The Fruits of Free-Trade

Snapped this tonight hoping and praying the liberal trading order doesn’t collapse in the next few years.  My real income — purchasing power — is much higher due to trade with other nations.

I also get the satisfaction of, say, eating fresh grapes in the deep of winter imported from Chile and have fresh cut flowers from Ecuador on our Christmas dinner table   Franky, I don’t feel “ripped off” by either.


Did you know Guatemala is a partner in a free trade agreement with the United States?

On August 5, 2004, the United States and the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) with five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) and the Dominican Republic (the Parties). Under the Agreement, the Parties significantly liberalizes trade in goods and services.

The CAFTA-DR also includes important disciplines relating to: customs administration and trade facilitation, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, transparency and labor and environmental protection.

The Agreement entered into force for the United States and El Salvador on March 1, 2006; for, Honduras and Nicaragua on Aril 1 2006; and for Guatemala on July 1, 2006. The CAFTA-DR entered into force for the Dominican Republic on March 1, 2007, and for Costa Rica on January 1, 2009.  – USTR

How Trade Creates Jobs In the Nontradeable Sector

My higher real income provides the financial firepower to purchase more local goods, which create more jobs and income for our local residents, such as the bartender who pours my beer and receives a bigger tip.    Most are winners in this transaction except the American plantain farmer, for example.

Trade Adjustment Assistance (TAA) 

Free-trade is a tough sell politically these days but I am willing to pay a little extra for those plantains from Guatemala, as long it is not structured as a tariff, earmarked for an adjustment fund to help the American plantain farmers (if there are any) displaced by trade.

The current TAA program is a joke, is grossly underfunded, and needs to be revamped or replaced with a much more efficient and effective program.   Politicians on both sides turned their backs on those displaced by trade failing to beef up TAA.  Then came the political blowback and now we are paying the price, especially many of our farmers.

The protectionists are also just as guilty, in our book, for not understanding the trajectory of the global economy.  Let’s see how things work out if they get their way.

If my cost of living increases by 30 percent, I better get a comparable rise in income or none of the goods that are being protected will be bought.  Everyone will be worse off.

Here’s to hoping we don’t commit economic suicide by letting our political passions get the better of us shutting down the global trading system.  It’s not a done deal but we worry it’s getting close to midnight.

Bring It

Okay.  Bring on the comments and emails about “globalists” and “that is the traditional and archaic way of looking at the global trading system,” yadda, yadda.   We’re big girls and boys and can take it.


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