Essay/Term paper: Economics: turn around is fair game

Essay, term paper, research paper:  Economics

Economics: Turn Around is Fair Game


America's size and prosperity have made it the largest consumer of
imported products in the world. Brightly lit shopping malls adorned with the
latest foreign-made apparel, gadgets and trinkets, testify to the vast selection
of goods available for purchase. There is a dark side to this enormous quantity
of choices: a hefty price tag - the federal deficit. Unfair trade agreements,
and, predatory pricing strategies and practices from abroad, placed those goods
on the store's shelves. The United States Trade Representative (USTR), who is
directly responsible to the President and Congress for trade negotiations; is
forecasting a two hundred billion-dollar trade deficit for fiscal year 1996.
The American people must demand reciprocal trade agreements for overseas
business competitors. Complimentary trading would; put an end to subsidized
dumping, curb the loss of manufacturing jobs, and, tear down the barriers
associated with free trade.
The practice of selling items at a price less than what it costs to make
them is called dumping. Foreign governments subsidize the manufacturing
processes of certain industries so their companies can displace the
competition's industry. The television industry is a perfect example of
subsidized dumping. The post World War II infusion of subsidized Japanese-made
televisions, terminated the United States(U.S.) television manufacturing
industry. In the late 1950's, half a million units crossed our borders, tax and
tariff free. These television sets were made using cheaper components and
cheaper labor. However, the cost of transportation, which would normally
escalate each individual price, was paid for by the Japanese government. The
pioneering inventors of the electronic marvel were forced out. No longer able
to compete by meeting rapidly declining prices, companies had to stop production,
liquidate all available assets, and release their entire work force.
Unemployment figures for 1996 are predicted to be at seven percent (USTR,
1996.) This equates to nearly twenty million skilled American workers without
jobs. The math is simple; imports cost an economy jobs, exports produce jobs.
Reciprocal trading contracts would definitely curb the exponential loss of
manufacturing jobs.
Trade barriers are the largest problems facing American companies in
overseas markets. The obstructions are sometimes overt, sometimes hidden and
usually extremely complex. Deals are covertly impeded with complicated
licensing and import procedures. Regulations concerning special specification
standards and testing of American goods are hurdles deliberately enacted to
block fair trade. If foreign governments were mandated to treat American
businesses the same way native companies were treated, free commerce would truly
be achieved.
The U.S. has used an arsenal of tools to try to mitigate unfair trade
practices and enhance U.S. access to overseas markets. These include: Section
301 of the 1974 Trade Act - Section 301 serves as the flagship of the
President's fleet of trade remedies aimed at unfair trade practices. It calls
on the USTR, subject to the specific direction (if any) of the President, to
enforce U.S. rights under any trade agreement. It also allows the USTR to
respond to any act, policy, or practice of a foreign country or instrumentality
that is unjustifiable, unreasonable, or discriminatory and that burdens or
restricts U.S. commerce.
Under Section 301's broad mandate, the USTR may take any appropriate and
feasible action to enforce U.S. trade agreement rights or eliminate trade
practices unfairly burdening U.S. commerce. If the foreign country does not
modify its practices, the USTR may deny it U.S. trade benefits or impose duties,
fees, or other import restrictions upon that nation's goods or services. Under
Section 301, retaliatory action has been taken by the U.S. to eliminate unfair
trade activities of countries such as Japan as well as European Community
countries. In other cases, its credible threat has been sufficient to achieve
market-opening, trade-liberalizing results without imposing sanctions.
Unfortunately, it is seldomly used. In most instances, Section 301 is used only
as a last resort when all other available remedies have been exhausted. Often,
bilateral negotiations and dispute-settlement procedures under the General
Agreements on Tariffs and Trade (GATT) are used to resolve trade disagreements
without resorting to Section 301. For example, bilateral negotiations have been
successful in improving access to Japan's market for U.S. products, resolving
South Korean unfair trade practices affecting intellectual property rights and
insurance, and eliminating tariffs and import bans on several U.S. items in
Taiwan.
Economic principle tells us that free trade or freer trade will mean
lower consumer prices, and, in the long term, job security in a stable,
competitive economy. However, in the real world, the short term world, jobs are
threatened by competition from abroad - no matter how fair that competition may
be. The only way to achieve freer trade in the complex and delicate world of
global business, is for the elected officials of America, to decree reciprocal
trade agreements at the international bargaining table. These agreements will
open doors for new economic opportunities in all nations. The agreements could
eliminate all tariffs, reduce or eliminate most nontariff barriers, liberalize
investment practices, cover trade in services, and support efforts at
multilateral trade liberalization. As a result all nations' international
competitiveness and living standards should markedly increase.