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Economics 3

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


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.

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