Nothing new. Just more complex structures and different framing on the same old government controlled utpoia. I laugh at “Free Trade Agreement”. They are many, many pages that are negotiated over the course of years. Hysterical. This is not “free trade”. Free trade would require at most a few sentences. Something like this: “As of this date, the signatories hereby rescind and/or declare null and void any restrictions, quotas, or tarrifs between the two countries in any industry or industries where they previously existed or were instituted by the governments of said Countries.”
Politics be damned. It would be the right thing to do for all.
Free trade agreements, my ankle.
The cartelization of the global textile trade dates back to the 1950s when America coerced a major developing exporter, Japan, into short-term “voluntary” export restraint arrangements with quotas, which became commonplace between developed countries seeking to protect an influential domestic industry and poor countries seeking to shield nascent export opportunities from retaliation. Such deals evolved into the Multi-Fiber Arrangements, which institutionalized governments’ management of the trade. The 1995 Agreement on Textiles and Clothing abolished the MFA over a ten-year transition period, freeing textiles in a manner consistent with global trade rules beginning January 1, 2005.
For China’s competitive textile industry, the prospect of quota-free trade was an immensely appealing inducement for its government to join the World Trade Organization. Since January 1 Chinese exports of clothing and textile products to the United States, the world’s largest textile market, have jumped more than 40%.
Anxious about Beijing’s growing economic clout and nebulous military ambitions, the Bush administration has invoked safeguard clauses embedded in China’s conditions for WTO membership to unilaterally re-institute limits on import levels of individual product lines. In the eleven months since the expiration of the MFA, the administration has exercised this option for 19categories of clothing.
The appeal of the accord struck between the American and Chinese governments is clear. Washington constrains foreign competition in 34 textile product lines without having to rule out further trade restrictions or annually renew the quotas, as would be the case with the 19 items it had already subjected to safeguards. Beijing pockets average growth rates of about 15% per annum in the pertinent textile categories over the life of the agreement, which exceeds the 7.5% per annum ceiling America must admit under China’s WTO accession agreement.
Unhelpful intervention
Nevertheless, the justification and efficacy of government meddling in trade matters — especially in the case of Washington’s embrace of textile quotas — is dubious. Not only are political means counterproductive, but such interventionist measures tend to generate real dislocations in its wake where only supposed ones existed.
Read the rest on your own.