Multilateral vs. Bilateral Trade
Bilateral Trade Good
Bilateral Trade Good – General
Bilateralism is key to addressing state concerns.
Thomas Rixen & Indo Rohlfing; 2005 (Thomas Rixen, political scientist and economist, is a senior
research fellow in the research unit “Transnational Conflicts and International Institutions”. He holds a
PhD from Jacobs University Bremen (with distinction), where he was affiliated with the Collaborative
Research Center (Sfb) “Transformations of the State.” Ingo Rohlfing, PhD Assistant Professor Cologne
Graduate School in Management, Economics and Social Sciences Faculty of Management, Economics
and Social Sciences, University of Cologne. TranState Working Papers, “The Political Economy of
Bilateralism and Multilateralism: Institutional Choice in International Trade and Taxation”
http://academia.edu/700228/The_Political_Economy_of_Bilateralism_and_Multilateralism_Institutional
_Choice_in_Trade_and_Taxation)
Based on stylized institutional histories of both cases we develop simple game theo-retic models
incorporating domestic level considerations. Building on these models we then go on to explain the
institutional choice between bilateral and multilateral coopera-tion. We show that state concerns for
the distribution of benefits can be best achieved under bilateral bargaining in both regimes. However,
in order to lower transaction costs there are also elements of multilateral bargaining. Agreement is
multilateral in trade in order to overcome a free-rider problem that results from an interaction of
concerns for distribution and enforcement. Since such a problem of free-riding does not exist in taxation, there is no need for binding multilateral agreement.
Bilateral Trade Good – Econ
Bilateralism is key for American manufacturing – allows access to foreign consumers.
The National Association of Manufacturers, 2011 (“Manufacturing and Trade – Bilateral Trade”
http://www.nam.org/Issues/Trade/Manufacturing-And-Trade-Bilateral-Trade.aspx)
Ninety-five percent of the world’s consumers live outside the United States. Manufacturers in America
must be able to reach those consumers to grow their businesses and create jobs.¶ Manufacturers rely
on bilateral free trade agreements (FTAs) as a proven, practical way of eliminating foreign trade
barriers and creating new markets for American products. The passage of FTAs with Colombia, Panama
and South Korea in October 2011 opens these markets for U.S. exports by removing tariff and nontariff barriers. The legal process for implementation of these agreements necessary for U.S.
manufacturers to take advantage of the benefits is underway. As soon as it is available, the NAM will
provide information on how you can take advantage of these three new agreements.¶ FTAs account for
nearly one-half of U.S. manufactured goods exports. They lower the price for consumer goods in the
United States as well as the costs U.S. businesses pay for imported materials. Bilateral FTAs also open
foreign markets to U.S. goods, increasing employment in those export sectors. The Census Bureau
reports that over the past two years, U.S. manufacturers had a $50 billion surplus with their
counterparts in FTA partner countries. Conversely, in the same time period, the U.S. trade deficit in
manufacturing goods with the rest of the world was an astounding $820 billion.¶ The United States
already has FTAs in force with 17 nations. Utilizing the preferential benefits of these existing FTAs can
be a powerful factor in increasing manufactured goods exports for companies large and small. The
NAM and its members are strongly encouraging key players in the Administration, Congress and the
international community to move forward on some of the most pressing trade agreements, including
the Trans-Pacific Partnership regional trade agreement; passing Permanent Normal Trade Relations with
Russia to receive the benefits of its World Trade Organization accession; and launching new bilateral and
regional trade initiatives. Additionally, the NAM leads an advocacy effort for a strong, proactive U.S.
Bilateral Investment Treaty (BIT) program.¶ Without these critical tools in the fight to open foreign
markets, U.S. manufacturers are at a significant competitive disadvantage.
Bilateralism accesses the economic benefits of free trade while remaining easy to
execute.
Joynal Abdin, 6/19/2009 (Assistant Secretary, The Federation of Bangladesh Chambers of Commerce
and Industry (FBCCI), The Financial Express, “Advantages of bilateral free trade agreement (BFTA)”
http://www.thefinancialexpress-bd.com/2009/06/19/70203.html)
Currently the world economy is experiencing a very serious economic crisis. World's leading economies
are suffering badly and working hard to overcome this crisis. Governments around the world offered
special rescue packages to help the entrepreneurs so that the economic recession may not destroy their
industrial sectors. The government of Bangladesh has also taken a comprehensive package to tackle the
possible effect of recession. But we must remember that day comes after night. This recession may
create opportunities for the growing economies to have newer market access around the world. ¶
Presently countries are to share mutual strengths and overcome mutual weaknesses through combined
efforts. As a result, countries are coming closer through various trade agreements like regional free
trade agreements, bilateral free trade agreement even through cross-regional free trade agreements.
Geographical distance is not an issue to act as a barrier today. ITC facilitates one touch connection
between two cross-regional business interests. ¶ Signing bilateral free trade agreement is not only
creating the condition for closer relations among the nations but also providing a common platform to
act in a united fashion in other multilateral platforms like, multilateral trade negotiation in the World
Trade Organisation (WTO) and even in the global political arena under the UN. On the other hand,
executing bilateral free trade agreement is comparatively easier than the regional or multilateral
ones.¶ It facilitates resource sharing and to have a unique voice in the other forums. For example,
during 11-17 May, 2009, this writer participated in an international workshop on "South Asian Economic
Integration: Ways, Tools and Methods" in the Orchard Hotel, Singapore jointly organized the Asian
Development Bank (ADB) and the Federation of Indian Chambers of Commerce and Industry (FICCI).
During dummy trade negotiation session he found that, the young trade negotiators of Sri Lanka and
India are talking from a common ground. Each of them is supporting strongly the argument of the other.
¶ It is because they are now closer to each other than any other South Asian States. They have a
bilateral trade agreement in action and they are going to further expand it into agreements on
investment and labour movement very soon. So it is quite clear that they will act together in real trade
negotiation table under the South Asian Free Trade Agreement (SAFTA) or in the WTO. As a result small
Sri Lankan economy will get a strong support from giant India in these arenas. ¶ The BFTAs also facilitate
technology transfer and free flow of investment for the least developed countries (LDCs) like
Bangladesh. These two are core elements of development of a country. ¶ You may hardly get a single
country except Bangladesh that is not having a bilateral free trade agreement with any neighbours. Not
only neighbours, currently countries are signing cross-regional free trade agreements to ensure market
access for their products abroad. This scribe may cite the example of the Singapore-USA free trade
agreement here. Our neighbouring country India is also negotiating one bilateral free trade agreement
with Singapore. Hopefully it may be concluded this year and will be executed from the next year. ¶
Currently, Bangladesh has three proposals for signing bilateral free trade agreements. Those are IndoBangla FTA, Bangladesh-Sri Lanka FTA and Pak-Bangla FTA. It is not known why our government is in a
state of indecision in connection with these BFTAs. From our past experience we can say that indecision
is always harmful for us. For example, when submarine cable offer came, we neglected it or somehow
avoided it. Similarly, the offer for the Asian Highway came. But we were dithering then and now it is
depending on Indian and Thai decision, whether we may get connectivity with the Asian Highway.
Usefulness of both the offers have been proved today and now we are ready to spend for the same. ¶
Bangladesh's experience regarding the regional trade agreements: Bangladesh is involved in four
regional preferential trade agreements. Those are:¶ Asia Pacific Trade Agreement (APTA)¶ SAARC
Preferential Trading Arrangement (SAPTA)¶ Trade Preferential System among the Countries of OIC (TPSOIC)¶ Preferential Trading Arrangement among Developing-8 Countries (D-8 PTA)¶ We had one bilateral
preferential trade agreement (PTA) with Islamic Republic of Iran i.e. "Preferential agreement Between
Bangladesh and Iran". We are a member of two Free Trade Agreements (FTAs). These are - South Asian
Free Trade Area (SAFTA) and Bay of Bengal Initiatives for Multi-Sectoral Technical and Economic
Cooperation (BIMSTEC FTA)¶ None of the above is functioning well. So far as individual trade agreement
is concerned, APTA is still in a negotiation stage, SAPTA has been transformed into SFTA, TPS-OIC and D8 PTA would not be effective due to Turkey factor. ¶ The only hope is AFTA, but until now intra-SAARC
trade under SAFTA is less than 5.0 per cent and countries are not fulfilling SAFTA commitments as
stated. A long negative list, some non-tariff barriers (NTBs), technical barriers to trade (TBTs) and geopolitical factors are involved behind the ineffectiveness of SAFTA. ¶ From the above discussion it is clear
that, implementing RFTAs has involved a slow process and the progress may be halted by any country.
On the other hand, implementing BFTA is quite easy and depends only on two signatory states. So we
should give more concentration on BFTAs rather than waiting for multilateral or RFTAs.
Bilateral Trade Good – War
Bilateralism prevents war – trade gains are more in comparison to multilateralism.
Philippe Martin et al; 2006 (Phillipe Martin is a Professor of economics Sciences Po, Chairman of the
department of economics, Member of the Conseil d'Analyse Economique of the Prime Minister; Thierry
Mayer is a Professor of Economics at Sciences-Po, Scientific advisor in CEPII, Research Fellow at CEPR
(International Trade Programme) ; Mathias Thoenig is Professor of Economics at the University of
Geneva and associate researcher at Paris School of Economics and research affiliate at CEPR in the
international trade and macro programmes; “Make Trade Not War?”
http://www.ecore.be/Papers/1177063947.pdf)
This paper analyzes theoretically and empirically the relationship between military conflicts¶ and trade.
We show that the intuition that trade promotes peace is only partially true even in a¶ model where trade
is beneficial to all, military conflicts reduce trade and leaders take into account¶ the benefits of peace.
When war can occur because of the presence of asymmetric information, the¶ probability of
escalation is lower for countries that trade more bilaterally because of the opportunity¶ cost
associated with the loss of trade gains. However, countries more open to global trade have a¶ higher
probability of war because multilateral trade openness decreases bilateral dependence to any¶ given
country. We test our predictions on a large data set of military conflicts on the 1950-2000¶ period. Using
different strategies to solve the endogeneity issues, including instrumental variables,¶ we find robust
evidence for the contrasting effects of bilateral and multilateral trade openness.¶
Multilateralism leads to an increase in war when compared to bilateralism.
Philippe Martin et al; 2006 (Phillipe Martin is a Professor of economics Sciences Po, Chairman of the
department of economics, Member of the Conseil d'Analyse Economique of the Prime Minister; Thierry
Mayer is a Professor of Economics at Sciences-Po, Scientific advisor in CEPII, Research Fellow at CEPR
(International Trade Programme) ; Mathias Thoenig is Professor of Economics at the University of
Geneva and associate researcher at Paris School of Economics and research affiliate at CEPR in the
international trade and macro programmes; “Make Trade Not War?”
http://www.ecore.be/Papers/1177063947.pdf)
We test the theoretical predictions that bilateral and multilateral trade have opposite effects on¶ the
probability of military conflicts on the 1950-2000 period using a data set from the Correlates Of¶ War
(COW) project, that makes available a very precise description of interstate armed conflicts.¶ The
mechanism at work in our theoretical model rests on the hypothesis that the absence of peace¶ disrupts
trade and therefore puts trade gains at risk. We first test this hypothesis. Using a gravity-type¶ model of
trade, we find that bilateral trade costs indeed increase significantly with a bilateral conflict.¶ However,
multilateral trade costs do not increase significantly with conflict. Second, using a theory¶ groundedeconometric model, we test the predictions of the model related to the contradictory effects¶ of
bilateral and multilateral trade on conflict. In the pooled regressions, we control for potential¶
contamination by co-determinants of conflict and trade. We also control for possible country pair¶ fixed
effects. Finally, we use an instrument that exerts a positive shock to multilateral trade and¶ a negative
one to bilateral trade, without directly interacting with armed conflicts. We choose the¶ Generalized
System of Preferences (GSP) which are schemes of tariff preferences granted by developed¶ countries to
developing countries. Our results are robust to these different estimation strategies, and¶ are
quantitatively substantial: historically, between 1960 and 2000, the increase in bilateral openness¶ for
the median country pair separated by less than 1000kms, has led to a decrease in the probability¶ of
military conflict by 22%. However, during the same period, the growth in multilateral openness has¶
led to an increase in this same probability by 66%.
Trade patterns affect the probability of war – proximate countries are mostly at risk.
Philippe Martin et al; 2006 (Phillipe Martin is a Professor of economics Sciences Po, Chairman of the
department of economics, Member of the Conseil d'Analyse Economique of the Prime Minister; Thierry
Mayer is a Professor of Economics at Sciences-Po, Scientific advisor in CEPII, Research Fellow at CEPR
(International Trade Programme) ; Mathias Thoenig is Professor of Economics at the University of
Geneva and associate researcher at Paris School of Economics and research affiliate at CEPR in the
international trade and macro programmes; “Make Trade Not War?”
http://www.ecore.be/Papers/1177063947.pdf)
The previous specification has the drawback of dropping most of the sample. As an alternative,¶ we use
the whole sample in column (3) but add interaction terms between distance and the two¶ trade
variables.14 In this regression, both trade variables have the right sign and are significant at¶ 1%. The
interaction variables also have the right sign and are significant. An increase in bilateral¶ openness
decreases the probability of MID [militarized interstate conflict] but less so for distant countries. A
high multilateral¶ openness raises the probability of MID mostly for proximate countries. This is
consistent with our¶ theoretical framework and suggests that trade patterns (bilateral and multilateral
trade openness)¶ affect the probability of military conflicts mostly for proximate countries because
they mostly affect¶ the probability of escalation rather than the probability of disputes. Hence if, as
suggested by our¶ theory, globalization increases the probability of escalation for any given pair of
countries (through¶ facilitated global trade flows), it does so mostly for countries that have a high
probability of disputes,¶ i.e. proximate countries. This, we argue, may be an explanation for the trend
towards more local¶ conflicts as illustrated by Figure 2.
Bilateral trade deters war whereas multilateral trade opens doors to regional conflict.
Martin, 2005
Philippe Martin, Thierry Mayer and Mathias Thoenig, September 2005. All at the Centre for Economic Policy
Research, researcher at Ecole Nationale des Ponts et Chaussées, researcher at Université Paris I PanthéonSorbonne, and Centre for Economic Policy Researcher and Department of Political Economics at the University of
Geneva. "Make Trade not War?" CEPR Discussion Paper No. 5218 Available at
(http://www.ecore.be/Papers/1177063947.pdf)
Our paper is the first, to our knowledge, to highlight the opposite effects of bilateral and multilateral
trade on the probability of war and to base the empirical analysis on testable predictions generated by a
theoretical model. Our results are somewhat ambivalent on the impact of trade and more generally of
globalization on the prevalence and the nature of war. We have shown that even in a model where
trade increases welfare and war is Pareto dominated by peace, higher trade flows may not lead to
peace. The intuition that trade promotes peace is only partially right: bilateral trade, because it
increases the opportunity cost of bilateral war indeed deters bilateral war. However, multilateral
trade openness, because it reduces the opportunity cost of going to war with any given country,
increases the probability of war between any given pair of country. Trade globalization also affects the
nature of war: multilateral trade openness increases the probability of local wars and deters global
conflicts. This last point is important: our paper should not be interpreted as suggesting that trade
globalization leads to war. Given that World Wars are certainly the most costly in terms of human
welfare, this is not a small achievement. We interpret more our paper as a word of caution and a
possible explanation of the changing nature of wars.
Bilateral => Multilateral Trade
Bilateral commerce inevitably leads to multilateral trade
HLWG 2/11 (Final report from High Level Working Group on Jobs and Growth as part of the executive office of the president and United
States Trade Representative, February 11, 2013) http://www.ustr.gov/about-us/press-office/reports-and-publications/2013/final-report-us-euhlwg
Given the size and influence of the transatlantic partnership, the HWLG also supports the aim of developing rules in several areas that would
bilateral commerce, but would also contribute to the progressive strengthening of the
multilateral trading system. To this end, negotiations shall address:
not only be relevant to
Multilateral Trade Bad – War
Multilateral trade leads to war – increases vulnerability to disruptions
Kinne 12
Brandon J Kinne, 2012, assistant professor of political science at The University of Texas at Dallas, PhD in political science
from Yale University, “Multilateral Trade and Militarized Conflict: Centrality, Openness, and Asymmetry in the Global Trade
NetworkӦ
http://journals.cambridge.org/download.php?file=%2FJOP%2FJOP74_01%2FS002238161100137Xa.pdf
&code=26756df0ac55f890a239898b8d35813a
This dyadic logic is directly extensible to multilateral trade. Increased integration corresponds to
increased trade partners, strengthened trade ties, and shorter commercial distances to nonpartners.
