We are free traders. We want maximum exchange – with minimum government interference.
Markets always work better the freer they are. Free from all but the barest necessity laws and regulations, and the least taxes possible – up to and including none at all….
“Trade Wars” actually aren’t about trade – they are about government trade policy. If peoples are trading freely, there isn’t a “War” – there’s commerce. The “Wars” only happen when governments get involved – placing tariffs, regulations and subsidies in the way of the flow.
It becomes a regulatory arms race. A government imposes another subsidy or tax. So several others in response impose new subsidies and taxes of their own. Lather-rinse-repeat.
But when the world’s trade works get gummed up by decades of this government build-up, there are times when unilateral deregulation does more harm than good – to the country or countries doing the deregulating. For instance:
(T)he European Union (EU), which supplied as much as 20 percent of global sugar exports in the 1990s, shifted from a net exporter to a net importer following sugar policy reforms in 2005.
Their reforms? Unilateral tear-down of their trade barriers – which sounds good. Except it allowed Big Sugar Subsidy Brazil to flood their market…. And now the EU is paying about 25% more for sugar.
And We the People in the 1990s – into this global largely un-free market – dropped the North American Free Trade Agreement (NAFTA). Which set up a trade open channel between Canada, Us – and Mexico.
The latter has since been exploiting that openness – to apparently cheat the system.
In the case of sugar, the Mexican government owns and runs a large chunk of its industry – a woefully inefficient mess that would have long since gone belly-up bereft its massive subsidizes.
Mexico is now dumping government-money below-cost product on the U.S. – to do to us what Brazil did to the EU.
In May, the Barack Obama Administration officially acknowledged this process abuse.
Preliminary ITC Ruling Finds Injury from Mexican Sugar Dumping
The U.S. International Trade Commission made a preliminary ruling May 9 that unfair trade practices by the Mexican sugar industry have hurt U.S. sugar producers and American taxpayers who support the nation’s sugar program.
And it ain’t just sugar. In late April the Administration found Mexico guilty of doing the same with steel. And before that – tomatoes. And on, and on, and….
The takeaway from all of this is – we still need to cut as many NAFTA-esque deals with as many nations as possible. Free trade is good because the more open things get – the better things get.
But trade deals only work when everyone does what they say they’ll do. With freedom comes responsibility.
And if you want a more receptive domestic climate for farm policy reform, you need full-on enforcement of these trade deals – which will liberate our ridiculous government-subsidized farm markets.
Editor’s Note: This first appeared in Red State.