America’s Trade Policy Failures
It is no secret that a sound trade policy must be centered on American-made goods hitting the shelves overseas. Every president of the last hundred years, Republican and Democrat, has understood this premise and searched for ways to boost exports. Recently though, their plans have increasingly failed, and the U.S. trade deficit is crippling the American economy.
It isn’t a failure of one man or one plan; it’s the failure of a trade system evolved out of greed and misplaced truths. It is the failure to protect the American market from an overflow of cheaply produced imports from countries with no regulations.
President Bill Clinton spoke passionately about trade before winning the 1992 election. Recognizing that Japanese electronics, automobiles and other goods were saturating the American market, Clinton vowed to challenge the imbalanced trade customs of Japan but these issues were never addressed. Instead, Clinton signed the biggest – and widely believed to be the most damaging – trade agreement in U.S. history, NAFTA. In addition, trade with China was normalized, and American stores have been filled with hordes of Chinese merchandise ever since.
Presidents George W. Bush and Barack Obama have continued this trend in the ensuing years. More trade pacts that resemble NAFTA have been pushed through Congress, such as last year’s trade deal with South Korea (KORUS FTA). These treaties are always promised to increase American exports to other countries involved, yet each and every time the exact opposite proves to be true.
In 2009, the year of the economic collapse, the manufacturing share of overall employment fell to 9.5 percent in the United States. The global average for nations with advanced industrial economies was 16 percent that year. Germany, a thriving economic powerhouse right now, was at 19 percent. Today the U.S. has a 7.8 percent unemployment rate; Germany is at 5.4 percent. The correlation is not a coincidence.
As exports go, so too does a nation’s manufacturing base and economy as a whole – our leaders seem to understand that much. But the promised long-term benefits of “free trade” are not developing, and the U.S. is sinking further and further into debt. Politicians may believe people are simply not paying attention, but these empty guarantees about boosting exports through “free trade” are suffocating the economy. When jobs and homes are lost in the midst of this policy, these broken promises will have the attention of everyone.