{"id":216,"date":"2006-12-08T12:27:22","date_gmt":"2006-12-08T17:27:22","guid":{"rendered":"http:\/\/jimbovard.com\/blog\/2006\/12\/08\/the-fair-trade-fraud-at-15\/"},"modified":"2006-12-08T12:43:22","modified_gmt":"2006-12-08T17:43:22","slug":"the-fair-trade-fraud-at-15","status":"publish","type":"post","link":"https:\/\/jimbovard.com\/blog\/2006\/12\/08\/the-fair-trade-fraud-at-15\/","title":{"rendered":"The Fair Trade Fraud at 15"},"content":{"rendered":"

The front page of the Washington Post this morning shows a tearful photo of a Pearl Harbor veteran and others at ceremonies commemorating the 65th anniversary of the ‘day of infamy.’<\/p>\n

That\u00a0photo reminded me that, 15 years ago, I was being derided as a Japanese agent.\u00a0 (Yes, I did\u00a0have a history before being labeled an Islamo-fascist sympathizer and all-around\u00a0anti-Bush hooligan).\u00a0 The accusations were spurred by the publication of The Fair Trade Fraud<\/a><\/strong>, a book that exposed the deceit and absurdity of U.S.\u00a0“fair trade”\u00a0laws.<\/p>\n

After the New York Times<\/em> ran an op-ed spinoff from the book, I was on a televisision show in Boston and the host introduced me by declaiming: “Our next guest says that we have a trade deficit because AMERICAN WORKERS ARE LAZY!” I was perplexed, as the op-ed had not mentioned this particular L-word.\u00a0\u00a0But the audience took the hint and\u00a0 gave me a warm welcome – or, more accurately, made it warm for me.<\/p>\n

Unfortunately, a whole new generation of gullible folks have come along to fall for\u00a0“fair trade” chicanery.<\/p>\n

And I remain confounded why any sober citizen would give politicians and bureaucrats the arbitrary power to define fairness.<\/p>\n

Some of the review comments on the book are here.<\/a><\/strong> (This was compiled in the early 1990s, before Tom DeLay was indicted and before George Will revealed that everyone is obliged to kowtow to the President of the United States).<\/p>\n

And here is the book’s first chapter:<\/p>\n

\u00a0JAMES BOVARD\u00a0 – FAIR TRADE FRAUD<\/strong>\u00a0\u00a0 (St. Martin’s Press, 1991)<\/p>\n

\u00a0INTRODUCTION<\/p>\n

\u00a0\u00a0\u00a0 Americans’ freedom and prosperity are being sacrificed on an altar of fair\u00a0 trade.\u00a0 Protectionists have wrapped themselves in a cloak of\u00a0 fairness,\u00a0 and each year they discover new moral pretexts to\u00a0 further restrict how American citizens may spend their paychecks. Fair\u00a0 trade is a moral delusion that could be leading to an economic\u00a0 catastrophe.\u00a0\u00a0\u00a0\u00a0
\n\u00a0\u00a0\u00a0\u00a0\u00a0 Congressmen are calling for an “economic war” with our\u00a0 trading partners.\u00a0 Starkly\u00a0 protectionist legislation has been passed in recent years by both\u00a0 the House and Senate, only to be stopped by presidential\u00a0 vetoes. American corporations are now running advertisements that seek to\u00a0 inflame hostility to foreign companies.\u00a0 “Fair trade” is widely\u00a0 perceived as a panacea for the U.S.’s international economic problems.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0 But, “fair trade” is one of the great intellectual frauds of\u00a0 the twentieth century.\u00a0 The louder politicians have demanded\u00a0 fair trade, the more U.S. trade policies have become a travesty\u00a0 of fairness.\u00a0 The U.S. government has created a trade lynch law\u00a0 that can convict foreign companies almost regardless of how they\u00a0 operate.\u00a0\u00a0 Between 1980 and 1989, the U.S. Commerce Department reached a “not guilty” verdict in only five percent of its investigations of foreign dumping.\u00a0 Three thousand foreign companies have been penalized\u00a0 since 1980 for selling their products to Americans\u00a0 at\u00a0 prices lower than the U.S. government approved.<\/p>\n

\u00a0\u00a0\u00a0\u00a0 When politicians call for ‘fair trade’ with foreigners, they\u00a0 routinely use a concept of fairness that is\u00a0 diametrically\u00a0 opposed to the word’s normal usage.\u00a0 In exchanges\u00a0 between individuals – in contract law – the test\u00a0 of fairness is\u00a0 the voluntary consent of each party to the bargain: “the free\u00a0 will which constitutes fair exchanges,” as Sen. John Taylor wrote\u00a0 in 1822.\u00a0 When politicians speak of unfair trade, they do not mean\u00a0 that buyers and sellers did not voluntarily agree, but that U.S. government officials disapprove of the bargains American citizens\u00a0 chose to make.\u00a0<\/p>\n

