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The Impact of Free Trade Agreements in the US

Shattering

the Myths

About U.S.

Trade Policy

Case study 1

+The blames from U.S.

Loss of

jobs

Damage of

welfare

+The 3 Myths about U.S. Trade Policy

Job losses, especially in manufacturing, due to the American’s trade policy.

Export from developing countries had reduced their living standards.

Higher oil prices that import from developed and developing countries is hurting Americans

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2

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+ Robert Z. Lawrence and Lawrence Edwards say…

Forget the doomsayers,

and stop blaming trade.

An active trade policy

can lead to a stronger U.S. economy.

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  Employment has fallen steadily for over half a century.

  The trend is similar with Germany and the Netherlands.

  Increasing productivity growth in American manufacturing. And or so in agriculture.

  A shift in demand away from goods toward services.

  The recessions started at home in U.S.

Job losses, especially in manufacturing, due to the American’s trade policy. 1

Balanced trade won’t offset job losses permanently.

-From <Shattering the Myths About U.S.Trade Policy>

+ Balanced trade won’t offset job losses permanently.

-From <Shattering the Myths About U.S.Trade Policy>

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  Very different products and processes between the U.S. and developing countries.

  The most products differ in terms of price and quality, factors of production are used for specific tasks.

  The developing countries exported that are no longer produced certain products in U.S.

Export from developing countries had reduced their living standards. 2

Countries in the early stages of development are most likely to experience rapid productivity growth in the industries in which they have a comparative advantage.

-John Hicks' theory

From 1993 to 2010,the manufacturing terms of trade improved primarily because the relative prices of U.S.-manufacturing imports from developing countries declined.

-By Robert Z. Lawrence and Lawrence Edwards

The variety of imports available to Americans would have been greater. The terms of trade would have been

better for the United States.

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  The united states imports about 58% of its oil, the price of oil heavily influences the nation’s trade benefits

  The impact of the net-supply shortfall created by the U.S..

Higher oil prices that import from developed and developing countries is hurting Americans 3

Increase global supply or reduced demand of just 1% a year would reduce oil prices in 2030 by 75%.

-By U.S. Energy Information Administration

scenarios

Relatively small changes in the production and conservation of liquid fuels may make it possible to accommodate demand from emerging economies without a major increase in oil prices.

-By Robert Z. Lawrence and Lawrence Edwards

the shortfall between growth of demand in emerging markets and slow growth of supply in developed countries

+ A free and fair global trading system can result in economic win-win.

  ---By U.S. President John F. Kennedy

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China U.K.

How is the trade developing?

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China U.K.

Tax/Tariff Trade Barriers Import Quotas

How is the trade developing?.

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China U.K.

Tax/Tariff Trade Barriers Import Quotas

Efficiently, Easily, and Effectively

The benefits of the free trade

+The free trade organizations

+Free Trade in the United States

  A member of the WTO. And or so in part of several other trade agreements including NAFTA, CAFTA-DR, and bilateral investment treaties, which are individual agreements with about 40 additional nations.

  The goal is to establish worldwide free trade agreements (referred to by detractors as "globalization").

  The belief is that the further expansion of trade would be "an important contribution to addressing the global economic crisis."

+Currently economy in US   Slower growth since the early 1970s

– Public debt rose quickly from $909 billion in 1980 to $14.3 trillion in 2010, by 15 times

– Jobless rate is high: February 2013, the unemployment rate was up to 7.7%

– Living standards fall: personal income were down sharply from their 2007 peaks

– Sustained merchandise trade deficits since 1976

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American learn to spend less More of the demand for their output has to come through trade.

+President Barack Obama 's doubling exports

  Revitalized U.S. trade aiming to double exports by 2014

•  Expand trade opportunities through regional economic

integration with partners in Africa and Asia in 2013

•  Launch trade policy negotiation with EU to boost U.S economy

  Accelerated efforts on TPP negotiations •  To build a ”Trans-Pacific” free trade zone without China’s

attendance, which will restrict Chinese development.

•  Plan to complete the talk at the end of this year

In five years, exports can be boosted by a weaker dollar or by greater investments

that make goods and services cheaper, more attractive ,or more prominent

The trade barriers are much higher overseas than in U.S..

+What need American to do   More active in trading order •  1.Sustain trade order from current FTAs •  2.Seeks out untapped foreign markets--Opening up trade with

Russia LY   Maintain good relationship with trade partner •  Relationship with China- find a win-win way to boost economic

interest bilaterally •  Allow China’s remedies in antidumping and safeguard cases •  End the compliance review of trade   Leadership on pushing international meaningful

agreement •  Help to end Doha round talk •  Reconstruct WTO

+The thinking of this case…

 Free Trade Increases U.S. Sales and Profits

 Free Trade Creates U.S. Middle-Class Jobs

 U.S. Free Trade Helps Poorer Countries

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+ Don’t erect more higher barriers

Encourage domestic innovation More active in trading order

+Maintain good relationship with trade partner

Leadership on pushing international meaningful agreement

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Thanks