Each of these aspects of trade increases a state’s sensitivity to market dynamics and its vulnerability
to disruptions in the global trade network. As Dorussen and Ward observe, dyadic conflict ‘‘generates
external effects on the system of states,’’ including reductions in trade¶ (2008: 195). An extensive array
of trade partners (breadth) creates potential disruption points in a¶ state’s trade relations, and stronger
trade ties (depth) increase the costs of those disruptions. Commercial proximity to nonpartners
(closeness) also increases costs for conflict. Referencing Angell (1933), Gartzke asserts that
‘‘interdependence ensures that damage inflicted on one economy travels through the global system,
afflicting even aggressors’’ (2007, 170). Similarly, Maoz argues that states avoid conflict even against
enemies they do not trade with, as the¶ ‘‘uncertainty and instability associated with conflict may cause
their trading partners to look for other markets’’ (2009, 225). These indirect costs may disrupt global
value-added chains or intrafirm trade by, for example, affecting availability and costs of intermediate
goods and other productive inputs. When states use force, even toward nonpartners, they risk
disrupting the complex economic linkages that feed their domestic industries and drive demand for
their own products (cf. Brooks 1999). Thus, by ex ante increasing opportunity costs, multilateral trade
unilaterally inhibits uses of force.
Multilateral Trade Good
Multilateralism Now
Latin America has a history of multilateral deals that attempt to assert autonomy over
the US – America’s weakened state provides the avenue for Latin America to form
these deals.
Thomas Legler & Lesley Burns, September 2010 (Thomas Legler, FOCAL Fellow and Professor of
International Relations at the Universidad Iberoamericana, Mexico City; Lesley Burns joined FOCAL to
manage the governance and civil society portfolio. Prior to joining FOCAL she conducted research
throughout Latin America on democratic stability, democratic institutions, elections, Canadian-Latin
American relations, international trade and peace agreements and taught international relations.
Canadian Foundation for the Americas, “Latin American ¶ Multilateralism: ¶ New Directions”
http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
This compilation paints the picture of a ¶ dynamic multilateralism with a number of ¶ distinctive
characteristics, but one also fraught ¶ with challenges. For one, Latin American ¶ multilateralism is
heavily state- or even ¶ executive-centric, with a clear preference for ¶ presidential summits. Second, it is
pro tempore, ¶ in the sense that it favours arrangements in ¶ which national leaders take periodic turns ¶
chairing organizations over creating strong, ¶ independent secretariats. Currently, Latin ¶ American
multilateralism has a strong emphasis ¶ on promoting spaces for political dialogue ¶ and concentration
instead of investing in ¶ regional public goods, regional governance and ¶ development. It also rests on a
long tradition of ¶ defensive multilateralism, one that participates ¶ in the struggle to assert Latin
American ¶ autonomy vis-a-vis the United States while also ¶ defending the exclusive sovereign
prerogative ¶ of states to formulate foreign policy unimpeded ¶ by neither domestic nor foreign
actors. Future ¶ research must determine to what extent these are Latin American multilateral
idiosyncrasies ¶ or whether in fact they are common to different ¶ regional contexts. The authors concur
that these ¶ defining attributes often represent the limits or ¶ deficiencies of Latin American
multilateralism; ¶ some point out that this illustrates the gap ¶ between multilateral aspirations and the ¶
reality. As Andrés Serbin states in his overview ¶ of the main principles and challenges to Latin ¶ American
multilateralism, the next test for ¶ the region will be to move from formal to ¶ substantive co-operation.
Multilateralism has grown rapidly in Latin America.
Andres Serbin, September 2010 (Dr. Andrés Serbin is the Executive Director ¶ of Coordinadora
Regional de Investigaciones ¶ Económicas y Sociales (CRIES), Chair of the ¶ International Coalition for the
Responsability to ¶ Protect (ICRtoP), Member of the Global Partnership ¶ for the Prevention of Armed
Conflict (GPPAC) ¶ directorate, and Councillor of the Argentine Council ¶ of Internacional Relations (CARI).
Canadian Foundation for the Americas, “Latin American ¶ Multilateralism: ¶ New Directions”
http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
This past decade, a large number of multilateral ¶ forums, organizations and spaces have been ¶
deployed in Latin America and the Caribbean. ¶ Among them is a growing abundance of summits ¶ of
all stripes, both strictly regional and broader, ¶ such as the Summit of the Americas, the IberoAmerican
Summit and the EU-Latin America and ¶ Caribbean Summit. There was also a marathonlike succession
of four summits involving ¶ presidents from Latin America and the Caribbean ¶ in Brazil in December
2008; these summits lay the ¶ foundations for the recent Cancún Summit and the ¶ creation of the
Community of Latin American and ¶ Caribbean States (known by its Spanish acronym ¶ CELAC). The
summits have also been associated ¶ with the creation of new multilateral organizations ¶ working on
agreements and co-ordination related ¶ to a diverse regional agenda. Parallel to these ¶ summits are
the social summits convened by civil ¶ society and non-governmental organizations.¶ Further, the last
10 years have been witness ¶ to the birth of several multilateral spaces with ¶ economic-financial or
integration goals: the ¶ Bolivarian Alliance for the Peoples of Our America ¶ (ALBA), the Union of South
American Nations ¶ (UNASUR), the Bank of the South, the South ¶ American Energy Summit, and the
Summit of ¶ Latin America and the Caribbean on Integration ¶ and Development (CALC); these overlap
with older ¶ multilateral spaces such as the Rio Group, the ¶ Latin American Integration Association
(ALADI), ¶ the Latin American and Caribbean Economic ¶ System (SELA), the Central American Integration
¶ System (SICA), the Caribbean Community ¶ (CARICOM), the Andean Community (CAN), the ¶ Southern
Common Market (MERCOSUR), the ¶ Andean Development Corporation (CAF) and the ¶ Association of
Caribbean States (ACS).
The increase in Latin American multilateralism has excluded the US from activity in the
area.
Andres Serbin, September 2010 (Dr. Andrés Serbin is the Executive Director ¶ of Coordinadora
Regional de Investigaciones ¶ Económicas y Sociales (CRIES), Chair of the ¶ International Coalition for the
Responsability to ¶ Protect (ICRtoP), Member of the Global Partnership ¶ for the Prevention of Armed
Conflict (GPPAC) ¶ directorate, and Councillor of the Argentine Council ¶ of Internacional Relations (CARI).
Canadian Foundation for the Americas, “Latin American ¶ Multilateralism: ¶ New Directions”
http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
There is also a series of endogenous factors ¶ that have contributed to the proliferation of ¶
multilateral organizations. These factors include ¶ the reconfiguration of the political and geopolitical ¶ maps of Latin
America and the Caribbean through ¶ the election of progressive or populist governments ¶ in many countries, the
emergence of regional ¶ leadership with the aspiration of backing distinct ¶ regional projects , and new
and different visions ¶ for regional integration that have contributed to ¶ heterogeneity and fragmentation. Other relevant ¶ endogenous
factors include the growing role of ¶ social movements —especially through the rise to ¶ power of left-wing and centre-left governments— ¶
that aspire to influence the regional agenda. ¶ Another
factor is the weakening of the state and ¶ its effective political,
and the recurrence of internal and
security ¶ crises at different levels; these crises contributed ¶ to the weakening of the process of
democratic ¶ consolidation that, despite failures in poverty ¶ and inequality reduction, is still prevalent in the ¶ region.
Finally, the emergence of new challenges ¶ and threats to regional security and public safety ¶ due to transnational crime and
drug trafficking, ¶ which both question and limit the traditional ¶ principle of national sovereignty and eventually ¶ lead to the
reconsideration of the principle of nonintervention, has also factored in.¶ The reconfiguration of the
region’s geopolitical ¶ map is due to both the lack of U.S. attention toward ¶ the region, and the election of
territorial and institutional ¶ reach, especially after structural reforms in the ¶ ’90s,
left-wing and centreleft governments in most of its countries. One of ¶ the goals of these governments is to strengthen ¶ their autonomy from
the United States, be it ¶ through more independence and clearly limited ¶ co-operation, or through direct confrontation as ¶ a form of
differentiation and pressure exertion. ¶ Brazil is a clear example of the former approach, ¶ and Venezuela of the latter. Through their different
¶ ideological and political perspectives, both countries play a clear leadership role in creating ¶ autonomous multilateral spaces in accordance
¶ with their respective visions of a regional project ¶ that fosters a multi-polar international system. ¶ The most representative initiatives are
UNASUR ¶ led by Brazil and ALBA led by Venezuela. This ¶ emergent
leadership has generated a significant ¶ increase
in the efforts to promote multilateral ¶ spaces that exclude the United States; these ¶ efforts sometimes
overlap or compete against one ¶ another as they vie to become the hard nucleus of ¶ regional integration promoting different political ¶ and
ideological orientations. These efforts were ¶ differentiated from, and eventually rivalled, the ¶ Organization of American States’ (OAS) vision
for ¶ the hemisphere. ¶ In addition, the emergence and development of ¶ social movements and their will to influence the ¶ policies and
decisions —or at least the agendas— ¶ developed in these multilateral spaces have led to ¶ diverse attempts at participation. In the framework
¶ of new and emergent multilateral organizations, ¶ the main opportunity for the participation of ¶ civil society and social movements in
particular ¶ is achieved through various social summits that ¶ eventually generate dialogue with governments. ¶ However, beyond the
participation of the private ¶ sector in trade agreements in the ’90s, citizenry ¶ has been conspicuously absent from emerging ¶ multilateral
organizations, both because of its own ¶ diversity and heterogeneity, and because of the ¶ lack of institutional mechanisms for participation. ¶
For example, during the marathon-like succession ¶ of summits in Costa do Sauipé, Brazil in December ¶ 2008, and despite the precedent set
by the South ¶ American Community of Nations (CSN), the ¶ involvement of civil society was inexistent and ¶ there was no effective interaction
with participating ¶ governments. ¶ Further, the weakness of some states has become ¶ a relevant endogenous factor. Their political and ¶
institutional limitations increase the chances that ¶ any crisis or conflict that takes place will affect the ¶ stability and security of a country’s
neighbours. ¶ That is why it has become necessary to develop ¶ and consolidate specific multilateral mechanisms ¶ that can effectively defuse
or mediate in inter- or ¶ intra-state crises to bring forward less polarized positions. This was done by the Group of Rio after ¶ the ColombiaEcuador crisis of March 2008 and ¶ by UNASUR in the 2008 Pando crisis in Bolivia. ¶ However, many
of the current threats to
regional ¶ security are not the work of clearly identifiable ¶ state or domestic actors, but that of transnational ¶ actors, such as
participants of organized crime. ¶ These threats require transnational policies ¶ and strategies that can only be coordinated by ¶ multilateral organizations or forums. Beyond their ¶ effective accomplishments, these venues become ¶ a
crucial factor to co-operate and co-ordinate ¶ the necessary policies to fight new transnational ¶ security threats. This is exemplified by the
creation ¶ of a series of UNASUR mechanisms, most notably ¶ the South American Defence Council. ¶ The last endogenous factor relates to
policy coordination and lies in the need to face specific ¶ challenges brought about by particular sectors, ¶ such as: finance, which is particularly
sensitive ¶ to globalization; energy; the development of ¶ regional infrastructure that allows for greater ¶ interconnection and better
communication; and ¶ policies in public health, poverty eradication and ¶ environmental protection, which often go beyond ¶ the national
level and display transnational ¶ characteristics. The co-ordination of these ¶ policies seeks to create regional public goods that ¶ transcend the
national sphere and necessarily ¶ becomes a fundamental element in the creation ¶ and development of multilateral organizations, as ¶
evidenced by the Initiative for the Integration of the ¶ Regional Infrastructure of South America (IIRSA), ¶ UNASUR’s Health Council, and the
creation of the ¶ Bank of the South.
A decline of US hegemony in Latin America has increased multilateral deals with other
world powers - energy has increased influence.
Thomas Legler, September 2010 (Thomas Legler, FOCAL Fellow and Professor of International
Relations at the Universidad Iberoamericana, Mexico City. Canadian Foundation for the Americas, “Latin
American ¶ Multilateralism: ¶ New Directions” http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
R¶ ecent events may well be adding up to a ¶ dramatic redefinition and even possible ¶ transformation of
the inter-American system. ¶ Having endured successive periods of foreign ¶ domination under
colonialism and postindependence, states from Latin America and ¶ the Caribbean (LAC) are presently
passing ¶ through an unprecedented historical moment ¶ in which not only have they won hardfought ¶ autonomy vis-a-vis existing regional and global ¶ powers, but they also have the potential to ¶
take charge decisively over their own regional ¶ governance agenda.¶ An important part of this story is
the gradual ¶ decline of U.S. hegemony in the region such ¶ that now we can speak accurately of a
posthegemonic moment in the region’s history. ¶ Concurrently, as even conceded recently by ¶ Secretary
of State Hillary Clinton, we see the ¶ rise of a multi-polar regional order, in which ¶ Argentina, Brazil,
Chile, Mexico and Venezuela ¶ enjoy considerable regional influence (although ¶ not necessarily
equally) alongside the United ¶ States. Importantly, for the first time, Brazil, ¶ Chile and Mexico are all in
the process of joining ¶ the international club of official development ¶ assistance donors. Bolivia, Brazil
and Venezuela ¶ possess vast natural gas and oil reserves with ¶ the potential to convert these
countries into ¶ international energy powers along the lines of ¶ their Middle East counterparts. ¶ In
practical terms, LAC states have successfully ¶ diversified their international relations to ¶ such an extent
that they now currently enjoy ¶ hitherto unknown foreign policy autonomy and flexibility. This often
translates into a situation ¶ where individual countries continue existing ¶ trade and investment
arrangements with ¶ the United States while pursuing expanding ¶ ties with such non-traditional
actors as the ¶ European Union and its individual member ¶ states, Canada, China, India, and Venezuela
¶ through its petro-diplomacy initiatives.
US backed organizations are losing power to regional multilateral organizations.
Thomas Legler, September 2010 (Thomas Legler, FOCAL Fellow and Professor of International
Relations at the Universidad Iberoamericana, Mexico City. Canadian Foundation for the Americas, “Latin
American ¶ Multilateralism: ¶ New Directions” http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
The traditional, U.S.-dominated pillars ¶ of the inter-American system, that is, the ¶ Organization of
American States (OAS), the ¶ Inter-American Development Bank (IDB), the ¶ Rio Treaty, and the
Summit of the Americas, ¶ face increasing competition and mandate ¶ overlap from a striking
proliferation of new ¶ sub-regional and regional integration schemes ¶ and multilateral forums
characterized by their ¶ “U.S.-free” membership. On top of the Andean ¶ Community, the Southern
Common Market ¶ (MERCOSUR), the Caribbean Community ¶ (CARICOM), and the System for the Central
¶ American Integration (SICA), the long list also ¶ includes the Rio Group, the Bolivarian Alliance ¶ for the
Peoples of Our America (ALBA), the ¶ Union of South American Nations (UNASUR) ¶ and the IberoAmerican Summits. The Cold ¶ War relic of the Rio Treaty has come under ¶ serious challenge, first by
Mexico’s withdrawal ¶ in 2003 and then by the creation of an ALBA ¶ military alliance and a new South
American ¶ Defense Council linked to UNASUR. For its ¶ part, the Summit of the Americas faces a new ¶
challenger: the Summit of Latin America and ¶ the Caribbean on Integration and Development ¶ (CALC),
which held its second meeting in Mexico ¶ City in February 2010. Further, the Banco del ¶ Sur could
eventually pose competition for the ¶ IDB. Finally, the OAS struggles to maintain its ¶ relevance in the
context of a rapidly expanding ¶ and increasingly complex inter-American ¶ governance architecture.
Non-US multilateral blocs are experiencing growing influence in the region at the
expense of the US due to increasing activism of regional multilateral forums.
Thomas Legler, September 2010 (Thomas Legler, FOCAL Fellow and Professor of International
Relations at the Universidad Iberoamericana, Mexico City. Canadian Foundation for the Americas, “Latin
American ¶ Multilateralism: ¶ New Directions” http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
It is noteworthy that “U.S.-free” multilateral forums have increasingly taken the lead ¶ in efforts to
resolve pressing problems on ¶ the regional agenda. In March 2008, Latin ¶ American leaders that had
gathered for the Rio ¶ Group Summit held in Santo Domingo managed ¶ to diffuse the crisis triggered
by the incursion ¶ of the Colombian military into Ecuadorian ¶ territory, which targeted the
Revolutionary ¶ Armed Forces of Colombia (FARC) presence in ¶ the neighbouring country. In September
2008, ¶ UNASUR held a fruitful emergency session ¶ to address the worrisome political crisis in ¶
Bolivia. In 2009, SICA, ALBA, MERCOSUR, the ¶ Rio Group and UNASUR all responded rapidly ¶ and with
determination to the June 28 coup ¶ d’état in Honduras. In August 2009, UNASUR ¶ convened another
special session to confront ¶ the growing regional tensions triggered by the ¶ recent announcement that
the United States ¶ had reached an agreement with Colombia to ¶ sustain and possibly expand its military
bases ¶ in that country.