\u00a0\u00a0 \u00a0 Fair trade, as the term is now used, usually means\u00a0 government intervention to direct, control, or restrict trade.\u00a0\u00a0 Fair trade means government officials deciding what Americans\u00a0 should be allowed to buy, and what prices they should be forced\u00a0 to pay.\u00a0 Fair trade is paternalism applied to international\u00a0 commerce.\u00a0 Fair trade means subjugating the economic interests of\u00a0 private citizens to the moral and political values of government\u00a0 policymakers.<\/p>\n

\u00a0\u00a0\u00a0\u00a0 Fair trade often consists of some politician or bureaucrat\u00a0 picking a number out of thin air and imposing it on foreign\u00a0 businesses and American consumers.\u00a0 Fair trade\u00a0 means that Jamaica is allowed to sell the U.S. only 970 gallons of\u00a0 ice cream a year, that Mexico is allowed to sell Americans only\u00a0 35,292 bras a year, that Poland is allowed to ship us only 51,752\u00a0 pounds of barbed wire, that Haiti is allowed to sell the US only\u00a0 l6,070 tons of sugar.\u00a0\u00a0 Fair trade means restricting peanut\u00a0 imports to the equivalent of only two foreign peanut per year for\u00a0 each U.S. citizen, restricting cheese imports to one pound per year for each citzen, and restricting ice cream imports to one teaspoon per American per year.\u00a0 Fair trade means that the U.S. Congress can\u00a0 dictate over 8,000 different taxes on imports, with tariffs as\u00a0 high as 458%.<\/p>\n

\u00a0\u00a0\u00a0\u00a0 Fair trade is generating a new economic scholasticism.\u00a0\u00a0\u00a0\u00a0 Thirteenth century theologians debated the doctrine of the\u00a0 “just price.”\u00a0 Today, U.S. Commerce Department employees spend their\u00a0 lives ensnaring foreign companies in quibbles over what\u00a0 is a used forklift, how a company disposed of wilted flowers, and how to account for the costs of storing frozen\u00a0 raspberries.\u00a0\u00a0 The Commerce Department recently penalized a\u00a0 Japanese company for selling typewriters in the U.S. for a\u00a0 fraction of a penny less than in Japan.\u00a0 A federal judge\u00a0 criticized American TV manufacturers for using American trade law\u00a0 to conduct an “economic war” against their Japanese competitors.<\/p>\n

\u00a0\u00a0\u00a0\u00a0 American trade negotiators have exerted far more effort to\u00a0 close the U.S. market than to open foreign markets.\u00a0 Since 1980,\u00a0 the U.S. government has negotiated 170 bilateral trade agreements\u00a0 to restrict exports to the United\u00a0 States.\u00a0 If a Third World\u00a0 nation’s exports of a clothing item\u00a0 equal 1 percent or more of U.S. production, the U.S. government almost\u00a0 automatically restricts that nation’s exports.\u00a0 U.S. trade law has turned incompetence into an entitlement, as any\u00a0 lagging American company has a right to seek relief from foreign competition.\u00a0 Foreign nations are increasingly\u00a0 denounced as unfair unless they provide “affirmative action”\u00a0 programs to force foreign businesses to buy more American\u00a0 products.<\/p>\n

\u00a0\u00a0\u00a0 Webster’s New World Dictionary defines “fair” as “just and\u00a0 honest; impartial; unprejudiced.”\u00a0 Yet, most of the foreign trade\u00a0 practices deemed to be unfair are not considered unfair if\u00a0 done by the U.S. government or by an American company.\u00a0 U.S.\u00a0 government officials loudly denounce Japan’s beef import quota, though the U.S. also imposes import quotas on Australian and\u00a0 Argentine beef.\u00a0 The U.S. levied an import surtax on Thai rice\u00a0 in 1986 because of a small Thai government rice subsidy – though the U.S. government was simultaneously providing a subsidy over a hundred\u00a0 times larger to American rice growers.\u00a0 American trade law\u00a0 requires foreign companies to earn a significantly higher profit\u00a0 than American companies – or else the foreign companies are penalized as if they were selling at a loss.\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In federal unfair\u00a0 trade investigations, foreign companies are automatically assumed\u00a0 to be lying and American companies are automatically assumed to\u00a0 be telling the truth.\u00a0 The Commerce Department has used information\u00a0 provided by American firms to punish foreign competitors\u00a0 even when it knows that the allegations from the American firms\u00a0\u00a0 are incorrect or false.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0 Fair trade consists largely of the U.S. government\u00a0 devising new ways to protect American consumers against the\u00a0 scourge of low prices.\u00a0 The U.S. government does not penalize foreign companies for charging high prices – only for charging\u00a0 low prices.\u00a0 Imported clothing that is priced lower than U.S.\u00a0 clothing is automatically assumed to threaten to disrupt the\u00a0 U.S. market.\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0 Fair trade aims not to safeguard competition, but\u00a0 to enrich American competitors.\u00a0 The most common foreign “unfair\u00a0 trade practice” is producing a better product at a lower price.\u00a0\u00a0 In a nation with hundreds of federal, state, and local consumer\u00a0 protection agencies, consumers are explicitly denied a role in most trade proceedings of the U.S. International Trade Commission and Commerce Department.<\/p>\n

