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Rating: 
Summary: An excellent manifesto supporting true international trade
Review: The author makes a convincing case that the development of large trading blocks actually hinders World trade. As an example, he mentions how the European Community (EC) is a trading block that consists in a protectionist fortress that hinders free trade with trading partners outside the EC. The advent of the EC, and the growing trade U.S. deficit has lead government officials to respond by developing a large trading block of its own to compete with the EC. This entails an expansion of NAFTA to eventually include all Central and South American countries. The author states that such a U.S. trade policy is misguided on several counts, because: First, the U.S. already accounts for over 40% of trade with the Americas. This share is far higher than either Japan or the EC share with the Americas. Thus, the U.S. has nothing to gain from spending much energy on expanding NAFTA; it already has achieved the end goal of being by far the dominant trading partner within this region. Second, the trade volume with Central and South America is minuscule compared to U.S. trade with Asia. Third, it is triggering a response in kind from both Japan and China who are now both working on developing and expanding a large and competing Asian trading block. The U.S. would loose a lot more market share of World Trade by this development (Asian trading block), than it would by expanding NAFTA. The author states that the impetus of developing an Asian trading block is a direct reaction to the U.S. effort in expanding NAFTA. Instead, the author suggests that the U.S. trade policy should be redirected along the following lines: First, the U.S. should abandon its pursuit of forming protectionist trading blocks.
Second, it should promote free trade by giving its full support to the current round of the World Trade Organization (WTO). This is a far better option to promote free trade then working on bilateral free trade agreements (FTA) that are really protectionist in nature towards all trading partners excluded from the FTAs.
Third, it should reduce or eliminate the tariffs it imposed on steel and textile. These domestic industries do not need to be protected anymore.
Fourth, the U.S. should reduce its volume of agricultural subsidies. By doing so, it will be in a position to pressure the EC, and specifically France, to reduce its own huge agricultural subsidies. The author maintains that the U.S. misguided trade policy emanates from a misperception from the public and Congress regarding the U.S. trade performance. The perception is that U.S. is performing poorly in international trade as it incurs large trade deficits, and is getting routinely beaten by Japan, China, and the EC who routinely achieve large trade surpluses, especially with the U.S. This view is based on an outdated Mercantilist perspective that states that exports and trade surpluses are good and imports and trade deficits are bad. Nothing could be further from the truth. What really matters is the productivity of the labor force which is the engine behind a country's economic growth and rising living standard. Focusing on these more meaningful economic metrics (labor productivity, living standards, economic growth), the U.S. has beaten the socks out of its major trading partners, specifically Japan and the EC. The author brings two other interesting points. The first one is that the U.S. share of World trade has remained remarkably steady at around 12% to 13% over the past century. This negates the perception that the U.S. performance in international trade is weaker now than it used to. It clearly is not. The other point is that the U.S. trade mix is almost evenly distributed between the EC, Asia, and North America (Canada and Mexico). In other words, the U.S. has the most diversified and optimal mix of trading partners. As mentioned above, its pursuit of expanding trading blocks with the Americas will cause the U.S. to be increasingly locked out of trades with the other two major regions (Asia and EC). This would cause a decline in the U.S. diversification of trading partners. This is clearly not a favorable development as demonstrated by the author. In conclusion, this book is one of the most eloquent defense of true free trade. It can also be viewed as an equally eloquent attack on the formation of trading blocks including NAFTA, and the EC.
Rating:
Summary: An excellent manifesto supporting true international trade
Review: The author makes a convincing case that the development of large trading blocks actually hinders World trade. As an example, he mentions how the European Community (EC) is a trading block that consists in a protectionist fortress that hinders free trade with trading partners outside the EC. The advent of the EC, and the growing trade U.S. deficit has lead government officials to respond by developing a large trading block of its own to compete with the EC. This entails an expansion of NAFTA to eventually include all Central and South American countries. The author states that such a U.S. trade policy is misguided on several counts, because: First, the U.S. already accounts for over 40% of trade with the Americas. This share is far higher than either Japan or the EC share with the Americas. Thus, the U.S. has nothing to gain from spending much energy on expanding NAFTA; it already has achieved the end goal of being by far the dominant trading partner within this region. Second, the trade volume with Central and South America is minuscule compared to U.S. trade with Asia. Third, it is triggering a response in kind from both Japan and China who are now both working on developing and expanding a large and competing Asian trading block. The U.S. would loose a lot more market share of World Trade by this development (Asian trading block), than it would by expanding NAFTA. The author states that the impetus of developing an Asian trading block is a direct reaction to the U.S. effort in expanding NAFTA. Instead, the author suggests that the U.S. trade policy should be redirected along the following lines: First, the U.S. should abandon its pursuit of forming protectionist trading blocks.
Second, it should promote free trade by giving its full support to the current round of the World Trade Organization (WTO). This is a far better option to promote free trade then working on bilateral free trade agreements (FTA) that are really protectionist in nature towards all trading partners excluded from the FTAs.
Third, it should reduce or eliminate the tariffs it imposed on steel and textile. These domestic industries do not need to be protected anymore.
Fourth, the U.S. should reduce its volume of agricultural subsidies. By doing so, it will be in a position to pressure the EC, and specifically France, to reduce its own huge agricultural subsidies. The author maintains that the U.S. misguided trade policy emanates from a misperception from the public and Congress regarding the U.S. trade performance. The perception is that U.S. is performing poorly in international trade as it incurs large trade deficits, and is getting routinely beaten by Japan, China, and the EC who routinely achieve large trade surpluses, especially with the U.S. This view is based on an outdated Mercantilist perspective that states that exports and trade surpluses are good and imports and trade deficits are bad. Nothing could be further from the truth. What really matters is the productivity of the labor force which is the engine behind a country's economic growth and rising living standard. Focusing on these more meaningful economic metrics (labor productivity, living standards, economic growth), the U.S. has beaten the socks out of its major trading partners, specifically Japan and the EC. The author brings two other interesting points. The first one is that the U.S. share of World trade has remained remarkably steady at around 12% to 13% over the past century. This negates the perception that the U.S. performance in international trade is weaker now than it used to. It clearly is not. The other point is that the U.S. trade mix is almost evenly distributed between the EC, Asia, and North America (Canada and Mexico). In other words, the U.S. has the most diversified and optimal mix of trading partners. As mentioned above, its pursuit of expanding trading blocks with the Americas will cause the U.S. to be increasingly locked out of trades with the other two major regions (Asia and EC). This would cause a decline in the U.S. diversification of trading partners. This is clearly not a favorable development as demonstrated by the author. In conclusion, this book is one of the most eloquent defense of true free trade. It can also be viewed as an equally eloquent attack on the formation of trading blocks including NAFTA, and the EC.
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