Multilateralism in Latin America will grow – declining US influence has freed up the
area.
Michael Shifter, September 2010 (President of the Inter-American Dialogue, a Washington-based
centre ¶ for policy analysis and exchange on Western Hemisphere affairs. He also directs the Andean
program at the Inter-American Dialogue. ¶ Prior to joining the Inter-American Dialogue; Canadian
Foundation for the Americas, “Latin American ¶ Multilateralism: ¶ New Directions”
http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
T¶ he Western Hemisphere cannot be justly ¶ accused of lacking regional and multilateral ¶ mechanisms
purportedly aimed at strengthening ¶ co-operation. Drawing up a full inventory of ¶ such mechanisms,
and explaining their purpose ¶ and role, is in itself a considerable task. ¶ The proliferation of regional
groupings stems ¶ in part from a longstanding aspiration in ¶ Latin America and the Caribbean for
greater ¶ unity and integration. In some ways, this is ¶ an old and familiar story. But in the age of ¶
globalization, that aspiration also derives from ¶ the determination of such countries as Brazil ¶ and
Venezuela to assume more active regional ¶ leadership —along with the relative decline ¶ of U.S.
influence in hemispheric affairs. As ¶ Latin American countries face a widening ¶ range of foreign
policy options they also seek ¶ increased breathing space and distance from ¶ the hemisphere’s
dominant power. ¶ While it is preferable to have weak institutions ¶ than no institutions at all, it would
be better still ¶ to have regional and sub-regional groupings ¶ that are able to effectively tackle common ¶
problems and challenges, from drugs, security ¶ and democracy and human rights to trade, the ¶
environment and migration. What is striking ¶ about the hemisphere’s current multilateral ¶
arrangements is the extent to which they have, ¶ on balance, underperformed. This is particularly ¶ so in
light of the gravity of the shared agenda, ¶ and the expectations created in the early post Cold War years
about vigorous co-operation. ¶ The obstacles have been fundamentally ¶ political, both within
countries —the United ¶ States included— and among nations. The ¶ notion of collective action on
key policy ¶ challenges that would gradually erode barriers ¶ of sovereignty has given way to the
salience ¶ of nationalism, resulting in high degrees of ¶ tension, fragmentation and disarray. ¶ On
economic, technological, demographic and ¶ cultural fronts integration is moving forward, ¶ albeit by fits
and starts, and absent the idea ¶ of an all-encompassing Free Trade Area of ¶ the Americas. But as
bilateral strains mount, ¶ drug-fueled violence spreads, and democratic ¶ safeguards and the rule of law
in some countries ¶ erode, the mobilization of the hemisphere’s ¶ political resources has been
disappointing.
Countries are moving towards multilateralism - it promotes trade liberalization and
attracts resources.
Sam Choon Yin, October 2004 (Sam Choon Yin is the Head of the School of Business at PSB Academy.
“Multilateralism, Regionalism, and Bilateralism” http://choonyin.tripod.com/multilateralism/)
However, it is useful to note that RTAs and FTAs are complimenting rather than replacing multilateral
negotiations. They are tapped when there is a possibility of the trading system falling side ways and
backwards (the realisation of the bicycle theory). Fred Bergsten (1996) from the International for
International Economics has pointed out that contemporary regionalism and bilateralism initiatives
were necessary to keep up with the momentum of trade liberalisation after the conclusion of the
Uruguay Round.[1]¶ Furthermore, contemporary RTAs and FTAs are welcomed for they respond to the
process of competitive liberalisation (a term coined by Fred Bergsten (1996)). More countries are
essentially moving towards regional and bilateral trade negotiations because of their desire to attract
investments, jobs and technology so as to perform economically better than others. This appears to be
true if one is look at Mexico’s experience. For instance, in view of the positive prospect of NAFTA,
leaders of Singapore and Malaysia had led government and business delegations to Mexico in early
1992 to discuss cooperative opportunities in trade and investment while Japanese, Korean and
Taiwanese investors announced plans to locate new production facilities in Mexico (Snape, Adams and
Morgan, 1993, p. 167).¶ In the process of competitive liberalisation, more countries would be pressured
to liberalise trade further so as to avoid being left behind by others who had gone ahead with trade
liberalisation either bilaterally or regionally. Andrew Stoler (2003) provided an example. He credited the
NAFTA for helping to push the Uruguay Round toward a successful conclusion. In arguing for AUSFTA,
both the Canberra and Washington offices had also used the term ‘competitive liberalisation’ to explain
the demonstration effect of the FTA in helping achieving the WTO objectives. This is pointed out in
Stoler (2003, p. 25) in response to an argument put forward in the ACIL report (prepared for Australia’s
Rural Industries Research and Development Corporation). The ACIL report had argued that the US might
feel that it had done enough in meeting Australia’s demand in the AUSFTA such that it became ‘less
interested in meeting those demands in the WTO context’ (ACIL, 2003, p. vii).[2]
Multilateral Trade Good
Multilateralism solves the problems bilateralism creates – greater regional unity and
integration is key.
Michael Shifter, September 2010 (President of the Inter-American Dialogue, a Washington-based
centre ¶ for policy analysis and exchange on Western Hemisphere affairs. He also directs the Andean
program at the Inter-American Dialogue. ¶ Prior to joining the Inter-American Dialogue; Canadian
Foundation for the Americas, “Latin American ¶ Multilateralism: ¶ New Directions”
http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
On economic, technological, demographic and ¶ cultural fronts integration is moving forward, ¶ albeit by
fits and starts, and absent the idea ¶ of an all-encompassing Free Trade Area of ¶ the Americas. But as
bilateral strains mount, ¶ drug-fueled violence spreads, and democratic ¶ safeguards and the rule of
law in some countries ¶ erode, the mobilization of the hemisphere’s ¶ political resources has been
disappointing. ¶ To be sure, there have been some successes that, ¶ in a hemisphere devoid of regional
groupings, ¶ might not have otherwise been achieved. A ¶ Brazilian initiative launched in 2008, the ¶
Union of South American Nations (UNASUR) ¶ was able to help defuse tensions between ¶ Colombia and
Venezuela, and also assisted in ¶ brokering a political accord in Bolivia. But it is ¶ unclear whether
UNASUR and the associated ¶ South American Defence Council (CDS) will ¶ become sufficiently
institutionalized to deal, ¶ for example, with the fundamental threat of ¶ organized crime and the risk
of an arms race in ¶ the region. Among UNASUR members, levels ¶ of mistrust are high and
governments are ¶ generally reluctant to cede too much control on ¶ such sensitive questions. ¶ The
Community of Latin American and ¶ Caribbean States (CELAC), the latest grouping ¶ that will be formally
launched in Caracas in July 2011, is exclusively regional. The United States, ¶ Canada and Europe do not
take part. Bolivian ¶ President Evo Morales has said that CELAC will ¶ supplant what he sees as the U.S.dominated ¶ Organization of American States (OAS). ¶ The OAS has had more than its share of difficulties
¶ and frustrations, particularly surrounding the ¶ 2009 crisis in Honduras. Member states have long ¶
expressed disappointment with the organization’s ¶ performance. Still, despite its shortcomings, ¶ the
OAS has developed a remarkably advanced ¶ normative and juridical framework, and has had ¶ some real
accomplishments in resolving conflicts ¶ throughout its history. The formation of CELAC ¶ might provide
added impetus to the United States ¶ and Canada to revitalize and reform the OAS. ¶ It will take some
time before the incipient ¶ regional groupings acquire more definite shape ¶ and a clearer purpose. Some
political posturing ¶ will be inevitable, and national governments ¶ may well turn inward to deal with
many of ¶ their problems. It is unlikely, however, that ¶ such reactions will succeed in resolving the ¶
underlying problems that continue to deepen ¶ and that require meaningful co-operation. ¶ In the postfinancial crisis context, Latin ¶ America’s resilience and multiple strengths have ¶ been on display and
deserve to be recognized. ¶ But the region’s vulnerabilities are serious, ¶ and cannot be adequately
addressed without ¶ effective multilateralism.
Multilateralism prevents global crises and helps governments deal with internal
issues.
Thomas Legler, September 2010 (Thomas Legler, FOCAL Fellow and Professor of International
Relations at the Universidad Iberoamericana, Mexico City. Canadian Foundation for the Americas, “Latin
American ¶ Multilateralism: ¶ New Directions” http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
In the absence of world or regional ¶ governments, multilateralism is an anchor for ¶ diverse
governance schemes, from addressing ¶ international economic crisis to combatting ¶ transnational
crime to countering global ¶ warming. In theory, as the main embodiment ¶ of multilateralism, formal
international ¶ organizations contribute in practical ways to governance challenges, such as the ability
to ¶ centralize collective activities for member states ¶ or to serve as independent and neutral thirdparty
arbiters in conflict resolution. Informal ¶ and formal multilateral groupings can promote ¶ the creation
of new norms and the construction ¶ of new international regimes, as well as enhance ¶
communications, share knowledge, and coordinate approaches among member states.
Multilateral trade solves Latin American instability
Thomas Legler, September 2010 (Thomas Legler, FOCAL Fellow and Professor of International
Relations at the Universidad Iberoamericana, Mexico City. Canadian Foundation for the Americas, “Latin
American ¶ Multilateralism: ¶ New Directions” http://www.iadb.org/intal/intalcdi/PE/2010/06396.pdf)
On a number of occasions the Americas’ ever ¶ more complex regional and sub-regional ¶ multilateral
architecture has been advantageous. ¶ For example, in the 1996 political crisis in ¶ Paraguay, the
efforts of MERCOSUR leaders ¶ complemented the OAS response to procure a ¶ quick resolution.
During the mounting crisis ¶ in Haiti in 2003-2004, CARICOM leaders ¶ assumed an important role in coordinating ¶ with the OAS the search for a political solution. ¶ During the current crisis ignited by the
June ¶ 28, 2009 coup in Honduras, SICA, the OAS ¶ and the United States jointly proposed Costa ¶ Rican
President Óscar Arias as chief dialogue ¶ facilitator. The sub-regional groupings of the ¶ Andean
Community, CARICOM, the SICA ¶ and MERCOSUR have also served as caucuses ¶ in the OAS
Permanent Council and General ¶ Assembly which have facilitated the crafting of ¶ resolutions.
Multilateralism is efficient and cost effective for developing countries
Powell 3 (Lindsey, Yale Center for Environmental Law and Policy New Haven, CT- paper prepared for: Global Environmental Governance:
the Post-Johannesburg Agenda on 23-25 October 2003) http://www.yale.edu/gegdialogue/docs/dialogue/oct03/papers/Powell.pdf
In fact,
multilateralism offers developed nations a solution to the aforementioned problem by arranging for competing
states to synchronize their implementation of such regulation. As a result, heavily polluting nations can begin the
That analysis falls short, however, when multilateralism is viewed in a broader context.
abatement process with minimal fear regarding the loss of their respective competitive advantages, since those nations most likely to be their
competitors – other developed, heavily polluting nations – will be required under a multilateral framework to abate as well. Clearly, the same
cannot be said for a nation that decides to abate unilaterally.
Multilateral cooperation thus allows developed nations, if
to work toward that end in a much more efficient,
predictable, and ultimately more cost-effective manner than would a series of disjointed, unilateral
decisions to reduce pollution.
they are truly serious about their commitment to an improved environment,
MDB’s are empirically better than bilateral agencies
Ratha 1 (Dilip, from Economic Policy and Prospects Group at The World Bank “Complementarity Between Multilateral Lending and Private
Flows to Developing Countries: Some Empirical Results” December
2001)http://elibrary.worldbank.org/docserver/download/2746.pdf?expires=1372544934&id=id&accname=guest&checksum=BF6B5ED755EF91
57812DD823CEE5A240
Besides transferring funds when countries do not have access to private capital, lending
from multilateral development banks (MDBs) is supposed to contribute to building infrastructure,
institutions and public policy in developing countries.1 The not-for-profit and multilateral nature of
these lending institutions has some distinct advantages in comparison to private lenders and bilateral
agencies: these agencies have access to a wealth of information on developing countries that can be useful for
investors undertaking new investments in a developing country; they also provide a unique forum for international policy
coordination, and if necessary, for designing and exercising policy conditionalities in a borrower country. It is expected, therefore, that
multilateral lending should encourage private flows to developing countries.
Multilateral trade is key to US Leadership
Sutherland 12 (Peter is Special Representative of the Secretary General of the UN for Migration and former Director General of the
WTO. “The Bilateral Threat to Free Trade” published: December 31, 2012)http://www.project-syndicate.org/commentary/the-doha-round-andthe-decline-of-the-world-trade-organization-by-peter-sutherland#FP8IS6zpbUXEv5IK.99
multilateral trade negotiations
have significantly shaped the world in which we live and have dramatically enhanced the lives of millions of people.
Successful
Between 1960 and 1990, only one person in five lived in an economically open society; today, nine in ten do.
But if we are to move forward rather than revert to earlier, more dangerous times, the
US, in particular, must reassert a
constructive role in multilateralism. The US must lead again, as it did in the past. And now it must do so with China at its
side.
Inequality DA
Inequality Turn
1NC Inequality Turn
Uniqueness – Inequality gap decreasing in Latin America since 2000
Light 13
“The U.S. is Now More Unequal than Much of Latin America”¶ January 29, 2013 by John Light article
from MOYES AND COMPANY.com
The vast gap between rich and poor in Latin America has long been notorious. In fact, it grew even more
during the 80s and 90s. But over the last decade, income inequality in Latin America has been rapidly
decreasing, while inequality in the U.S. has skyrocketed in the other direction, as the top 1 percent of
earners pulls further and further away from the middle class and poor.¶ over the last half a century,
income inequality in the U.S. has grown more than in any other western country. As a result, the U.S. is
now one of the more unequal countries in the Americas, according to the U.N. Economic Commission
for Latin America and the Caribbean’s Statistical Yearbook, released earlier this month. Incidentally,
the most equal country on the list, Uruguay, is led by a president who lives on his wife’s farm and
gives 90 percent of his salary to charity, leaving himself with an income of $775 a month — in line
with the average Uruguayan.¶ he relative supply and a decrease in¶ the relative demand for skilled
labor. In the case of Argentina, the demand-side of the story¶ dominates while in Mexico, the supplyside one does; in Brazil, both appear to be equally¶ important. In turn, the increase in the relative
supply of skilled labor seems to be associated¶ with a push in the coverage of basic education, which
made low-skilled labor relatively less¶ abundant. The distribution of human capital became more
equal and—everything else the¶ same--the gap in returns to schooling by level narrowed. Changes in
demand for labor by¶ skill level also moved favorably towards the unskilled. There is some evidence that
positive¶ terms of trade had something to do with this change. The exact mechanism, however,¶ remains
to be identified.
Link – increased trade causes income inequality in
Economist’s View 2007 (Mark Thoma, “Trade and Inequality” June 15, 2007
<http://economistsview.typepad.com/economistsview/2007/06/trade_and_inequ.html>).