\u00a0\u00a0\u00a0\u00a0 Federal trade policy is increasingly sacrificing some\u00a0 industries to other industries.\u00a0 American manufacturers have been\u00a0 forced to beg Commerce Department officials for each ton of\u00a0 specialty\u00a0 steel they are allowed to import.\u00a0 The number of American manufacturing\u00a0 jobs destroyed since 1980 by sugar import quotas exceeds the\u00a0 total number of sugar farmers in the U.S.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0 American politicians are profiteering on allegations of\u00a0 foreign unfairness. For American trade policy, need is the basis\u00a0 of right, and political campaign contributions are the measure of\u00a0 need.\u00a0\u00a0 Congressmen’s solution to the problem of unfair\u00a0 foreigners is almost always to increase their own power over what\u00a0 Americans are allowed to buy.\u00a0 Every restriction on foreign\u00a0 competition means an increase in political control over the\u00a0 American consumer.\u00a0 And to control what a person is allowed to\u00a0 buy is indirectly to control how a person lives.\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0 Though complaints about unfair trade are at a historic high, American protectionists have always found some moral pretext to denounce imports.\u00a0 In the 1820s, protectionists proclaimed that trade\u00a0 between England and America could not be fair because England was\u00a0 advanced and America was comparatively backward.\u00a0 In the 1870s,\u00a0 protectionists announced that trade between America and Latin\u00a0 America could not be fair because America was comparatively rich\u00a0 while Latin American countries were poor.\u00a0 In the 1880s,\u00a0 protectionists warned that trade could not be fair if the\u00a0 interest rate among the trading nations differed by more than 2\u00a0 percent.\u00a0 In l922, Congress effectively defined “unfair competition” as any\u00a0 foreign cost of production advantage\u00a0 that existed for any reason\u00a0 on any product.<\/p>\n

\u00a0\u00a0\u00a0\u00a0 In practice, fair trade means protectionism.\u00a0 Yet, every\u00a0 trade barrier undermines the productivity of capital and labor\u00a0 throughout the economy. A 1979 Treasury Department study\u00a0 estimated that trade barriers routinely cost American consumers eight\u00a0 to ten times as much as they benefit American producers.\u00a0\u00a0 A 1984\u00a0 Federal Trade Commission study estimated that tariffs cost the\u00a0 American economy $81.00 for every $1.00 of adjustment costs saved.\u00a0 Restrictions on clothing and textile imports cost consumers\u00a0 $l.00 for each 1 cent of increased earnings of American textile\u00a0 and clothing workers.\u00a0 According to the Institute for International Economics, trade barriers are costing American\u00a0 consumers $80 billion a year – equal to over $l,200\u00a0 per family.<\/p>\n

CONCLUSION
\n<\/strong>\u00a0\u00a0\u00a0\u00a0 The myth of fair trade is that\u00a0 politicians and bureaucrats are fairer than markets – that\u00a0 government coercion and restriction can create a fairer result\u00a0 than voluntary agreement –\u00a0 and that prosperity is best achieved by arbitrary political manipulation, rather than\u00a0 allowing each individual and company to pursue their own\u00a0 interest.\u00a0\u00a0 Government cannot make trade more fair by making it\u00a0 less free.<\/p>\n

