Wednesday, August 18, 2010

Free Trade, Not So !

Congress Must Fix Trade Deficit by Addressing China Currency Manipulation
by James Parks, Aug 17, 2010
The U.S. trade deficit hit $49.9 million in June, the highest it’s been in nearly two years. But many in Congress don’t see the need to solve this dangerous imbalance by addressing the problem behind the deficit—China’s currency manipulation.
Economist Paul Krugman correctly opposes such a timid position. Today, he took issue with an editorial by the New York Times—his employer—that called for a soft approach to China. Krugman writes: My colleagues believe that we should lecture the Chinese on what a bad thing they’re doing, but not actually threaten sanctions, lest we start a trade war. My belief is that this gets us nowhere. Right now, China is following a policy that is, in effect, one of imposing high tariffs and providing large export subsidies because that’s what an undervalued currency does. That should be a violation of trade rules; it might in fact be a violation, but the language of the law is vague on the subject. Check out Krugman’s column, “Killer Trade Deficits,” here below >>>>>>>>> .
Here’s the solution. When Congress gets back from its summer vacation, lawmakers should get down to work and pass currency legislation (H.R. 2378 in the House and S. 3134 in the Senate). Or as AFL-CIO President Richard Trumka said last month: At a time when our economy is more than 10 million jobs short of pre-recession unemployment levels, and when we are focused on boosting exports to create jobs, we simply cannot afford to look the other way as the Chinese government continues to manipulate its currency for an unfair trade advantage. Stan Sorscher, a labor representative for the Society of Professional Engineering Employees in Aerospace/IFPTE Local 2001 (SPEEA), says the crux of the problem is that our free trade policy is: A bankrupt theory with a predictable track record of failure. Writing at Huffington Post, Sorscher says the only winners in the free trade scheme are bankers, investors and large multinationals. Our trading partners have industrial policies to guide their development. If we really want to rebuild our economy, we need a national industrial policy, too, he says. Read Sorscher’s entire post, “Free Trade: Flawed Theory and Bad Policy,” here below >>>>>>

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