthly, US free trade policy has proved to be a horrible tool in achieving and sustaining public support free markets and trade liberalization. Focusing on exports gives many Americans the unwarranted impression that trade policy is little more than tools to large multinational exporters and investors (Kim, 2011). This happens at the expense of American workers. Therefore, it is not a way of achieving grassroots support for the important economic policy. Additionally, the focus in exports and resistance to import liberalization breeds public misunderstanding and distrust. There is nothing wrong with pursuing new markets for US as the exports contribute the US economic growth and creating jobs. However, US relentless with exports confuse the public and reinforce bad economy. It also creates unnecessary and large openings, which misleads protectionists (Kim, 2011). Finally, the current approach of US trade policy is immoral because of government voluntary economic exchange intervention on behalf of some citizens (Folsom, 2003). This aspect of the trade policy displaces others, and it is also unfair, inefficient and overlooks the rule of law. Trade barriers on sugar, clothing, automobile, as well as footwear, are politics and barriers to coercion over free choice and economics (Kim, 2011). USTR is fighting policies which are because of productive resources being diverted in achieving political ends and its taxes unsuspecting consumers (Kim, 2011). The immorality depicted has a cost since Americans paid over 10 billion dollars in 2011 on clothes tariffs (Kim, 2011). Others were imposed on automobile and shoes. The tariffs also increase the cost of homemade products, hence consumers have to pay more for everyday use products such as butter, sugar, ice cream, milk, apparel than their international counterparts. Conclusion US foreign trade is getting worse. There is need to re-evaluate the policies in place, which will ensure it places measures in place to promote the growth of the economy. There are very simple and better ways forward for US trade policy. One of them is to immediately and unconditionally eliminate the tariffs on the basics such as clothing, shoes, food and industrial inputs (Kim, 2011). For US to remain globally competitive, it has to remove the tariffs on industrial inputs since US manufacturers use them in maintaining their competitive nature but the situation has since changed. US also needs to phase out other tariffs for a short transition period to match a shift about the domestic trade liberalization (Kim, 2011). Doing this will ensure US places itself back in the forefront of global economic policy and in line with longstanding economic doctrine. Similarly, must be unilateral elimination of tariffs (Cushman, 2006). Although some have argued that this will flood unfair imports that will destroy US industry, it is not true because there are already laws in place, which address such situations that are biased on protection. Most imports are fairly traded hence there are no options of unfair game play. US also needs to pursue fundamental reforms in its trade remedies law in ensuring they address unfairly and injuries, imports and consider the broader public interest (Bernstein, 2006). Government should be vigilant because the American consumers pay unfair trade duties. Additionally, the government needs to reform regulatory laws such as elimination of the US subsidy program and other forms of regulatory protectionism (Kim, 2011). Some of them include Lacey act and Dodd-Frank rules. All these policies are barring competition, hence raising prices and distorting domestic and global markets. References Bernstein, M. (2006). The more trade grows, the worse U.S. port congestion becomes. World Trade, 19 (8), 46-52. Cushman, T. (2006). UNTANGLING THE TRADE MESS. Builder, 29 (2), 140-144 Folsom, G. A. (2003). The conduct of United States financial diplomacy in the negotiations to build the enterprise for the Americas initiative. (Order No. 3080615, The Johns Hopkins University). ProQuest Dissertations and Theses, 372-372 Kim, T. (2011). The effects of taxes on foreign direct investment in the united states. (Order No. 3009130, Michigan State University). ProQuest Dissertations and Theses, 140-140 p. Lyle, G. (2011). Consumer goods and retailing in the PRC: Getting U.S. goods on the shelves. Business America, 117 (1), 12. Nivola, P. S. (2012). Minding their business: Reflections on regulating unfair trade. The Brookings Review, 10 (4), 36. Ostfeld, L. R. (2011). Here and there: Representing U.S. clients in a foreign jurisdiction and foreign clients in the United States. GPSolo, 28 (3), 8-12. Read More