\u00a0\u00a0\u00a0\u00a0 Our great grandchildren may look\u00a0 back at the trade wars of\u00a0 the twentieth century with the same contempt that many\u00a0 people today look at the religious wars of the seventeenth century –\u00a0 as a senseless conflict over issues that grown men should not\u00a0 fight about.\u00a0\u00a0 Every voluntary trade transaction is mutually beneficial, otherwise the parties would not agree to trade.\u00a0 Most trade wars consist of\u00a0 politicians turning a squabble over the division of benefits into\u00a0 a schism\u00a0 that makes all the nations involved losers.\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0 Many people consider the idea of fair trade in the abstract\u00a0 and judge trade policy simply by the question of whether\u00a0 fairness in itself is a good or bad thing.\u00a0\u00a0\u00a0 We need to\u00a0 understand the contrast between the ideals and the realities of\u00a0 fair trade.\u00a0 Fair trade can only be as fair as the trade\u00a0 laws and the restrictions that governments proclaim in the\u00a0 name of fairness.\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0 The best way to understand fair trade is to examine how our\u00a0 trade laws, trade agreements, and trade restrictions actually\u00a0 operate.\u00a0 We will\u00a0 examine the U.S. tariff code, import quotas,\u00a0 how the dumping law operates, the U.S. government’s judgments on foreign’ subsidies, the U.S. International Trade\u00a0 Commission’s role in unfair trade investigations, the failure of trade retaliation, the\u00a0 nature of political control of trade, and the moral essence of\u00a0 trade restraints.<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

The front page of the Washington Post this morning shows a tearful photo of a Pearl Harbor veteran and others at ceremonies commemorating the 65th anniversary of the ‘day of infamy.’ That\u00a0photo reminded me that, 15 years ago, I was being derided as a Japanese agent.\u00a0 (Yes, I did\u00a0have a history before being labeled an […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-216","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nThe Fair Trade Fraud at 15 - James Bovard<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/jimbovard.com\/blog\/2006\/12\/08\/the-fair-trade-fraud-at-15\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Fair Trade Fraud at 15 - James Bovard\" \/>\n<meta property=\"og:description\" content=\"The front page of the Washington Post this morning shows a tearful photo of a Pearl Harbor veteran and others at ceremonies commemorating the 65th anniversary of the ‘day of infamy.’ That\u00a0photo reminded me that, 15 years ago, I was being derided as a Japanese agent.\u00a0 (Yes, I did\u00a0have a history before being labeled an […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/jimbovard.com\/blog\/2006\/12\/08\/the-fair-trade-fraud-at-15\/\" \/>\n<meta property=\"og:site_name\" content=\"James Bovard\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/jim.bovard\" \/>\n<meta property=\"article:published_time\" content=\"2006-12-08T17:27:22+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2006-12-08T17:43:22+00:00\" \/>\n<meta name=\"author\" content=\"Jim\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@jimbovard\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Jim\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"10 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/jimbovard.com\\\/blog\\\/2006\\\/12\\\/08\\\/the-fair-trade-fraud-at-15\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/jimbovard.com\\\/blog\\\/2006\\\/12\\\/08\\\/the-fair-trade-fraud-at-15\\\/\"},\"author\":{\"name\":\"Jim\",\"@id\":\"https:\\\/\\\/jimbovard.com\\\/blog\\\/#\\\/schema\\\/person\\\/79550830ad81c14be529a2c37469974f\"},\"headline\":\"The Fair Trade Fraud at 15\",\"datePublished\":\"2006-12-08T17:27:22+00:00\",\"dateModified\":\"2006-12-08T17:43:22+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/jimbovard.com\\\/blog\\\/2006\\\/12\\\/08\\\/the-fair-trade-fraud-at-15\\\/\"},\"wordCount\":1961,\"commentCount\":6,\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/jimbovard.com\\\/blog\\\/2006\\\/12\\\/08\\\/the-fair-trade-fraud-at-15\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/jimbovard.com\\\/blog\\\/2006\\\/12\\\/08\\\/the-fair-trade-fraud-at-15\\\/\",\"url\":\"https:\\\/\\\/jimbovard.com\\\/blog\\\/2006\\\/12\\\/08\\\/the-fair-trade-fraud-at-15\\\/\",\"name\":\"The Fair Trade Fraud at 15 - 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The Wall Street Journal called Bovard \\\"the roving inspector general of the modern state\\\" and Washington Post columnist George Will called him a \\\"one-man truth squad.\\\" His 1994 book, Lost Rights: The Destruction of American Liberty, received the Free Press Association\u2019s Mencken Award as Book of the Year. His Terrorism & Tyranny won the Lysander Spooner \\\"Best Book on Liberty in 2003\\\" award. He received the Thomas Szasz Award for Civil Liberties work, awarded by the Center for Independent Thought and the Freedom Fund Award from the Firearms Civil Rights Defense Fund of the National Rifle Association. 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