If you haven't heard about it, Vox EU is a new blog from the Centre for Economic Policy Research and it has an impressive list of contributors. In
this entry, Paul Krugman adds to his discussion in "Divided Over Trade" and "Winners and Losers from Trade" on the increasing role of trade as
a source of inequality:¶ Trade and inequality, revisited, by Paul Krugman, VoxEU: Trade and inequality, revisited Paul Krugman 15 June 2007
Print Email Comment Republish¶ It’s
no longer safe to assert that trade’s impact on the income distribution in
wealthy countries is fairly minor. There’s a good case that it is big, and getting bigger. I’m not endorsing
protectionism, but free-traders need better answers to the anxieties of globalisation’s losers.¶ During the 1980s
and 1990s, there was considerable concern about the possible role of globalisation in contributing to rising income inequality, especially in the
United States. This concern was based on standard economic theory: since the 1941 Stolper-Samuelson paper, we’ve known that growing trade
can have large effects on income distribution, and can easily leave broad groups, such as less-skilled workers, worse off.¶ After economists
looked hard at the numbers, however, the consensus was that the effect of trade on inequality was probably modest. Recently, Ben Bernanke
cited these results – but he recognised a problem: “ Unfortunately,
much of the available empirical research on the
influence of trade on earnings inequality dates from the 1980s and 1990s and thus does not address
later developments. Whether studies of the more recent period will reveal effects of trade on the
distribution of earnings that differ from those observed earlier is to some degree an open
question.Ӧ
But the question isn’t really that open. It’s clear that applying the same models to current data that, for example, led William
Cline of the Peterson Institute to conclude in 1997 that trade was responsible for a 6% widening in the college-high school gap would lead to a
much larger estimate today. Furthermore, some of the considerations that once seemed to set limits on the possible inequality-promoting
effects of trade now seem much less constraining.¶ There are really two key points here: the rise of China, and the growing fragmentation of
production.¶ First, thanks to the rise of China, OECD imports of manufactured goods from developing countries have continued to rise rapidly
since the early 1990s. Cline’s estimate of income distribution effects was based on data from 1993, when US imports of manufactures from
developing countries were approximately 2% of GDP; now that number is close to 5%, and rising rapidly.¶ At the same time, the rise of China
has prevented, for the time being, a development that I and others expected to mitigate the effects of trade on income distribution: up-skilling
by the developing country exporters. “As newly industrializing countries grow,” I wrote in 1995, “their comparative advantage may shift away
from products of very low skill intensity.” And that’s exactly what happened – for the countries that were the major exporters of manufactured
goods to the OECD then. As John Romalis has shown, the exports of the original group of Asian newly-industrialising economies have shifted
dramatically away from labour-intensive toward skill-intensive products.¶ But along has come China, which is far more labour-abundant now
than the NIEs were then. A simple indicator is relative wage rates: in 1990, according to the US Bureau of Labor Statistics, the original four Asian
NIEs had hourly compensation costs that were 25% of the US level. Now the BLS estimates that China’s labour costs are only 3% of US levels.¶ In
1995 I
also believed that the effects of trade on inequality would eventually hit a limit, because at a
certain point advanced economies would run out of labour-intensive industries to lose – more
formally, that we’d reach a point of complete specialisation, beyond which further growth in trade
would have no further effects on wages. What has happened instead is that the limit keeps being
pushed out, as trade creates “new” labour-intensive industries through the fragmentation of
production.¶ For example, the manufacture of microprocessors for personal computers is clearly a highly sensitive, skill-intensive process.
Intel’s microprocessor production, however, now takes place in two stages: the “fabs,” which print the circuits on disks of silicon, are all located
in high-wage advanced countries, but the assembly and testing, in which those disks are cut into individual chips and tested to be sure that they
work, is conducted in China, Malaysia, and the Philippines.¶ Outsourcing of services, in both directions, adds to the possibilities of unequalising
trade. The skill-intensive pieces of production processes that mainly take place in the third world are often now located in the OECD – for
example, Lenovo, the Chinese computer company, has its executive headquarters in North Carolina.¶ What
all this comes down to
is that it’s no longer safe to assert, as we could a dozen years ago, that the effects of trade on income
distribution in wealthy countries are fairly minor. There’s now a good case that they are quite big, and
getting bigger.¶ This doesn’t mean that I’m endorsing protectionism. It does mean that free-traders need better answers to the anxieties
of those who are likely to end up on the losing side from globalisation.¶ Dani Rodrik adds:¶ A new mainstream consensus on trade and wages?:
Krugman was the co-author of a well-known 1994 paper (called "Trade, Jobs, and Wages") which laid out the case for trade's relative
insignificance. Interestingly, his co-author on that paper, Robert Lawrence, does not see much of a footprint of trade behind the recent rise in
inequality. In fact, he argues the case is even less compelling now...¶ How to reconcile the two perspectives? I think Lawrence is right to the
extent that the skill premium has stopped rising since 2000, and therefore the type of approach that Cline and others used ... would not actually
explain current inequality... But there are other (non-Stolper-Samuelson) models, based on bargaining for example, that could.¶ In any case,
...[w]hat is remarkable is that a growing number of prominent economists--Bernanke, Summers,
Krugman--are now willing to give globalization a starring rather than supporting role in the recent rise
on inequality.¶
Internal link – income inequality structurally constrains growth and leads to economic
decline and instability – the internal link outweighs the turn
NYT 2012 (October 16, “Income Inequality May Take Toll on Growth”
http://www.nytimes.com/2012/10/17/business/economy/income-inequality-may-take-toll-ongrowth.html?pagewanted=all&_r=0&pagewanted=print)
Income inequality has soared to the highest levels since the Great Depression, and the recession has
done little to reverse the trend, with the top 1 percent of earners taking 93 percent of the income gains
in the first full year of the recovery.¶ The yawning gap between the haves and the have-nots — and the
political questions that gap has raised about the plight of the middle class — has given rise to anti-Wall
Street sentiment and animated the presidential campaign. Now, a growing body of economic research
suggests that it might mean lower levels of economic growth and slower job creation in the years
ahead, as well.¶ “Growth becomes more fragile” in countries with high levels of inequality like the
United States, said Jonathan D. Ostry of the International Monetary Fund, whose research suggests that
the widening disparity since the 1980s might shorten the nation’s economic expansions by as much as a
third.¶ Reducing inequality and bolstering growth, in the long run, might be “two sides of the same
coin,” research published last year by the I.M.F. concluded.¶ Since the 1980s, rich households in the
United States have earned a larger and larger share of overall income. The 1 percent earns about onesixth of all income and the top 10 percent about half, according to statistics compiled by the respected
economists Emmanuel Saez of the University of California, Berkeley and Thomas Piketty of the Paris
School of Economics.¶ For years, economists have thought of such inequality in part as a side effect of
policies that fostered the country’s economic dynamism — its tax preferences for investment income,
for instance. And organizations like the World Bank and the I.M.F., which is based in Washington, have
generally not tackled inequality in the world head on.¶ But economists’ thinking has changed sharply in
recent years. The Organization for Economic Cooperation and Development this year warned about the
“negative consequences” of the country’s high levels of pay inequality, and suggested an aggressive
series of changes to tax and spending programs to tackle it.¶ The I.M.F. has cautioned the United States,
too. “Some dismiss inequality and focus instead on overall growth — arguing, in effect, that a rising tide
lifts all boats,” a commentary by fund economists said. “When a handful of yachts become ocean liners
while the rest remain lowly canoes, something is seriously amiss.Ӧ The concentration of income in the
hands of the rich might not just mean a more unequal society, economists believe. It might mean less
stable economic expansions and sluggish growth.¶ That is the conclusion drawn by two economists at
the fund, Mr. Ostry and Andrew G. Berg. They found that in rich countries and poor, inequality
strongly correlated with shorter spells of economic expansion and thus less growth over time .¶ And
inequality seems to have a stronger effect on growth than several other factors , including foreign
investment, trade openness, exchange rate competitiveness and the strength of political institutions.¶
For developing economies, the channels through which inequality might drag down growth seem clear.
Inequality might foster political instability and lead to violence and economic destruction, for
instance, a theme that fits for Arab Spring countries, like Egypt and Syria.
Uniqueness Ext.
Historical turn around for Latin American inequality gap
Gasparini 12
The rise and fall of income inequality in Latin America
Leonardo Gasparini (is director of CEDLAS, the Center for Distributional, Labor and Social Studies at
Universidad Nacional de La Plata)ECINEQ WP 2011 – 213
The income distributions in the Latin American countries experienced two distinct trends in the period
1980-2008. During the so-called “lost decade” of the 1980s, the structural reforms of the 1990s, and
the crises at the turn of the century, income inequality increased in most countries for which
comparable data are available. Starting in the late 1990s in a few countries and in the early 2000s for
the rest, inequality began to decline . Between 2002 and 2008, income inequality went down
significantly in almost all Latin American economies. This chapter documents this pattern of rise and
fall of income inequality in the region and comments on some plausible explanatory factors. After an
overview of the regional trends and comparisons with other regions of the world, it focuses on three
countries for which substantial analysis is available: Argentina, Brazil and Mexico.
Inequality decreasing for Latin America, recent decade proves
Birch 07
Declining Poverty in Latin America? A Critical Analysis of New Estimates by International Institutions
Ann Helwege and Melissa B.L. Birch Tufts University September 2007
“The last four-year period (2003–2006) has thus seen Latin America’s best performance, in terms of
social indicators, for 25 years. For the first time the poverty rate has come below the figure for 1980,
when 40.5% of the population was classified as poor, while the indigence rate is now more than three
percentage points below the 18.6% figure for that year. Moreover, the new figures show a reduction
for the third consecutive year in the absolute numbers of poor and indigent, which is unprecedented in
the region.”
Latin American inequality gap decreasing
Lusig 12
Nora Lustig, Luis F. Lopez-Calva, and Eduardo Ortiz-Juarez. 2012. “Declining Inequality¶ in Latin
America in the 2000s: The Cases of Argentina, Brazil, and Mexico.” CGD ¶ Working Paper 307.
Washington, DC: Center for Global Development.¶
http://www.cgdev.org/content/publications/detail/1426568
Inequality is a distinctive feature of Latin America due to its high level and persistence.1 After rising in
the 1990s, however, income inequality in the 2000s unambiguously declined in the majority of
countries2. From an (unweighted) average of 0.530 in the late 1990s, the Gini coefficient for household
per capita income3 fell to 0.497 in 2010.4 Of the 17 countries for which there is (reasonably) comparable
data, 13 experienced a decline (while the Gini increased in other parts of the world) (Figure 1).5 Existing
analysis suggests that the decline in inequality is robust to the selection of the time interval, income
variable, inequality measure, and data source.6
Link Ext. – Wages
Trade causes income inequality through creating a wage gap
Tasini ‘08
Jonathan has been a union leader and organizer, a social activist, and a commentator and writer on
work, labor and the economy. From 1990 to April 2003, he served as president of the National Writers
Union (United Auto Workers Local 1981).He was the lead plaintiff in Tasini vs. The New York Times, the
landmark electronic rights case that took on the corporate media's assault on the rights of thousands of
freelance authors. ¶ “BREAKING: Corporations Admit Trade Is About Lower Wages (Duh)”, Huff Post,
6/18/08¶ http://www.huffingtonpost.com/jonathan-tasini/breaking-corporations-adm_b_107773.html
I meant the "breaking" as a snark, in case it wasn't obvious. For everyone but the pro- so-called "free
trade" crowd (economists, elites and too many Democrats), it's been crystal-clear that the driving force
behind trade is wages , not efficiency, a better product, lower prices for consumers and all the other
nonsense you read. Today, even some business people are admitting it, albeit, not intentionally.¶ The
New York Times has a piece today that describes how companies are now fleeing China, or at least
hedging their bets, because--get this--labor costs are TOO HIGH:¶ China remains the most popular
destination for foreign industrial investment in the world, attracting almost $83 billion last year. But a
growing number of multinational corporations are pursuing a strategy that companies and analysts call
"China plus one," establishing or expanding Asian bases outside China, particularly in Vietnam.¶ A long
list of concerns about China is feeding the trend: inflation, shortages of workers and energy, a
strengthening currency, changing government policies, even the possibility of widespread civil unrest
someday. But most important, wages in China are rising close to 25 percent a year in many industries,
in dollar terms, and China is no longer such a bargain. [emphasis added]¶ And if you can't keep wages
down, well, let's just cut the number of workers: ¶ "We will maintain our capacity in China, but we
will make it more automatic and reduce the number of employees," said Laurence Shu, the chief
financial officer of Shanghai-based Texhong, one of the world's largest makers of cotton and spandex
fabric.¶ To limit labor costs, Hanesbrands is building a largely automated factory in Nanjing. But the
company is also building a factory in Vietnam, in addition to a factory it bought here, and two more in
Thailand. [Emphasis added]¶ What does the labor cost issue mean?¶ In coastal provinces with ready
access to ports, even unskilled workers now earn $120 a month for a 40-hour workweek, and often
considerably more; wages in inland provinces, where transport is costlier, are somewhat lower but also
rising fast. While Chinese wages are still less than $1 an hour, factory workers in Vietnam earn as little
as $50 a month for a 48-hour workweek, including Saturdays.¶ Texhong estimates that average labor
costs for each textile worker in China will rise 16 percent this year, including increases in benefits costs -on top of a 12 percent increase last year. New regulations are making it harder for companies to avoid
paying for benefits, like pensions, further increasing labor costs.¶ When those increases are combined
with a currency rising against the dollar at an annual pace of up to 10 percent, labor costs in China are
now climbing at 25 percent a year or more.¶ Got it. Imagine that: China labor is no longer a bargain.
Chinese workers are putting in 48-hour workweeks (and we thought we worked too hard) and still
earning less than $1 an hour--AND THAT COST IS GETTING TOO HIGH FOR CORPORATIONS.¶ Yes, I am
yelling. Because despite the fact that it is painfully obvious (thanks to a good article by The Times, a
paper I regularly criticize for its bias towards so-called "free trade") that wages is the overriding, and, in
many case, sole factor driving trade, we still have to hear the gibberish about those who are for socalled "free trade" are enlightened while those who oppose so-called "free trade" are backwards.¶
Perhaps we could have a public debate and ask: what is the lowest wage, taking into account differences
in prices of goods, workers around the world should expect in the future? Is there a floor?
The benefits of trade are unequally distributed – it causes unemployment
Giglio 12
Joseph M. Giglio is a professor of strategic management at Northeastern University’s College of Business
Administration. “Free trade: Bad for Us, Good for Them”, Economy in crisis, 8/26/12
http://economyincrisis.org/content/free-trade-bad-for-us-good-for-them
The natural human instinct to trade is obvious from a very early age. You know, “I’ll trade you one of my
Superman comic books for two of your Captain Marvels.” But why do nations trade?¶ We are told that
free trade is the best strategy for advancing world economic development, reducing poverty, raising
living standards and achieving world peace. There is a lot to be said on behalf of the utopian dreams
of free traders – if you disregard the realities of everyday life.¶ To say that everyone benefits in
principle is a touch misleading . For example, data from the U.S. Department of Commerce shows
that U.S. multinational corporations, the big brand-name companies that employ one-fifth of all
American workers, cut their domestic workforces by 2.9 million during the last decade while increasing
employment abroad by 2.4 million.¶ Any wonder why 15 percent of all American workers are
desperately seeking either full-time work or any work at all?¶ The answer depends on which circles you
run in. Economists, businessmen and politicians say technological advances lead to increased
productivity, which means fewer workers are needed to get the job done. Yes, we have substituted
capital for labor. But we have also substituted cheap offshore labor for American labor. Both strategies
have the same result: Americans are losing jobs and their wages are stagnating.¶ So how countries
trade and whether they benefit from it are important questions. Starting with Adam Smith, economists
have emphasized specialization and exchange as essential to increasing productivity and higher living
standards.¶ Free-trade theory is based on the notion of comparative advantage developed by David
Riccardo in 1817. His quaint theory, which built on Smith’s work, remains the cornerstone of free trade
economics.¶ So what in simple terms is comparative advantage?¶ Let’s assume that Lady Gaga, the worldfamous entertainer, also happens to be a world- class typist. Rather than both entertaining and typing,
she should specialize in entertaining where her comparative advantage is greatest and she could
maximize her income. This key insight is still endorsed today by the overwhelming majority of
economists.¶ But there are some basic objections to free trade, especially when it comes to how gains
and losses from it are distributed. Although we are told that nations benefit from free trade in the
aggregate, these gains are often unevenly distributed.¶ Cheaper labor, for example, means cheaper
goods. But who is going to pay for these goods, if Americans keep losing jobs and the middle class keeps
getting squeezed?¶ What does moving production overseas and offshoring jobs have to do with
comparative advantage? Or is this really labor arbitrage? Arbitrage is about pursuing absolute
economies; it has been around since the time of the Phoenicians. In this case, firms are taking advantage
of cross-country differences in labor costs. Thus, U.S. brand names sold in America are produced in
China.¶ American employees who lose their jobs are becoming less rich so people in foreign countries
can be less poor. In the global aggregate, people are better off, but American workers bear the loss.¶
The gains in trade are often widely dispersed, while the losses are concentrated. The extent to which
labor arbitrage or offshore outsourcing is responsible for some of our current labor-arket woes has
become highly contentious in recent years.¶ Perhaps it is time to consider Michael Corleone’s view of the
world embodied in the 11th commandment: Never go against the family. Never! Mel Brooks would tell
you this commandment was on the third tablet Moses got from God, the one he accidently broke
coming down from Mount Sinai.¶ Let’s adopt a national strategy that can make the American economy
grow fast enough to produce decent jobs for every member of the American family who wants to work.
How about we start investing in our broken-down infrastructure so it can generate economic growth
instead of hamstringing it? We could start educating our children so that they become world leaders in
something besides sports.¶ Then we just might become internationally competitive again, and restore
our economy to full employment while we’re at it.
