"FREE TRADE" ISN'T REALLY ABOUT TRADE: "Free Trade" Sounds Great to Most Business People, but Free Trade Treaties Are about Giving Up a Country's Powers and People's Rights to Unaccountable International Entities

By Scaliger, Charles | The New American, August 20, 2018 | Go to article overview

"FREE TRADE" ISN'T REALLY ABOUT TRADE: "Free Trade" Sounds Great to Most Business People, but Free Trade Treaties Are about Giving Up a Country's Powers and People's Rights to Unaccountable International Entities


Scaliger, Charles, The New American


In June 1994, during congressional debate over approval of joining the World Trade Organization (WTO), Republican congressman Newt Gingrich said:

   We need to be honest about the fact
   that we are transferring from the
   United States at a practical level significant
   authority to a new organization.
   This is a transformational moment.
   I would feel better if the people
   who favor this would just be honest
   about the scale of change.

      Twenty years from now we will
   look back on this as a very important
   defining moment. This is not just
   another trade agreement.... I am not
   even saying we should reject it; I, in
   fact, lean toward it.

"Free trade," so styled, is an issue that the establishment figures of both major parties seem to agree on. NAFTA was ratified by a GOP-controlled Congress, after being signed by Democratic President Bill Clinton.

To understand the debate over free trade, it's important to recognize what early free market economists meant by the term. The literature of early economics, from Ricardo and Smith to Say and Bastiat, is replete with recommendations for free trade, by which they meant the abolition of tariffs and border controls, and their replacement with essentially open borders and an unimpeded flow of goods and services across them. Protectionist policies, Bastiat argued in one famous essay, were comparable to candle-makers urging people to living inside and closing all doors and windows to protect them from unfair competition--the rays of the sun. Tariffs and other impediments to free trade, Bastiat contended, are really government interference in the free market, and harm no one but consumers, whom protectionism forces to pay higher prices for domestically produced products that foreign competitors may well be able to produce more cheaply.

In economic terms, this is true--in the same way that any type of tax or government interference in the marketplace, viewed from a strictly economic perspective, is a hindrance to the free market.

But as long as government exists in some form, it will need revenue to sustain it. A government with no way of raising revenue is ineffectual. Likewise, a country wishing to remain free and independent cannot afford to become dangerously dependent on foreign suppliers, particularly potentially hostile powers, for essential commodities from oil to steel. As long as sovereign countries exist, both governments and borders will be necessary. And that means that there can never be any such thing as truly free trade or a perfect free market liberated from all government authority.

The problem then becomes, given that governments and borders must exist, how can they be maintained with as little inconvenience to personal liberty as possible? The American Founders had a simple and ingenious answer: tariffs. Taxes on imported goods, they believed, would both suffice to fund the basic, legitimate functions of government (except in extraordinary circumstances, such as war) and be guarantors of sovereignty. They saw tariffs as the least intrusive form of taxation, since they would fall primarily on imported luxury items and would therefore be paid mostly by the rich. They also saw tariffs as a way of allowing the infant United States to get its own industries off the ground, so as not to be dependent on (and beholden to) the collectivist old world. (See page 40.)

The federal government was funded almost entirely by tariffs until well into the 20th century, except during a few times of crisis such as the Civil War. But in the early 20th century, the notion began spreading that the federal government should no longer be limited by the narrow list of powers defined by the Constitution. Landmark legislation such as FDR's New Deal greatly expanded the size and cost

An insightful article published by Wiley Rein LLP, one of the largest law firms in Washington, D.C., documented in detail the manner in which WTO officials have resorted to "judicial activism. …

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"FREE TRADE" ISN'T REALLY ABOUT TRADE: "Free Trade" Sounds Great to Most Business People, but Free Trade Treaties Are about Giving Up a Country's Powers and People's Rights to Unaccountable International Entities
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