Bio: Founder of
Citizens for
Equal Trade

The U.S. Trade Deficit is Illegal, Unconstitutional, Unethical and Violates the World Trade Organization (WTO) Agreement. Now more than ever before there is enough data to support such claims. Data currently shows that the Trade Deficit:

1. has an 84% correlation to the U.S. national debt [1, 2].
2. has allowed foreigners to now own over 15% of all U.S businesses while proportionately stifling U.S. job growth in hiring only 3.6 percent U.S. workers [2, 3]
3. has cost over 3.6 million jobs losses [2, 3]
4. promotes uncontrollable Economic Global Greed violating WTO agreement costing U.S. business failures and significant job losses [2]

These are only some key data results now available, unfortunately there is even more data on why Free Trade is broken and a rip-off [4, 5, 10]. Americans did not sign-up for this, and no longer want any part of this failed policy [5]. Unfortunately, without a highly publicized legal action, true trade reform may be an insurmountable task because of the dysfunctional U.S. Congress.

Therefore, if you are in a position to petition the Supreme Court in this regard, please contact the author for help in doing so. Otherwise the author requests the reader to send this article to their representative and sign our petition [6].

The Origin of the Illegalities of the Trade Deficit

Item Number 1 is the major issue for legal action. Although obvious to many economists, quantifying the fact that the trade deficit increases the national debt [1, 2, 4] now allows us to make legal complaints. It means that U.S. citizens are subsidizing the trade deficit. All the reasons why the trade deficit increases the national debt have been described qualitatively [2, 7] and mathematically [1, 2] in our prior articles. This fact means the trade deficit is a rip-off [4] because it amounts to a Reverse Tariff Debt [
2, 7]. For simplification, we described that portion of the National debt caused by the trade deficit as a Reverse Tariff debt [7]. With that in mind we use this definition to simplify our explanations on why the trade deficit is illegal and unethical.

Trade Deficit Ethical and Legal Questions

The key ethical greed issues related to the trade deficit are [2]:

1. Currency manipulation by U.S. trading partners, 2) Excessive Job outsourcing, 3) Product subsidies by foreign governments, 4) Unfair non tariff trade barriers by our trading partners, 5) Lack of intellectual property rights protection, and 6) and the ever growing enormous problem of product counterfeiting (mainly by China) [11].

First we see that because of the Reverse Tariff Debt U.S. citizens are in part subsidizing these ethical problems related to the trade deficit itself. What motive does China have to stop for example product counterfeiting when it helps their economy? In effect, U.S. citizens are enabling job outsourcing, currency manipulation, product counterfeiting, and so forth. This has strong ethical implications for tax payers. Ethical issues lead to legal questions.

Does a Trade Deficit Violate Common Law? Under common law the trade deficit amounts to stealing money from people because U.S. citizens are forced to pay the Reverse Tariff Debt [7]. Why for example, should I have to partly pay for someone else’s purchase? Free trade policy is a big rip off [4].

Does it violate the WTO agreement? The agreement between our trading partners requires elimination of tariffs and quotas on most (if not all) goods and services traded between them. However, this is not the case since U.S. tax payers do pay a tariff, a “Reverse Tariff” on imported trade deficit goods [2, 7]. Therefore, any trade deficit violates free trade WTO policy!

Does it Violate Constitutional Law?

Violation No. 1: We have identified and verified a technicality with a constitutional lawyer [8], a violation on tax of interstate commerce. This constitutional law states (Article 1, Section 9, Clause 5): “No Tax or Duty shall be laid on articles exported from any State.” The argument is then, U.S. taxpayers end up paying a “Reverse Tariff” [7] duty on moving imported trade deficit goods from state to state. In other words, U.S. citizens are paying an interstate Reverse Tariff duty. However, legal council has also cautioned [8], when constitutional law is violated that the courts may choose not to rule citing a “Political Question Doctrine,” if the court feels “it is prudent not to interfere.” The final counter argument is, mathematically we show there is a solution, that of equal trade which does not have these tax consequence. The constitution is here to protect us. Furthermore, a test case would get the attention of legislatures who would then be forced to act.