Trade deals bad for the public
Kling, 6-14
Michael, President at Kling Publications, former editor at Zackin Publications, former reporter at The
Herald, "Economist Dean Baker: Trade Deals Are 'Bad News'", Money News, 6-14-2013 08:13 AM,
http://www.moneynews.com/Economy/Baker-trade-agreementdeals/2013/06/14/id/509931#ixzz2Xe3J9zrI
The two major trade deals in the works would most likely be "bad news" for most Americans, argues
Dean Baker, co-director of the Center for Economic and Policy Research. "Most of the people living in
our partner countries are likely to be losers too," Baker writes in an article for Truthout. One deal in the
works is the Trans-Pacific Partnership with Japan, Australia and several other East Asia and Latin
American countries. The other is with the European Union. Importantly, the deals are mainly about
regulations — not trade topics like cutting tariffs, Baker, an assistant professor at Bucknell University,
points out. The trade pacts would most likely limit national and local powers by restricting health,
safety and environmental rules that nations can enact. That's unwarranted, he argues. For instance,
suppose a country decided to ban a particular pesticide, believing it poses a health risk. If its risks
were negligible, the country banning it would be the one suffering from less productive agriculture
and higher food prices. "Is it necessary to have an international agreement to prevent this sort of
'mistake?'" The trade deals will probably strengthen copyright and patent protection, especially for
prescription drugs at the urging of the U.S. pharmaceutical industry. That would mean much higher
drug prices for our trading partners. "The difference in prices can be quite large," Baker notes.
"Generic drugs, with few exceptions, are cheap to produce. When drugs sell for hundreds or thousands
of dollars per prescription it is because patent monopolies allow them to be sold for high prices." That
would mean less revenue for other U.S. industries and fewer job opportunities for everyone from
manufacturing workers to workers in the tourism business, he warns. "The public may not have the
power to stop the high-powered lobbyists from getting their way on these trade pacts, but it should at
least know what is going on," he states. "These trade deals are about pulling more money out of their
pockets in order to make the rich even richer ." Not knowing what's going on in the negotiations is an
issue for others. Sen. Elizabeth Warren, D-Mass., is urging greater transparency for the Trans-Pacific
Partnership talks. Specifically, she is requesting the White House reveal the "composite bracketed text,"
which has proposed treaty language from the United States and other countries. "The lack of
transparency is this area is troubling because, as you know, the bracketed text serves as the focal point
for actual negotiations," Warren writes in a letter to the White House.
Link Ext. – General
Trade increases inequality between countries with different economic and social
structures- empirics prove
ECLAC 2012 (“Terms of Trade” Economic Commission for Latin America and the Caribbean, Date found under copyright to the United
Nations at the bottom of the webpage, <http://prebisch.cepal.org/en/XXIcentury/terms-trade>).
One of the most famous and most controversial components of Raúl Prebisch’s thinking was his conviction that there
had been a
centuries’ long deterioration in the terms of trade of commodities and food vis-à-vis industrialized
goods. Since the developing countries specialize in commodities and food, the downtrend in the value of these products would lead to a
worsening of their terms of trade.¶ A worsening of the terms of trade means that if export volumes remain
stable, these countries will see a decline in the purchasing power of these exports in relation to the
value of goods and services imported from abroad.¶ These ideas are referred to in the literature as the Prebisch-Singer
thesis, since the two analysts -Hans Singer and Raúl Prebisch- came up with very similar ideas at the same time. ¶ This thesis has a
fundamentally empirical basis, dating back to the end of the First World War, but especially the 1930s.
This trend continued up to the late twentieth century, when relatively speaking commodity prices
started to move up. ¶ Prebisch’s interpretation of these trends was based on a series of rational
theories. One of them is how income is distributed and how the fruits of technological progress are
allocated in countries with different economic and social structures. The prices of exports from the
centre and the periphery are based on highly uneven wages, which generate sharp inequalities and
low wages in the periphery. Moreover, since the income elasticity of demand for commodities is low, demand for goods of this kind
does not keep pace with income. Thus, developing countries are competing more intensely with each other for markets for their commodities,
and they handle this by reducing prices; these price reductions are achieved not only by increasing productivity but also by the difficulties
associated with appropriating these productivity gains domestically by raising wages and raising State capital. This problem of elasticities is
compounded by the impact of technological progress on the replacement of natural goods by artificial and synthetic goods, which was one of
the factors in the demand for goods such as textiles, nitrates, natural rubber, etc. ¶ Another component of the Prebisch thesis on the terms of
trade has to do with a pressing issue that attracted his attention: the wide fluctuations of the business cycles in the countries of the periphery.
The basic idea was that when the world economy is booming, the demand for raw materials and food soars, pushing up prices sharply in the
short term, whereas in the downswing, prices for these goods plummet; owing to the social reasons referred to above, no institutional
mechanisms existed for stemming this decline. These fluctuations may mask underlying trends, but at the end of each cycle, the deterioration is
even greater.
Trade causes inequality and manipulation
Williams 1985 (Kristen M. Williams, American Embassy Beijing “Is Unequal Exchange a Mechanism for Perpetuating Inequality in the
Modern World System?” September 1985, ESBCO <http://link.springer.com/content/pdf/10.1007%2FBF02687082.pdf>).
It the past ten years a new sociological approach to analyzing nat ional development has emerged? Utilizing some concepts from ¶ dependency
theory, the world system model has steadily gained adherents, while earlier approaches, such as various forms of moderniza tion theory, have
been criticized. The central assumption of world ¶ system theory is that there is a world system of capitalism with one ¶ international division of
labor and separate political boundaries. An
¶ important element of the theory, borrowed from dependency theory
(Frank, 1966), is that the processes of development and "underdevelopment" are intrinsically related.
As certain countries specialize in "core ¶ activities," others are manipulated to specialize in "peripheral
ac tivities?' In this view, the capitalist process continually reproduces a ¶ world-wide division of labor
rather than each country following a rela tively independent evolutionary path of development. If the
world system view is to be accepted, there should be explanations of how the ¶ political and economic
relationships between countries tend to per petuate the division of labor rather than leading to
development for all. ¶ Instead of looking at each individual country's development separately, ¶
¶
relations between countries, particularly between rich and poor ones, ¶ must be investigated.
Mechanisms must be found that contribute to the ¶ process of underdevelopment. ¶ There has been empirical research that has attempted to
specify these ¶ mechanisms.
One hypothesis that has received some empirical support ¶ is that foreign
investment, i.e. multinational corporations' penetration ¶ into the economies of peripheral countries,
has a long-term negative ¶ impact on growth (Chase-Dunn, 1975; Bornschier, Chase-Dunn and ¶ Rubinson, 1978; Gobalet and
Diamond, 1979; Bornschier, 1980). This ¶ article investigates another hypothesized process: unequal exchange. ¶ The question posed is whether
there is evidence that exchange, or trade, ¶ tends to benefit rich countries while impoverishing poor ones. The ¶ predictions of an unequal
exchange model will be empirically examined in comparison with those of two other models. ¶ E UNEQUAL EXCHANGE MODEL ¶ The idea that
trade may not be equally advantageous to all countries ¶ is not a new one. Smith and Toye (1979) identify three approaches to ¶ trade: (1) trade
is mutually beneficial; (2) it is structurally biased; and ¶ (3) it induces global polarity. It is the third point of view that underlies ¶ the unequal
exchange model. Others have conducted empirical studies ¶ testing other possible mechanisms that might induce polarity, such as ¶ the
composition of trade (raw materials vs. manufactured goods) or ¶ trade partner concentration (see Rubinson and Holtzman (1981) for a ¶
review of these studies). The
unequal exchange model differs from past ¶ studies of trade in that the type of
products traded (agricultural, raw ¶ materials, manufactured goods, etc.) is not seen as being
important. ¶ The key element is the wages paid to the persons who are producing ¶ certain products.
When the United States produces wheat, for example, ¶ the important question is the amount of
money paid to U.S. farmers to ¶ produce wheat, not the fact that it is an agricultural product. Although
¶ Wallerstein (e.g., 1978:220) and other word system theorists have referred to the issue of unequal
exchange, it is Emmanuel (1972) who has ¶ provided a theoretical basis for it. ¶ According to Emmanuel,
unequal exchange arises in the present ¶ world economy because of the wide disparity in wage rates
throughout ¶ the world. His thesis is that surplus value is transferred from low-wage ¶ countries to high-wage countries through trade.
How does this occur? ¶ Wages and profits are the independent variables in Emmanuel's theory. ¶ Instead of the prices of
commodities being determined by supply and ¶ demand, they are determined by the costs of
production (1972:28). The costs of production consist of constant capital (raw materials, equipment,
etc.) and wages. He assumes that the capital costs needed for ¶ producing a particular product are
roughly uniform and that profit ¶ rates are similar throughout the world. Wage rates, however, differ
considerably from country to country. Therefore, the prices of commodities are basically determined
by wage costs. 2 How are wages ¶ determined? As with other commodities, wages are determined by the ¶ costs of production. The
commodity is labor power and the cost of ¶ producing labor power is the food, clothing, and other necessities required to produce the worker,
i.e. the means of subsistence or standard ¶ of living. Since the standard of living in a country changes relatively ¶ slowly, wages do not change
quickly. Although Emmanuel allows for ¶ some impact from societal pressure, the "moral element" ¶ (1972:116-120), trade unions (1972:120122), and skill differences Williams 49 ¶ (1972:138), wages are thought to be historically determined. Therefore, ¶ when a country with high
labor costs trades with a country with low ¶ labor costs, surplus value resulting from low labor costs is transferred to ¶ the country with high
labor costs from the country with low labor costs. ¶ Consequently, the former gains from its trade with the latter. In conclusion, "[D]evelopment
then appears not as the cause but as the effect ¶ of high wages" (Emmanuel, 1972:124). ¶ 1 have derived two empirical predictions from this
theory. One is ¶ derived directly from his theory. If unequal exchange is operating, trade ¶ between countries with a wage difference should
have a positive effect ¶ on the economy of the high-wage country and a negative effect on the ¶ economy of the low-wage country. The other
prediction is derived indirectly from Emmanuel's disagreement with the neoclassical model and ¶ will be discussed below. Although there have
been criticisms of Emmanuel's theory on other grounds, 3 no attempt has been made to test ¶ whether the implications of his theory are
supported empirically.
Free Trade allows US companies to take advantage of lesser economies in a race to
the bottom; this kind of system is not sustainable.
Tonelson 2002 (Alan Tonelson, an American economist who is a Research Fellow at the U.S. Business
and Industry Council Educational Foundation. He has written extensively on the trade deficit between
the United States and other countries. “The Race to the Bottom: Why a Worldwide Worker Surplus and
Uncontrolled Free Trade Are Sinking American Living Standards” Published Apr 29, 2009)
All three followed what might be called the NAFTA model of¶ trade. As explained in The Race to the
Bottom, these agreements,¶ with some of the world's most poverty-stricken countries, were¶ never
designed mainly to expand U.S. exports. The markets involved were simply too small because the vast
majority of the people in these countries were simply too poor. Instead, the objective¶ was to help U.S.
multinational companies set up factories in these¶ countries, take advantage of very low labor costs
and very weak¶ or nonexistent regulations, and manufacture products to be sold in¶ the United
States.¶ Not only did these agreements vastly increase U.S. imports on¶ net instead of exports, they
helped U.S. companies remove American workers from key phases of the manufacturing processes for¶
their products—in many cases, entirely.¶ In other words, these agreements have helped plunge the
U.S.¶ economy even deeper in a race to the bottom, where its best hope¶ of attracting or keeping
vitally important business investments¶ (and therefore worthwhile jobs) is offering lower wages and¶
weaker regulations to footloose businesses. These agreements and many that have followed—e.g.,
with¶ Vietnam and the Andean countries of South America, along with¶ the trade openings to countries
such as Pakistan and Turkey that¶ the Bush administration is pushing as part of the war on terror-¶ ism—
are also worsening major imbalances in the global economy¶ that The Race to the Bottom warned of. In
particular, they re-enforce¶ the trend of transferring the world's productive capacities and¶ earnings
potential to populations too poor, too large, and still¶ growing too rapidly to expect significant
earnings growth in the¶ foreseeable future. Thus they cannot possibly consume a reason-¶ able share of
the goods they make. Meanwhile, these capacities are¶ being taken from populations that the world
depends on heavily¶ for continued consumption. The inevitable result is an international economic
system ever more dependent for its growth on¶ selling to the U.S. economy, even as the productive fuel
that has¶ powered U.S. economic growth is leaking out.¶ A recent report from the International
Monetary Fund has¶ shown just how lopsided—and thus unstable—global trade flows have become.
According to the authors, the U.S. economy is so¶ open to imports that when every unit of growth that it
achieves¶ boosts the growth of developing countries by the same amount.¶ But the European Union and
Japan are so closed to imports that¶ their growth has no effect on developing country growth what-¶
ever.''¶ Argentina's debt default in late 2001, Turkey's continuing problems, and the still-fragile state
financial of many third world countries indicates that the next global financial crisis will the biggest¶ and
most destructive one yet.¶ The recent burst of new U.S. trade agreements—including "fast¶ track"
legislation that authorizes the President to negotiate yet¶ more deals—brings up the last and possibly
most disturbing¶ globalization-related trend to emerge since The Race to the Bot-¶ tom’s publication. The
so-called anti-globalization movement¶ (most of which really should be called the "different kind of
globalization movement") clearly has lost much political momentum¶ since the tumultuous protests at
the 1999 World Trade Organization meeting in Seattle. Current globalization policies certainly are no
more popular¶ today than they were in 1999, according to all reputable polls.7¶ Much of the blame,
sadly, lies with the protestors themselves.¶ Their American wing, in particular, has seen its focus dissolve
into¶ incoherence. Clearly, 9-11 did not help, as the fast track legislation¶ benefited decisively from an
understandable but misguided im-¶ pulse (especially among Republicans in the House of
Representatives) to blindly support the president. The 2000 presidential election didn't help, either.
Many Republican members of Congress¶ normally opposed to current globalization policies simply found
it¶ much harder to vote against a Republican White House on trade¶ than a Democratic White House.
(Some Democrats made partisan¶ switches, too, but their numbers were smaller on a percentage¶
basis.)¶ Just as important, however, was that at the very time that the¶ U.S. economy finally was showing
major weaknesses, American¶ unionists and environmentalists played into the hands of cynical¶
globalization supporters. They permitted the debate to change¶ from one that focused on
globalization's impact on the U.S. economy and the American worker to one that focused on
globalization's impact on third-world poverty. The interests of American¶ working people—and
especially the working poor, who compete most directly with third world workers in industries like
apparel—were almost completely forgotten.¶ Nothing would please me more than learning that The
Race to the Bottom has helped to move the story of American workers back to-¶ ward center stage. It is
to them that this paperback edition of the¶ book is dedicated.
Aff Answers
Trade Reduces Inequality
Trade reduces inequality – Latin America proves
Montecino 2011¶ Decreasing Inequality Under LatinAmerica’s “Social Democratic” and “Populist”
Governments:¶ Is the Difference Real?¶ Juan A. Montecino (PhD Student in Economics at University of
Massachusetts Amherst ¶ Washington D.C. Metro Area) October 2011
Latin America has undergone major changes throughout the last two decades. Where once
authoritarian regimes of one form or another ruled most of the region, democracy has now become
the rule rather than the exception .2 Perhaps more remarkably, beginning around the end of the
1990s, the consolidation of democracy was accompanied by a marked shift to the left of the political
spectrum. Starting with the 1998 election of Hugo Chávez in Venezuela, left and center-left
governments were repeatedly elected across the region. With the election of Ricardo Lagos in Chile in
2000, Lula da Silva in Brazil in 2002 and then Evo Morales in Bolivia in 2005, by the middle of last
decade, the majority of the region was ruled by left of center governments with explicit redistributive
platforms.3 As the number of left-of-center governments increased, however, some scholars and
commentators began to distinguish between what they saw as two lefts: a moderate left with respect
for property rights and market forces, and an “undemocratic” left rooted in the region’s populist past.4
The former, according to these narratives, is modern, technocratic, and delivers on its promises because
of well-designed policies. The latter type, on the other hand, has simply benefitted temporarily from a
commodity boom and their policies will eventually prove unsustainable.
These changes in the political realm coincided with sustained improvements in social indicators,
including significant reductions in inequality in most countries of Latin America .5 Figure 1 compares
the levels of inequality, as measured by the Gini coefficient, for the 2007-2009 period and for 20012003. The farther a country appears below (above) the 45-degree line, the more it decreased (increased)
inequality between the two periods. Thus , by the end of last decade most countries for which data is
available managed to reduce inequality, and in some cases by considerable amounts.
