Tag: trade

Historical notes on Free Trade and the US

Early 1800s

The Industrial Revolution is in its early stages. The most economically important industries in the US are:

– cotton, produced in the south by slaves working in plantations, and

– manufactured goods, mainly textiles (fabric, clothing, curtains and bed sheets etc) produced in factories in the north.

Trade is a divisive political issue. Politicians from the southern states want low (or no) tariffs, since this would help them sell more cotton for export. Politicians from the north want high tariff barriers to protect their manufactured products from competition with similar products made in Europe.

Over time there is a trend towards higher tariffs / more protectionism.

[SIDE NOTE: There is no general, numerical definition of ‘trade protectionism’ or ‘trade liberalization’. A 2% tariff on pickled beets could be considered ‘protectionist’ in one context and ‘liberal’ in another. AFAICT a protectionist tariff is simply one that the speaker thinks is too high.]

[SIDE NOTE PART 2: No-one who says they believe in free trade, past or present, actually wants completely free trade. What they want is for certain tariffs, selected by them, to be reduced by a particular amount. No serious political leader, expert, or pundit has ever called for all tariffs to be removed – if they did they would be laughed at and dismissed as a crank whose ridiculous ideas could not possibly be taken seriously.]

1930: Smoot-Hawley Tariff Act

A US law that set tariffs at a high level. This to some extent causes or exacerbates the Great Depression.

1934: Reciprocal Trade Agreements Act

Allows the president to make tariff-lowering trade agreements between the US and other countries.

1950s to 1980s: The Cold War

Following World War 2, US manufacturing booms. With European countries still recovering from the war and much of the rest of the world recovering from colonization, the US emerges as the world’s strongest economy.

Political elites are divided; some call for Free Trade (but see SIDE NOTES 1 and 2) and others call for protectionism. As big businesses become more international, they also become more pro-Free Trade.

[EXCEPTION: Agriculture is protected with huge subsidies and tariffs. This exception is so hugely complicated and important it needs its own blog post.]

International trade becomes a key part of the US’s strategy for winning the Cold War against Russia, China, and other communist countries. Trade agreements bind together the major free market democratic countries, making them allies.

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On the birth and simultaneous rebirth of European civilization

A New World had been discovered overseas, but a new world was also being created at home, one where vibrant new ideas were encouraged, where new tastes were indulged, where intellectuals and scientists jostled and competed for patrons and funding. The rise in disposable incomes for those directly involved in the exploration of the continents and the wealth they brought back funded a cultural transfusion that transformed Europe. A swathe of rich patrons emerged in a matter of decades, keen to spend on luxury.

The task was now to reinvent the past… In truth, France, Germany, Austria, Spain, Portugal and England had nothing to do with Athens and the world of the ancient Greeks, and were largely peripheral in the history of Rome from its earliest days to its demise. This was glossed over as artists, writers and architects went to work, borrowing themes, ideas and texts from antiquity to provide a narrative that chose selectively from the past to create a story which over time became, not only increasingly plausible, but standard. So although scholars have long called this period the Renaissance, this was no rebirth. Rather it was a Naissance – a birth. For the first time in history, Europe lay at the heart of the world.

– From ‘The Silk Roads: a New History of the World’ by Peter Frankopan, p 218-219.

…effectively outlaws the saving of seeds from one season to the next

While the terms of the Trans-Pacific Partnership (TPP) were kept secret from the public and policymakers during negotiations, US negotiators relied heavily on input from the corporate insiders who populate the US government-appointed Industry Trade Advisory Committees.

[Seed industry lobby group] BIO spent roughly $8 million on lobbying each year while the TPP was under negotiation, paying firms like Akin Gump Strauss Hauer & Feld $80,000 annually to lobby for patent provision in the Trans-Pacific Partnership trade negotiations.

The results of this lobbying blitz were unknown until the final text of the agreement was released in November of last year… Experts have called the TPP a ‘big win’ for the biotech seed industry, and many warn that the trade deal will further enrich seed companies at the expense of farmers’ rights.

[The Trans-Pacific Partnership] effectively outlaws the saving of seeds from one season to the next, a practice the majority of the world’s farmers rely upon. Farmers are prohibited from saving, replanting, and exchanging protected seed, and breeders* are granted exclusive right to germplasm**.

– Exerpted and adapted from The Trans Pacific Partnership will hurt farmers and make seed companies richer by Alex Press, in The Nation, June 10, 2016.

* In this context, “breeders” means large-scale corporations or other institutions that carry out plant breeding to develop new crop varieties. It excludes small-scale farmers, or local seed sellers or coops, who don’t have the money to pay for lawyers to register and apply for patents for their seeds, or the time, money and extra land that would be required to carry out the seed trials that would be required for the patent application to even be considered.

** “Gerplasm” technically means the DNA or genetic material of a particular plant crop; practically it means seeds.