Violation No. 2: Another interesting possible constitutional violation is related to Article IV, Section IV of the U.S. Constitution, where the federal government has a required duty and obligation to remove foreign invaders from U.S. soil. One might interpret that the trade deficit allows for a foreign financial invasion. Foreigners must reinvest trade deficit profits in the U.S. due to the WTO currency agreement. Such reinvestments have led to excessive foreign ownership of U.S. business. In the last study on this subject we are aware of, a Grant Thornton report [2, 3] found “total assets at foreign-owned companies increased 15 percent to $9.2 trillion in 2005 from $8 trillion a year earlier and was more than three times the 1996 total of $3 trillion. Foreign-owned assets totaled just $37 billion in 1971.” This ownership has also only led to a deplorable 3.5 percent U.S. job creation [2, 3]. Right now foreigners own $7.5 trillion more of us than we do of them made possible mostly by the trade deficit.

One interesting thing observed in our correlation study [1, 2] was that if the trade deficit went to zero, the tax consequences (i.e. Reverse Tariff) would also diminish. This indicates that equal (i.e., balanced trade) would in fact be an excellent resolution to the trade deficit tax loss problem and is consistent with WTO policy. Historically, there was a proposal called the Balance of Trade Restoration Act of 2006 originally suggested by Warren Buffet. While this has been ignored by Congress, there is currently some effort to push a modified version of this proposal [9], which we support.

Summary

We feel if equal trade was implemented [9], it would not violate the WTO agreement, create millions of U.S. jobs, help pay off the National Debt, discourage currency manipulation and most other WTO violations, reduce separation of wealth, reduce housing and business failure rates, stop foreigners from buying up the U.S. and help assure America’s future.

No country can long sustain large trade deficits without putting its economy at risk. This article is a call for legal action. Such an action is needed to force Congress to adopt strong and just trade reform in order to secure America’s future.

Dr. Alec Feinberg is the founder of Citizens for Equal Trade (CET). He is a reliability economist and author of the book, The Truth of the Modern Recession, Root Causes and Reliable Solutions and inventor of Reliability Economics for the layperson, congress people and economists. He is also a member of the Coalition for a Prosperous America (CPA).

References:

1. Trade Deficit’s Reverse Tariff Increases the U.S. National Debt – an 84% Correlation!, Dr. Alec Feinberg, August 19, 2010. http://economyincrisis.org/content/trade-deficit%E2%80%99s-reverse-tariff-increased-us-national-debt-%E2%80%93-84-correlation-0
2. The Truth of the Modern Recession, Root Causes and Reliable Solutions (a not for profit book), by Dr. Alec Feinberg, Published by WE-Economy Press, 2009 (July 2010 update).
3. Biggest Threat to America’s Future –The U.S. Free Trade Deficit, Dr. Alec Feinberg, June 14, 2010, http://economyincrisis.org/content/biggest-threat-americas-future-us-free-trade-deficith -0
4. U.S. Trade Deficits Rip-Off America and Its Workers, Kenneth Davis, July 27, 2010 http://www.economyincrisis.org/content/us-trade-deficits-rip-america-and-its-workers
5. Free Trade Doesn’t Work: What Should Replace it and Why, by Ian Fletcher and published by the U.S. Business & Industry Council, 2010.
6. Petition may be found at CitizensForEqualTrade.org
7. Reverse Tariff – Economic Crisis Due to Free Trade’s Flaw, Dr. Alec Feinberg, August 2, 2010, http://economyincrisis.org/content/reverse-tariff-economic-crisis-due-free-trades-flaw
8. Private communications with Wesley Oliver, Professor of Constitutional Law, Widener University, March 2010
9. Massive Failure On Jobs By America’s Leadership, by Kenneth N. Davis, September 7 2010, http://www.economyincrisis.org/content/massive-failure-jobs-america%E2%80%99s-leadership
10. Good source for such articles is CPA’s website www.TradeReform.org
11. Counterfeiting: Many Risks and Many Victims, Daniel Bukszpan13 Jul 2010, http://www.cnbc.com/id/38229835/Counterfeiting_Many_Risks_and_Many_Victims

Print PDF