[mgj-discuss] The NYT and 'Free Trade'

[Eric Laursen]

Beat the Press by Dean Baker

February 02, 2007

The NYT Calls for More Selective Protectionism

The NYT editorial board continued its dogmatic pursuit of selective free 
trade in its lead editorial this morning. The piece includes typical 
spin tactics, using arguments or claims that they presumably know are 
misleading. Here are my three favorites:

1) The U.S. is the world leading exporter, therefore we gain from trade 
-- Put this in the big "huh?" department. On an exchange rate basis (the 
appropriate measure here), the U.S. is more than twice as large as the 
next biggest economy. We better be the world's largest exporter, or 
we're a basket case.

2) U.S. tariff reductions benefit poor countries like Bangladesh and 
Cambodia -- This is a yes and no story. Bangladesh and Cambodia have 
benefitted from being able to export to the United States. But, one of 
the things that protects their export markets are the restrictions on 
imports from China. A paper called the New York Times had some good 
articles on this issue a couple of years ago. The multi-fiber agreement 
that assigned import quotas by country ended in 2005, and imports from 
China quickly began to displace production in countries like Bangladesh 
and Cambodia. The U.S. quickly negotiated temporary caps on exports from 
China that last through 2008, thereby leaving some space for exports 
from poorer countries. Are these caps on Chinese exports free trade?

The other misleading part of this story is that much of the U.S. trade 
agenda is not focused on reducing barriers but rather on increasing 
protection for U.S. patents and copyrights. These restrictions raise the 
prices that people in developing countries have to pay for drugs and 
other products. Maybe the NYT editorial board can explain how developing 
countries are benefitted by trade agreements that make it impossible for 
many of their citizens to afford life-saving drugs.

3) The workers who lose their jobs because of trade need more assistance 
-- This one wins the prize in being misleading. The NYT editorial board 
presumably knows that the vast majority of workers who get hurt by trade 
are not the ones who directly lose their job due to import competition, 
but rather the tens of millions of workers who stay on the job but get 
lower wages because they now have to compete with imports produced by 
low wage workers. That is the way markets work.

The NYT is playing a game of three-card Monte here. They are distracting 
readers from the real issue: trade has been an important factor in 
lowering the wages for large segments of the U.S. workforce over the 
last quarter century. Those who lose their job directly because of 
import competition are the ones most affected, but this is a very small 
minority of the actual number of workers impacted by the current pattern 
of trade.

The NYT views on trade will be taken more seriously when they adopt a 
consistent standard, instead of their current support for selective 
protectionism. When they call for measures that subject doctors, 
lawyers, and other highly paid professionals to the same international 
competition as autoworkers and textile workers face, then they will have 
a coherent position. And, they will also have to evaluate the patent and 
copyright protection that the U.S. wants to impose on the developing 
world by the same standard as other forms of protection.

Until the NYT is prepared to adopt a consistent position on trade, their 
editorials should be viewed as presenting a brief for making the wealthy 
wealthier.
-- Dean Baker