Protectionism => Inequality
Economic Protectionism as opposed to free trade has dire effects on economies.
Krueger 2010 (Anne O. Krueger, former World Bank Chief Economist from 1982-1986 and First
Deputy Managing Director of IMF from 2001-2006. Better Living through Economics, 2010, Harvard
University Press)
A half century ago the non-Communist world was regarded as consisting of two blocs: the industrial countries and the
“underdeveloped” countries, as they were then called. The economies of the industrial part of the world were growing at an
unprecedented pace. In developing countries (as I shall call them), by contrast, growth was generally at lower rates than in the
rich countries. In addition, most developing countries were experiencing rates of population growth that were very high and
often rising.¶ Most assessments of the prospects of the developing countries were therefore pessimistic: with rates of growth
of per capita income in indus- trial countries above those of all but the highest-income group of develop- ing countries, it
appeared that not only the absolute gap between living standards but also the relative gap would continue increasing.1 There
was great pessimism about the possibility of declining rates of population growth, which seemed to exacerbate the outlook.¶
This can easily be seen from numbers given in the early 1960s. Although there was considerable variation from country to
country, only two coun- tries (both in Africa) were estimated to have grown at rates per capita above 6%, while only nine
countries were in the 4%-6% range. Forty-three coun- tries had experienced growth rates less than 2%, and twenty-six were in
the 2%~4% range.2 From 1950 to i960, low-income countries (then defined as having a per capita income of $265 or less) had
experienced falling per capita incomes at an average annual rate of 1.4%, and middle-income (per¶ capita incomes of $266 to
$520) and upper-middle-income (per capita in- comes of S521 to $1,075) countries had grown at average annual rates of 2.2
and 2.4%, respectively, while higher-income developing countries had experienced per capita income growth of 3.2% annually
during the de- cade. These numbers contrasted with an average annual 3.0% growth rate among the industrial countries.
Moreover, in the 1960s per capita incomes in the industrial countries accelerated to an average annual growth rate of 4%, while
the developing countries did little better, and some groups did worse, than they had in the preceding decade.3¶ To be sure,
there were some signs of progress in important dimensions in many countries. Life expectancies, which had been abysmally
low— thirty-two years in India, for example—had increased significantly. Health and nutrition indicators also suggested at least
modest improvement in most countries. School enrollments, although still low, had risen.¶ But overall, living standards were
unimaginably low by Western stan- dards. Infant mortality rates were over 100 per 1,000 in many developing countries and
over 200 per 1,000 in some. Malnutrition was pervasive, es- pecially in rural areas, and waterborne and other diseases were
prevalent. Safe drinking water was available only in major cities, albeit often errati- cally, and it was generally unavailable in
rural areas and urban slums.¶ During the quarter century to 1975, there had been a remarkable simi- larity of policies in the
developing countries. Almost all developing coun- tries had large rural populations, and a large fraction—typically 60% to¶
70%—was engaged in agriculture, which usually accounted for half or more of gross domestic product (GDP). There was a
widespread view, if not total consensus, that developing countries had to develop their indus- try and
would not, at least initially, be able to compete with manufactur- ing industries in the industrial
countries. It was also thought that without the development of industry, developing countries would
remain poor. Industrialization was equated with development and modernization.¶ It was generally
believed that economic development and rising living standards should be a major, if not the primary,
objective of government policy. Given the consensus on that belief and the need for industrializa- tion,
policies were adopted to foster the growth of new industrial activities. Although the details varied, the
overall thrust of these policies was similar in all countries: they in effect prohibited imports of goods
that might com- pete with newly established industries . Sometimes prohibitive tariffs were imposed.
In other instances import licensing was required, and licenses were granted only when it was
determined that there was no domestic source of supply available. Often these (very strong) incentives
for establishing new industries were supplemented by domestic-content requirements (so that a¶
producer of, say, automobiles would be required to obtain a certain per- centage of his parts and
components from domestic sources), thus requir- ing the development of suppliers to manufacturing
industries.¶ These import-substitution policies were consistent with, and part of, a development
strategy that assumed government ownership or regulation of most modern economic activities.
Foreign-trade and exchange controls were a necessary background against which these other
interventions could be effective, and they contributed to the difficulties that followed. Space
limitations prevent elaboration of the myriad regulations and con- trols that surrounded economic
activity in the “formal economy” of most countries. The interested reader can consult the World Bank’s
Doing Busi- ness (2008) or a similar source to glean some idea of the extent of these regulations.
Bureaucratic delays of many months could shut down a fac- tory or factories for want of an import
license for a particular spare part or replacement machine. Smuggling became widespread, and
corruption in the issuance of licenses was the rule rather than the exception. Adminis- trative efforts
to thwart smuggling and misrepresentation on licenses often resulted in reduced production because
of delays in receiving raw materi- als and other needed inputs.¶ The effects of import-substitution
regimes did not immediately become¶ evident, but over time would-be entrepreneurs knew that their
start-ups would be protected. Accordingly, they paid little heed to cost controls. Resources available for
investment were channeled into new industries, sometimes in state economic enterprises and
sometimes by rationing scarce credit to private-sector firms that would develop the desired products.
Producers inevitably found new monopoly positions more attractive than expanding capacity in their
existing lines of activity. It was also more prof- itable for an entrant to establish its own monopoly
position than to com- pete with rivals in an already-existing import-substitution industry. The result was
that industries were established that sold their products on the domestic market at prices often far
above those of competing imports; meanwhile, the monopoly positions held by producers often
meant that quality was poor and costs very high.¶ At first, many of these activities appeared sensible:
assembly of radios and bicycles, production of garments and later of textiles and footwear, and similar
activities. They were intensive in the use of unskilled labor, had relatively large domestic markets, at
least in the more populous countries, and did not place excessive burdens on scarce engineering and
technical skills or limited capital resources. But as the drive for “import substitu- tion” continued,
because of the small size of the domestic market, lack of skilled workers, and other difficulties, it was
generally necessary to move¶ into activities where costs were intrinsically higher in tiny domestic markets than those prevailing internationally, and there could be either one firm that met market demand
with a monopoly position or several small firms, each of which was so small that it had high costs. New
industries were often increasingly capital intensive, despite the fact that developing countries had very
little capital per person relative to industrial countries. The fact that sheltered producers had little
incentive to seek productivity improvements compounded the inefficiencies.¶ All these factors
contributed to very low productivity growth in devel- oping countries; in some countries it was even
negative . Artificially cheap capital goods imports (for those fortunate enough to receive import licenses) encouraged the use of capital-intensive means of production. That, in turn, led to very low
rates of growth of employment in the very indus- tries in which growth was to be concentrated.
Moreover, in most coun- tries “informal sectors” emerged and grew rapidly; these were economic
activities that avoided the bureaucratic controls and regulations that gov- erned economic activity in the
new import-substitution industries. They were labor intensive, but generally had very low productivity,
lacked ac- cess to imported machinery or equipment, and were generally very small in scale.¶ Moreover,
export earnings grew at much lower rates than the demand for imports. This was in significant part
because incentives were so highly directed toward producing goods that would compete with imports
that few investments were made in exportable production. Even if there were potentially exportable
lines of activity, the requirement that producers use domestic inputs (usually of inferior quality and high
cost) and the great attractiveness of investing in import-competing sectors generally discour- aged
export growth.¶ In consequence, balance-of-payments crises were frequent among the developing
countries. Almost all these countries (just like the industrial countries) adhered to fixed nominal
exchange rates and were reluctant to change them, even though inflation rates were generally higher,
and often much higher, than in industrial countries. As inflation proceeded, export- ing became less and
less profitable at constant nominal exchange rates, while imports of permitted items—the machinery,
equipment, raw mate- rials, and intermediate goods used in production of import-competing goods—
were becoming relatively cheaper. The authorities usually at first resorted to tighter quantitative
restrictions on imports, permitting entry only for those goods deemed “essential” for domestic
production. But even with those restrictions, the day came when it was clear that there was no way to
finance even essential imports.
Global trade raises incomes, decreases inequality, and ultimately betters the quality of
life for everyone worldwide.
Irwin 2010 (Douglas A. Irwin, the John Sloan Dickey Third Century Professor in the Social Sciences in
the Department of Economics at Dartmouth College, Research Associate of the National Bureau of
Economic Research and has also served on the staff of the President's Council of Economic Advisers and
the Board of Governors of the Federal Reserve System. Better Living through Economics, 2010, Harvard
University Press)
Of course, these critics are wrong. Economists do not advocate trade¶ liberalization for crass
materialistic reasons but because it can demonstra-¶ bly improve people’s lives. Economists are focused
on a higher goal than¶ simply raising income. The higher income that comes with more trade is¶ not an
end in itself. Rather, it is what higher incomes can purchase that¶ is important: better nutrition, better
health care, longer life expectancy,¶ higher literacy and better education, lower infant mortality, and
less child¶ labor. The reduction of poverty and the tangible improvements in the¶ quality of people’s
lives in China and India over the past two decades have¶ been simply awe inspiring. Trade liberalization
has played a key role in¶ making that reduction in poverty and those improvements possible.¶ There
are additional, unquantifiable benefits of freedom to trade. Ama-¶ rtya Sen’s (1999) Development as
Freedom argues that freedom is equally¶ as important a component of development as material
welfare, if not more¶ so. Trade creates opportunities that can powerfully change people’s lives.¶ The
sociologist Ching Kwan I-ce (1998) investigated sweatshops in China¶ and asked young women why they
wanted to work there. Aside from the¶ enormous economic benefits (their incomes were seven to eight
times greater¶ than their parents’ income in their rural village), there was one consistent¶ response: the
young women wanted to get away from their fathers, who¶ would otherwise run their lives, telling them
whom to marry and what they¶ could do. These young women valued the independence, the
autonomy,¶ and the sense that they could create their own destinies and shape their¶ own lives by
working in the factory. Those sweatshops would not have¶ existed had China not embraced the world
market. The ability of such op-¶ portunities to change people’s lives for the better cannot be underesti¶ mated.
Opening up trade accelerates economic growth.
Fernández and Bouhey 2008 (Santiago Fernández de Córdoba is an economist at the United Nations
Conference on Trade and Development (UNCTAD) and a Special Professor of Economics at Universidad de Navarra,
Spain. Antoine Bouhey has worked as a National Coordinator of Campaigns for Amnesty International Ecuador and
an adviser to Oxfam France. “Trade and the MDGs: How Trade Can Help Developing Countries Eradicate Poverty”
UN Chronicle online,
http://www.un.org/wcm/content/site/chronicle/home/archive/issues2008/partnershipfordevelopment/pid/2158
4)
Developing countries depend on national and global economic growth to achieve the Millennium
Development Goals (MDGs) by 2015. In this regard, international trade is recognized as a powerful
instrument to stimulate economic progress and alleviate poverty. Trade contributes to eradicating
extreme hunger and poverty (MDG 1), by reducing by half the proportion of people suffering from
hunger and those living on less than one dollar a day, and to developing a global partnership for
development (MDG 8), which includes addressing the least developed countries’ needs, by reducing
trade barriers, improving debt relief and increasing official development assistance from developed
countries.¶ ¶ ¶ Poverty is the most crucial plague of our times. It is commonly agreed that in order to
reduce the proportion of people living on less than $1 a day, developing countries need to substantially
accelerate their economic growth by carefully opening their markets. The standard rationale is that
trade liberalization improves efficiency in the allocation of scarce resources, enhances economic
welfare and contributes to long-term economic growth. However, while there might well be long-term
gains from opening their markets, liberalizing economies are likely to face some short-term adjustment
costs. This is because, as economies open up, a country’s imports use existing channels, while its new
exports opportunities often come from different sectors that have yet to sufficiently develop production
capacity.¶ ¶ The international community recognizes the importance of trade for development through
initiatives, such as Aid for Trade, Financing for Development and, most importantly, the World Trade
Organization (WTO) Doha Round of trade negotiations. It is estimated that the global annual welfare
gains from trade liberalization would be in the order of $90 billion to $200 billion, of which two thirds
would accrue to developing countries.1 This could help lift 140 million people out of poverty by
2015.2 ¶ Trade and economic growth. In the last decade, trade has helped trigger strong growth in
developing countries, whose share in the global trade has increased from 29 per cent in 1996 to 37 per
cent in 2006 and whose exports have consistently been growing at a faster rate than those of developed
countries. This has stimulated growth in export revenues of developing countries. At the same time,
gross domestic product (GDP) per capita, one of the most relevant indicators of MDG progress, has
increased by more than 16 per cent over the past five years in Africa, West Asia and Latin America (see
table above). This has led to significant increases in employment and investment levels. The strong
growth in exports from developing countries has, to a large extent, been due to the steady reduction
of global tariffs as barriers to trade. On average, world tariffs have declined from 11 per cent in 2000
to 7 per cent in 2006 (see Figure 1). However, there is still evidence that developing countries face
disproportionately high tariffs and trade barriers on products of export interest for them (see Figure 2).
For example, in 2005, developing countries’ agricultural exports faced, on average, a tariff of 8.9 per
cent. Developed countries still impose tariffs on imports from developing countries that are twice as
high as those from developed countries.1¶ In Africa, Mauritius—one of the most open economies in
sub-Saharan Africa—exemplifies how trade can be a strong instrument for achieving the MDGs. Its
traditional exports, such as sugar and textiles, have been sustained by trade policies that have allowed
the country to adapt to international competition and develop value-added services. Mauritius’ GDP
growth reached an impressive average of 6 per cent per year after implementing an export-oriented
strategy in 1996. Other successful initiatives have been initiated in Rwanda, where coffee exports
have fuelled economic development, and also in Kenya, where cut-flower exports have seen a growth
rate of 35 per cent annually over the last 15 years, sustained by trade incentives.
Attribute lack of substantial growth in US and Mexico after NAFTA to increased USChina relations, not failure of the FTA.
Blecker and Esquivel 2009 (Robert A. Blecker, Professor of economics and chair of the economics
department at American University, Washington, DC. Gerardo Esquivel, Professor of economics at El
Colegio de México, Mexico City. “NAFTA, Trade, and Development” October 2009
http://www.american.edu/cas/economics/pdf/upload/2009-24.pdf)
This lack of convergence did not occur because of a failure of trade to grow faster after NAFTA ¶ went
into effect. On the contrary, Table 7.1 shows that U.S. nonpetroleum imports from Mexico ¶
accelerated to an average annual growth rate of 19.5 percent in the first seven years of NAFTA ¶
(1993–2000), after growing at an already rapid clip of 13.9 percent in 1987–1993 following ¶ Mexico’s
unilateral liberalization. As a result of this faster growth, Mexico’s share of U.S. ¶ nonpetroleum imports
climbed from 6.7 percent in 1993 to 11.4 percent in 2000. The accelerated ¶ growth in 1993–2000 should
not be attributed entirely to NAFTA, however, but also resulted ¶ from two other factors: the “new
economy” boom in the United States in the late 1990s, which ¶ led to an enormous explosion of U.S.
demand for imports generally; and the depreciation of the ¶ Mexican peso following the 1994–1995 peso
crisis, which left the peso at a more competitive ¶ exchange rate for the next several years. ¶ However,
U.S. import growth from Mexico slowed considerably after 2000. U.S. ¶ nonpetroleum imports from
Mexico grew only at a 4.9 percent annual rate in 2000–2008, while ¶ U.S. imports from China continued
to soar at a torrid 16.4 percent annual pace during that ¶ period. To be sure—and this is where both
NAFTA and geography may have helped—Mexico ¶ succeeded in maintaining its U.S. market share better
than other global regions in the 2000–2008 ¶ period. The 11.3 percentage point increase in the Chinese
share of U.S. nonpetroleum imports ¶ during this period came mostly at the expense of other
countries, while Mexico’s share dipped ¶ only slightly. Nevertheless, it is likely that U.S. imports from
Mexico would have grown much 8 ¶ faster and increased their share further after 2000 in the absence
of the rapid influx of imports ¶ from China .10¶ The disappointing growth of Mexican exports to the
United States in 2000–2008 occurred ¶ after China joined the World Trade Organization (WTO) and
obtained “permanent normal trade ¶ relations” (formerly known as “most favored nation”) status
from the United States in 2001. ¶ However, other factors were also at work. As part of its inflationtargeting monetary policy, the ¶ Mexican government allowed the value of the peso to rise significantly
in the early 2000s.11 The ¶ end of the Multifibre Arrangement (MFA) in 2005 led other developing
countries (largely, but ¶ not exclusively, China) to increase their shares of global textile and apparel
production, thereby ¶ destroying a large part of the vertically integrated North American textile-apparel
complex that ¶ flourished briefly under NAFTA’s rules of origin in the late 1990s. High-tech producers
also ¶ discovered that they could find lower wages and more supportive government policies in various ¶
East Asian countries.12
NAFTA boosted demand for highly-skilled labor in Mexico, and wage inequality cannot
be attributed to trade liberalization.
Blecker and Esquivel 2009 (Robert A. Blecker, Professor of economics and chair of the economics
department at American University, Washington, DC. Gerardo Esquivel, Professor of economics at El
Colegio de México, Mexico City. “NAFTA, Trade, and Development” October 2009
http://www.american.edu/cas/economics/pdf/upload/2009-24.pdf)
Figure 7.4 shows one of the most widely cited indicators of wage inequality, the skilled-unskilled ¶ wage
gap, measured by the ratio of salaries of employees (non-production workers, in the U.S. ¶ terminology)
to wages of production workers, from the monthly survey of non-maquiladora ¶ industries in Mexico.
The sharp rise in this measure of wage inequality in the first decade of ¶ trade liberalization (1987–
1997) surprised most economists, since they had assumed that trade 12 ¶ liberalization would boost the
wages of less-skilled workers in Mexico due to a supposed ¶ abundance of less-skilled labor. One
explanation for the rise in this ratio at that time is that the ¶ initial tariffs that were lowered in the trade
liberalization of the late 1980s were higher in the ¶ industries that were most intensive in less-skilled
labor.19 Another explanation is that skill-biased ¶ technological change during this period boosted
demand for more educated workers —although ¶ this shift may have been at least partially an effect of
trade liberalization rather than an ¶ independent cause.20¶ Of course, a rise in wage inequality that
began several years before NAFTA cannot be ¶ attributed to this trade agreement. After NAFTA went
into effect, this measure of wage ¶ inequality stopped increasing and turned gradually downward
from 1997–2007, although as of ¶ 2007 it remained 34 percent above its 1987 level. While there are
probably several causes of this ¶ reversal, the leading explanation is an increase in the relative supply of
more-skilled labor due to ¶ the rising levels of education of the Mexican labor force.21
NAFTA didn’t decrease Mexican wage inequality because they’ve lacked a relative
abundance of skilled workers.
Blecker and Esquivel 2009 (Robert A. Blecker, Professor of economics and chair of the economics
department at American University, Washington, DC. Gerardo Esquivel, Professor of economics at El
Colegio de México, Mexico City. “NAFTA, Trade, and Development” October 2009
http://www.american.edu/cas/economics/pdf/upload/2009-24.pdf)
In hindsight, the expectations of significant overall wage gains for Mexican workers as a ¶ result of trade
liberalization alone were surely unrealistic. The prediction that Mexican workers ¶ in general—and lessskilled workers in particular—would benefit from trade liberalization ¶ hinged on the assumption that
Mexico had a relative abundance of (less-skilled) labor compared ¶ with its trading partners. Although
this is true in regional terms, i.e., in comparison with Canada ¶ and the United States, it is not true in
global terms, i.e., in a world economy that includes the ¶ much more labor-abundant countries of
South and East Asia. Mexico is close to the world ¶ average in terms of labor abundance, in-between
highly labor-abundant countries like China and ¶ India on the one side, and relatively labor-scarce
countries like the United States and Canada on ¶ the other.25 Similarly, although Mexico is the low-wage
country in North America, it is a ¶ medium-wage country globally.26 Thus, Mexico does not have a
global advantage in labor costs ¶ and should not have been expected to reap large gains in wages
from opening up to trade, except ¶ in those sectors where the country can parlay its geographic
proximity to the U.S. market into ¶ special competitive advantages.
Increased US trade and FDI to Mexico highly possible for future
Blecker and Esquivel 2009 (Robert A. Blecker, Professor of economics and chair of the economics
department at American University, Washington, DC. Gerardo Esquivel, Professor of economics at El
Colegio de México, Mexico City. “NAFTA, Trade, and Development” October 2009
http://www.american.edu/cas/economics/pdf/upload/2009-24.pdf)
Just before the financial crisis worsened in September 2008, the business press was ¶ noting a trend
toward the return of some manufacturing production from Asia to both the United ¶ States and
Mexico, as a result of the high energy prices and transportation costs that had emerged ¶ at that time
coupled with the then-lower value of the dollar and concerns over quality control in ¶ China.31 The
financial crisis and recession temporarily interrupted this process, as energy prices ¶ tanked,
transportation costs fell, and the dollar temporarily recovered (not only against the peso, ¶ but against
most currencies) in the fall and winter of 2008–2009. However, as the global ¶ economy began to revive
in the second half of 2009, energy and commodity prices started to 19 ¶ recover and the dollar resumed
its previous downward course against the major currencies such ¶ as the euro. If the dollar and peso
both stay low and transportation costs again rise when global ¶ demand recovers, the potential for a
revival of both Mexican and U.S. manufacturing is ¶ enormous. ¶ Press reports also indicate that
existing foreign investment in Mexico has been ¶ remarkably resilient in spite of the increased
violence resulting from the government’s ¶ crackdown on narcotrafficking;32 success in the latter
effort could help the country attract yet ¶ more FDI inflows. Furthermore, although both the U.S. and
Mexican automobile industries took ¶ a big hit in the crisis, as the auto companies begin to focus on
smaller and more fuel-efficient ¶ cars for the U.S. market, there is significant potential for a recovery of
regional trade in ¶ automobiles and auto parts. One sign of this potential is the (pre-crisis)
announcement by Ford ¶ Motors that it would produce a new (low-cost, fuel-efficient) Fiesta model at its
plant in Toluca, ¶ Mexico.33
Greater US-Mexico cooperation can benefit healthcare for both countries.
Blecker and Esquivel 2009 (Robert A. Blecker, Professor of economics and chair of the economics
department at American University, Washington, DC. Gerardo Esquivel, Professor of economics at El
Colegio de México, Mexico City. “NAFTA, Trade, and Development” October 2009
http://www.american.edu/cas/economics/pdf/upload/2009-24.pdf)
Third, there are special opportunities for mutual gains from U.S.-Mexican cooperation in ¶ the areas of
health care and elder care services. Given the aging of the U.S. population and the ¶ high and rising costs
of health and elder care in the United States, it would make sense to allow ¶ U.S. Medicare benefits
and private insurance payments to flow to Mexican providers of medical ¶ care and elder services
(e.g., assisted living or nursing homes), who can provide those services at ¶ significantly lower cost. In
fact, some U.S. senior citizens are already taking advantage of the ¶ lower cost of retiring and seeking
medical treatments in Mexico, but their numbers could be ¶ vastly expanded if Medicare and insurance
benefits were allowed to be spent there (subject, of ¶ course, to adequate quality controls). This could
provide enormous numbers of jobs for ¶ Mexicans not only in health and elder care directly, but also
in various supplier industries. Given ¶ that the manufacturing sector does not seem capable of supplying
adequate numbers of jobs in ¶ Mexico, for the reasons discussed earlier, Mexico needs to focus on other
sectors, such as ¶ services and construction, to solve its employment problems. Since rising health care
costs are 21 ¶ threatening both the private and public sectors of the U.S. economy, both countries could
reap ¶ enormous gains from such an arrangement.
Free trade has little too do with inequality
Yves 07 Does Globalization Cause Income Inequality? Posted by Yves Smith Yves (is a graduate of
Harvard College and Harvard Business School). Tuesday, February 6, 2007
Read more at http://www.nakedcapitalism.com/
Now this argument is increasingly made by the free market absolutists. We all know that free trade is a
good thing, since it makes all parties wealthier (well, at least in the two-country, two-goods model we
all learned in school, and presumably in models with more countries and more factors). But if this good
policy happens to have some side effects, as in it leaves some individuals worse off, that doens’t
necessarily obviate the overall merits of more open trade.
The causes of income inequality appear to be many, including the declining power of unions, less
progressive taxes and income redistribution, and the rise of technology (both in reducing the number
of lower-skill jobs and in increasing the incomes of higher skill ones). While globalization may play a
part, given that only 1% of American jobs have been outsourced, its role appears to be secondary.
Trade decrease inequality, China proves—
Carlos Lozada
Globalization Reduces Inequality in China-carlos lorzada ( a graduate of Notre Dame and Princeton
managing editor of Foreign Policy magazine)
National Bureau of Economic Research.com
In Globalization and Inequality: Evidence from Within China (NBER Working Paper No. 8611), coauthors Shang-Jin Wei and Yi Wu seek to overcome these obstacles by studying the connections
between openness and inequality within a single country, where data disparities as well as institutional
and cultural differences are less likely. Wei and Wu examine data for about 100 Chinese cities between
1988 and 1993, focusing on the gap between urban and rural incomes as a measure of income
inequality. (They limit the study to cities that encompass urban areas plus adjacent rural counties.) Total
income inequality in China can be decomposed into inequality between urban and rural areas, inequality
within urban areas, and inequality within rural areas. A number of other studies have shown that the
first component - the inequality between urban and rural incomes - explains 75-80 percent of the overall
inequality in China in the last two decades.
It is sometimes asserted, based on China's aggregate statistics, that it is an example in which greater
openness has led to an increase in inequality. Wei and Wu suggest that this is wrong because other
factors, such as inflation, could account for the increase in inequality. A within-country study such as
theirs can hold constant these nationwide factors. Wei and Wu find that "those cities that have had a
greater increase in the trade-to-GDP ratio have also tended to witness a reduction, rather than an
increase, in the urban-rural income inequality." In other words, openness to the global economy is
associated with a reduction, not a worsening, of income disparities
Trade reduces inequality – increases wealth
Eiras 2004
(Ana Isabel Eiras is Senior Policy Analyst for International Economics in the Center for International
Trade and Economics at The Heritage Foundation. “Why America needs to support free trade” May 24,
2004. The Heritage Foundation. http://www.heritage.org/research/reports/2004/05/why-americaneeds-to-support-free-trade)
The most compelling reason to support free trade is that society as a whole benefits from it. Free
trade improves people's living standards because it allows them to consume higher quality goods at
less expensive prices. In the 19th century, British economist David Ricardo showed that any nation that
focuses on producing goods in which it has a comparative advantage will be able to get cheaper and
better goods from other countries in return. As a result of the exchange, both trading parties gain
from producing more efficiently and consuming higher quality goods and services at lower prices. ¶
Trade between nations is the same as trade between people. Consider what the quality of life would be if
each person had to produce absolutely everything that he or she consumed, such as food, clothing, cars,
or home repairs. Compare that picture with life as it is now as individuals dedicate themselves to working
on just one thing--for example, insurance sales--to earn a salary with which they can freely purchase food, a car,
a home, clothing, and anything else they wish at higher quality and lower prices than if they had done it
themselves.¶ It simply makes sense for each person to work at what he or she does best and to buy the
rest. As a nation, the United States exports in order to purchase imports that other nations produce
more skillfully and cheaply. Therefore, the fewer barriers erected against trade with other nations,
the more access people will have to the best, least expensive goods and services in the world
"supermarket."¶ Producers benefit as well. In the absence of trade barriers, producers face greater
competition from foreign producers, and this increased competition gives them an incentive to
improve the quality of their production while keeping prices low in order to compete. At the same time,
free trade allows domestic producers to shop around the world for the least expensive inputs they can
use for their production, which in turn allows them to keep their cost of production down without sacrificing
quality.¶ In the end, the results benefit both producers--who remain competitive and profitable--and consumers-who pay less for a good or a service than they would if trade barriers existed.
Trade Good/Bad – General
Trade Good
Trade Good – General
Free trade is good – it’s a prerequisite to solving global problems
Eiras 2004
(Ana Isabel Eiras is Senior Policy Analyst for International Economics in the Center for International
Trade and Economics at The Heritage Foundation. “Why America needs to support free trade” May 24,
2004. The Heritage Foundation. http://www.heritage.org/research/reports/2004/05/why-americaneeds-to-support-free-trade)
Free trade is again under attack, despite having been, for over a century, the basis of America's wealth.
Some groups in the United States blame free trade for the loss of manufacturing jobs, while others blame it for
exposing some U.S. producers to foreign competition.¶ Free trade, however, is good for America, and for a
very simple reason: It allows American workers to specialize in goods and services that they produce
more efficiently than the rest of the world and then to exchange them for goods and services that
other countries produce at higher quality and lower cost. Specialization and free trade allow the U.S.
to become more competitive and innovative. Innovation constantly provides new technologies that
allow Americans to produce more, cure more diseases, pollute less, improve education, and choose
from a greater range of investment opportunities. The resulting economic growth generates betterpaying jobs, higher standards of living, and a greater appreciation of the benefits of living in a
peaceful society. New technologies bring about change, which, as U.S. economic history shows,
benefits society as a whole. In the process, however, some sectors suffer until they can adapt to the new
changes and begin to benefit from them. Today, Americans are experiencing some of that "suffering" because
new technologies are challenging old methods of production.
Trade Good – War
Trade openness massively reduces the risk of conflict
Pyun & Lee 2009 (Ju Hyun Pyun- Researcher at Ministry of Finance and Economy in Korea, and Korea Institute for International
Economic Policy, Jong-Wha Lee- Jong-Wha Lee is the Head of the Asian Development Bank’s Office of Regional Economic Integration,
Globalisation promotes peace, 21 March 2009, http://www.voxeu.org/article/globalisation-promotes-peace)
More importantly, our study finds that global trade openness also significantly promotes peace. An
increase in global trade openness would reduce the probability of military conflict as it leads to an
increase in bilateral trade interdependence. However, when the level of bilateral trade
interdependence is held constant, the effect of increased multilateral trade openness on the probability
of bilateral conflict is not clear. Countries more open to global trade may have a higher probability of
dyadic conflict if multilateral trade openness reduces bilateral dependence on any given country, thus
lowering the opportunity-cost of military conflict. In a recent paper, Martin, Mayer, and Thoenig (2008)
find that an increase in multilateral trade raises the chance of conflict between states (see their Vox
column). In contrast to their findings, however, our study finds that multilateral trade openness in fact
lowers the probability of dyadic conflict with the bilateral trade partner, and by a larger magnitude
than bilateral trade does alone. An increase in global trade openness by 10% from the world mean
value decreases the probability of the dyad's military conflict by about 2.6% from its predicted mean.¶
The results may derive from the fact that an open global trading system will prevent a state from
initiating a war against any trading partner because other trading partners in global markets prefer to do
business with a "peaceful" player. Hence, global trade openness of the dyad can reduce the incentive
to provoke a bilateral conflict. We also think that open states can be more peaceful because they
become more susceptible to political freedom and democracy. They apply international law better
and employ good governance. Trade openness can also lead to an "expansion of bureaucratic
structure," which concerns itself with economic interests in addition to security interests — and is
thus less likely to support military action.¶ Therefore, globalisation promotes peace through two
channels: one from the increased advantage peace holds for bilateral trade interdependence and the
other from a country’s integration into the global market, regardless of the size of trade with each
trading partner. "Globalisation" has been one of the most salient features of the world economy over
the past century. Emerging markets and developing countries continue to integrate into the global
trading system. World trade has increased rapidly, particularly since World War II — from 18% of
world GDP in 1950 to 52% in 2007. At the same time, the number of countries involved in world trade
has also increased significantly. However, despite the increase in the number of country pairs between
which conflict is possible, the probability of dyadic military conflicts has decreased.¶ Our findings suggest
that trade integration not only results in economic gain but can bring about significant political gain as
well — such as a significant “peace dividend” between trading partners. It also explains why regional or
global economic integration is often initiated to satisfy political and security motives. For example, the
raison d’etre behind the formation of the EU following World War II was the desire for peace —
particularly between France and Germany.¶ In response to the current financial crisis and economic
recession, some countries have resorted to trade-restricting measures to try to protect national
businesses and jobs. The world should remember that protectionism in the interwar period provoked
a wave of retaliatory actions that not only plunged the world deeper into the Great Depression but
also put international relations at greater risk.
Trade is key to international peace—China-Taiwan Relation Proves
Benson & Niou 2007 (Brett V. Benson-Assistant Professor of Political Science and Asian Studies at Vanderbilt University, Emerson M.
S. Niou-Professor of Political Science at Duke University, Journal of East Asian Studies 7 (2007), 35–59, 2007,
https://my.vanderbilt.edu/brettbenson/files/2012/04/jeas.pdf)
What can we learn about China and Taiwan from their economic relationship? At a glance, the booming
economic relationship between China and Taiwan appears to exhibit expected trends for trade partners
that are in close geographical proximity to one another, have complementary comparative advantages,
and share a common language and sociocultural roots. However, it is common knowledge that China
and Taiwan are also political adversaries because of the decades-long dispute over the question of
which government legitimately represents all of China and, in recent years, the official status of Taiwan’s
sovereignty. How, then, should we expect increasing economic integration to affect the political
relationships and prospects for peace and stability between interdependent dyads like China and
Taiwan?¶ Although some disagree, the prevailing view is that economic interdependence promotes
interstate peace.3 Early on, the pacific effect of interdependence was justified by two different but
related arguments. The first contends that peace follows economic integration through the
establishment of social links.4 Trade increases communication, a convergence of economic interests,
and the establishment of cultural ties that promote relationships of trust and respect between trading
partners that will prevent them from resorting to forceful means to resolve disputes.¶ The second line
of argument, which has become the central theoretical rationalization for the liberal proposition that
trade promotes peace, is that interdependence results from trade partners’ mutual emphasis on
maximization of gains from trade, which will be lost if conflict interrupts the trade relationship. From
this standpoint, conflict is viewed as a kind of tariff on trade prices, driving import prices up and export
prices down.5 As the level of trade increases, the cost of conflict also goes up because of the
opportunity costs due to lost gains from trade that follow from the onset of conflict. Optimizing trade
partners, therefore, will be less willing to initiate a conflict or increase existing levels of conflict,
because as trade increases, the marginal cost of conflict also increases, resulting in a decrease in the
marginal benefit of more hostility. Less-interdependent countries will derive greater utility from conflict
because their opportunity costs are lower due to lower import and export levels. However, as countries
trade more and become more interdependent, there is more at stake in terms of welfare gains lost
when conflict increases the cost of trade and ultimately threatens the cessation of trade altogether.
Economic interdependence decreases the likelihood of war
Copeland 1996 (Dale C. Copeland-Assistant Professor in the Department of Government and Foreign Affairs at the University of Virginia,
Economic Interdependence and War: A Theory of Trade Expectations, International Security, Volume 20, Number 4, Spring 1996, pp. 5-41,
https://www.mtholyoke.edu/acad/intrel/copeland.htm)
The prolonged debate between realists and liberals on the causes of war has been largely a debate
about the relative salience of different causal variables.¶ Realists stress such factors as relative power,
while liberals focus on the absence or presence of collective security regimes and the pervasiveness of
democratic communities.’ Economic interdependence is the only factor that plays an important causal
role in the thinking of both camps, and their perspectives are diametrically opposed.¶ Liberals argue that
economic interdependence lowers the likelihood of war by increasing the value of trading over the
alternative of aggression: interdependent states would rather trade than invade. As long as high levels
of interdependence can be maintained, liberals assert, we have reason for optimism. Realists dismiss
the liberal argument, arguing that high interdependence increases rather than decreases the
probability of war. In anarchy, states must constantly worry about their security. Accordingly,
interdependence-meaning mutual dependence and thus vulnerability-gives states an incentive to
initiate war, if only to ensure continued access to necessary materials and goods.¶ The unsatisfactory
nature of both liberal and realist theories is shown by their difficulties in explaining the run-ups to the
two World Wars. The period up to World War I exposes a glaring anomaly for liberal theory: the
European powers had reached unprecedented levels of trade, yet that did not prevent them from going
to war. Realists certainly have the correlation right-the war was preceded by high interdependence-but
trade levels had been high for the previous thirty years; hence, even if interdependence was a necessary
condition for the war, it was not sufficient.¶ At first glance, the period from 1920 to 1940 seems to
support liberalism over realism. In the 1920s, interdependence was high, and the world was essentially
peaceful; in the 1930s, as entrenched protectionism caused interdependence to fall, international
tension rose to the point of world war. Yet the two most aggressive states in the system during the
1930s, Germany and Japan, were also the most highly dependent despite their efforts towards
autarchy, relying on other states, including other great powers, for critical raw materials. Realism thus
seems correct in arguing that high dependence may lead to conflict, as states use war to ensure access
to vital goods. Realism’s problem with the interwar era, however, is that Germany and Japan had been
even more dependent in the 1920s, yet they sought war only in the late 1930s when their
dependence, although still significant, had fallen.
Globalization key to solve war
Holmes 2011 (James Holmes is professor of strategy at the Naval War College and senior fellow at the University of Georgia School of
Public and International Affairs, Globalization=No War?, August 6, 2011, http://thediplomat.com/flashpoints-blog/2011/08/06/globalizationno-war/)
Tanned, rested, and ready, Norman Angell lives again—and he now wears US Navy khaki. He’s doubled
down on his thesis that economic interdependence ought to end war, insisting that globalization has
ended war between leading powers like China and the United States. Writing in the US Naval Institute
Proceedings, Lt. Cmdr. Matthew Harper maintains that those of us who take China’s naval rise seriously
gaze ‘through a spyglass, distortedly,’ omitting a ‘glaring detail’ about this momentous development—
namely ‘the global economy.’¶ In particular, he writes, calling attention to Chinese weaponry like the DF21D/CSS-5 anti-ship ballistic missile is ‘both overblown and unproductive for the United States and its
military.’ Harper alleges that I and my co-author Toshi Yoshihara are among those pushing a skewed
understanding of Chinese military power:¶ ‘In Red Star over the Pacific…Naval War College professors
Toshi Yoshihara and James Holmes examine the rise of the Chinese military. However, they also appear
to dismiss the wider ramifications of a Sino-American conflict. In describing the Chinese advantages of
firing anti-ship missiles deep from inland China, the authors write, “the United States would risk a
limited naval conflict escalating into a full-blown war against China, its leading trading partner.” While
they note that China is America’s largest trading partner, they still imply a limited naval conflict over
Taiwan is possible.’¶ We imply nothing. We say explicitly, in Red Star over the Pacific and many other
forums, that such a conflict is possible. US-China economic ties elevate the costs of armed conflict for
both belligerents, but can’t rule it out entirely. Other interests supersede economics at times.
Conducting strikes on the Chinese mainland could carry vast economic and political consequences for
the United States. Knowing this—and knowing that Washington knows it—Beijing can hope to deter
the United States from coming to the island’s defence. Should a conflict come to pass, Chinese leaders
hope Washington will stand aside for the sake of national self-interest.
Trade Good – Economy
Trade causes economic growth
Eiras 2004
(Ana Isabel Eiras is Senior Policy Analyst for International Economics in the Center for International
Trade and Economics at The Heritage Foundation. “Why America needs to support free trade” May 24,
2004. The Heritage Foundation. http://www.heritage.org/research/reports/2004/05/why-americaneeds-to-support-free-trade)
This change is especially visible in the manufacturing sector, just as it was in the agricultural sector 100 years
ago. But in the same way that it adapted then to a new, more industry-based society, America will adapt again
to a new, more knowledge-based society. The Bush Administration should support free trade by all means
at its disposal. Keeping America free of protectionism and special favors helps to generate
opportunities and fosters economic growth. Economic growth is of particular importance today
because eliminating the large federal budget deficit requires either growth to generate tax revenues
or something even harder to come by--the political will to cut spending. To promote economic growth,
the Administration should advance more free trade agreements and lead negotiations at the World
Trade Organization to eliminate agricultural subsidies, antidumping measures, and other protectionist
policies that benefit a very small group of Americans at the expense of most other citizens. In addition,
instead of threatening to impose barriers against inexpensive imports, the Administration should lower the tax
and regulatory burden on U.S. companies so that they can be more competitive. Moving toward greater, not
less, economic freedom benefits all Americans.
Free Trade spurs innovation, jobs and bolsters US econ.
Markheim 7 (Daniella, is Jay Van Andel Senior Trade Policy Analyst in the Center for International
Trade and Economics at The Heritage Foundation. “Why Free Trade Works for America” April 16, 2007.)
http://www.heritage.org/research/reports/2007/04/why-free-trade-works-for-america)
The gains from freer Trade are substantial. Today, the $12 trillion U.S. economy is bolstered by free
Trade, a pillar of America's vitality. In 2005, U.S. exports to the rest of the world totaled $1.2 trillion
and supported one in five U.S. manufacturing jobs. jobs directly linked to the export of goods pay 13
percent to 18 percent more than other U.S. jobs.[1] Moreover, agricultural exports hit a record high in
2005 and now account for 926,000 jobs.[2]¶ In Colorado, international Trade supports one of every 20
private-sector jobs and more than 16 percent of manufacturing jobs. International Trade supports an
estimated 6.1 percent of Ohio's total private-sector employment and more than 20 percent of all
manufacturing jobs. In South Carolina, Trade supports one of every 10 private-sector jobs and more than
23 percent of manufacturing jobs.[3] State by state across America, international Trade promotes
opportunity.¶ The service sector accounts for roughly 79 percent of the U.S. economy and 30 percent of
the value of American exports.[4] Service industries account for eight out of every 10 jobs in the U.S.
and provide more jobs than the rest of the economy combined. Over the past 20 years, service
industries have contributed about 40 million new jobs across America.[5]¶ As today's global economy
offers unparalleled opportunities for the U.S., continuing to expand Trade by lowering barriers to
goods and services is in America's economic interest. Freer Trade policies have created a level of
competition in today's open market that engenders innovation and leads to better products, higherpaying jobs, new markets, and increased savings and investment. Small business, a critical component
of the U.S. economy, creates two out of every three new jobs and accounts for about one-quarter of
America's exports.[6]
Trade Good – Environment
Free trade is key to maintain a good environment
Kerr – 12 ( Thomas Kerr is director, Climate Change and Green Growth Initiatives at the World
Economic Forum. “Could free trade be good for the environment”. October 3, 2012
“http://forumblog.org/2012/10/could-free-trade-be-good-for-the-environment/”)
The past few weeks have produced good news and bad news for global “clean technology” markets, economic growth, and
sustainable development. On the negative side, a looming trade war threatens to undermine industry progress towards lower
costs and expansion in the use of solar technologies. Last week, China threatened retaliation after the US and EU launched
“anti-dumping” cases against Chinese solar energy products Without wishing to comment either way on the merits of these
cases, the World Economic Forum’s Climate Change and Green Growth Initiatives group urges all sides to avoid escalating the
situation. Negotiation is always better than litigation The good news is that leaders at the Asia-Pacific Economic
Cooperation (APEC) meeting in Vladivostok, Russia, agreed to cap tariffs affecting trade for green goods and
services at 5% When fully implemented, tariffs will be reduced from as much as 35% to the maximum
5%. They also produced a specific list of goods and services covered by the measure – a crucial step toward definitively
lowering tariff rates. These tariff reductions should have a significant positive impact in terms of
increasing trade in green goods and services – and protecting the environment – in the Asia-Pacific
region, which currently accounts for more than 50% of world trade. However, while the APEC decision is
welcome, the rising tide of green import tariffs, local content requirements, and other non-tariff barriers, demonstrates that
more action is needed: a truly global initiative to lower the barriers to green free trade. The information and
communications technology (ICT) industry faced similar challenges in the 1990s and successfully developed a ground-breaking
Information Technology Agreement that led to the elimination of tariffs. The result was substantial growth in the ICT sector,
with total trade rising from US$ 1.2 trillion to US$ 4 trillion between 1996 and 2008, an annual growth rate of 10%. This is a
promising model to follow. There should not be a “North vs South” agenda. Leading “clean-tech” companies come from large
emerging economies as well as industrialized countries. We all lose, and the environment loses, when we face trade barriers
that prevent free movement of sustainable technologies. Working with the Green Growth Action Alliance, the World
Economic Forum’s Climate Change and Green Growth Initiatives group is encouraging leading
companies in the sector to work with governments and civil society organizations in developing a
green free-trade strategy that delivers economic growth and preserves environmental prosperity.
Companies that have signed up to this approach so far include, Wal-Mart Stores, Inc., Applied Materials, Bank of America
Merrill Lynch, Barclays, Canadian Solar, General Electric, Yingli Solar, Novozymes, SEMI PV Group, Solar Energy Industries
Association, Suntech, Suzlon Group, Trina Solar, Vestas Wind Systems and Welspun Energy. We are also urging national leaders
to engage with multilateral trade organizations and liberalize trade in clean technologies. The threat to the environment affects
us all, so we should all work together to find a solution
Trade Good – Democracy
Turn: removing sanctions increase democracy: China and Mexico prove
NCPA 1-14-2003 (“Should We Trade with Cuba?” National Center for Policy Analysis, Amy Maness, No. 427, January 14, 2003
<http://www.ncpa.org/pub/ba427>).
The U.S. embargo on Cuba was instituted in 1961 to overthrow Fidel Castro and neutralize the threat his regime posed by blocking all trade,
except in food and medicine. The embargo was aggressively tightened in the 1990s with the enactment of the Cuban Democracy (Torricelli) Act
of 1992 and the Cuban Liberty and Democratic Solidarity (Libertad or Helms-Burton) Act of 1996. All trade with Cuba was blocked, including
food and medicine.
However, American attitudes toward U.S. policies on Cuba are changing, and support
for repealing the embargo is growing.¶ Passionate embargo proponents argue that trading with Cuba would strengthen Fidel
Castro, whose authoritarian regime has suppressed all opposition and violated the human rights of political dissidents. They say that trade
should occur only after Cuba makes significant efforts toward economic and political reform. Embargo opponents argue that sanctions actually
bolster support for Castro, providing an excuse for the poor economic performance of socialism. They note that the Cuban people suffer
because trade sanctions deny them access to basic necessities like food and medicine.¶ Both
arguments miss the point that U.S.
policies toward Cuba are outdated and ineffective. The threat Cuba once posed to U.S. national
security ended with the collapse of the Soviet Union in 1991. Without Soviet support, Cuba was
unable to maintain its military power. And as other countries trade with and invest in Cuba, the U.S.
embargo is increasingly ineffective.¶ Furthermore, while the embargo has not produced the desired
regime change in Cuba, integration into the international economy has helped other developing
countries - including socialist countries. Economic growth enhanced by trade has reduced poverty and
created a middle class that supports further liberalization. Trade partners are well positioned to influence government
policies on human rights and to encourage democratization.¶ Trading with the "Enemy."¶ The United States has trade agreements with
governments similar to that of Cuba - including China, Vietnam and North Korea.¶ After 20 years of economic reform, China has become one of
the United States' fastest-growing trade partners, among whom it already ranks fourth. U.S. trade with China for the year 2002 was $91.15
billion; in the month of August alone, it was $14.51 billion. As the Center for Trade Policy points out: ¶ In 1978 international trade was 10
percent of China's gross domestic product (GDP), but by the late 1990s trade comprised 36 percent of its GDP.¶ Due to China's reforms, 100
million people no longer live below the poverty line, and both rural and city dwellers have better access to health care and education.¶ Trade
with China has flourished due in part to the U.S. decision to separate trade promotion from human
rights issues. Trade has encouraged China to develop a legal system with enforceable contracts and
property rights. Thus trade is anchoring the process of democratization.¶ Trading with Latin America.¶
Like China, Mexico has benefited greatly from embracing trade as a means for economic
development. Mexico began economic reform by targeting trade and investment liberalization to
stimulate the economy in the 1980s and 1990s. According to Angel Villalobos, a high-ranking Mexican trade official:¶ Since the North
American Free Trade Agreement (NAFTA) was enacted in 1994, foreign direct investment (FDI) in Mexico has grown to over $115 billion.¶
Employment in FDI firms has grown more than twice as fast as the economy as a whole, and these firms offer salaries that are 48 percent
higher than average.¶ Between 1993 and 1999, Mexico rose from twenty-sixth to eighth among the world's exporting countries and became
the United States' second-largest trading partner.¶ The link between trade liberalization and increased democratization was evinced in Mexico's
case by the election of President Vicente Fox in 2000, which ended seven decades of single party rule. Economic growth from NAFTA increased
Mexico's commitment to trade liberalization. Mexico recently entered into free trade agreements with the European Union, Israel, Nicaragua,
El Salvador, Guatemala, Honduras and several Asian countries.¶ Hurting U.S. Farmers.¶ Cuba's population of 12 million is in need of everything,
and other countries are offering it.¶ A recent Texas A&M study commissioned by the Cuba Policy Foundation shows that U.S. farmers lose $1.24
billion each year due to the embargo. [See the Figure.]¶ Lifting the sanctions would generate an additional $1.6 billion in U.S. GDP, $2.8 billion
in sales and 31,262 jobs.¶ In the 10 months since Congress enacted the Trade Sanctions and Export Reform Act of 2000 - allowing cash sales of
agricultural commodities - Cuba has purchased almost $200 million in U.S. food and agricultural products from 34 states.¶ Falling International
Support.¶ The United States has pursued trade to promote democracy in countries throughout the Pacific and the Americas. The inconsistent
U.S. stance on Cuba does not have international support. An overwhelming majority in the United Nations has voted for 10 years to condemn
the U.S. embargo. Of 173 countries, only Israel and the Marshall Islands have sided with the United States. Similarly, the Organization of
American States has voted 32 to 1 to repeal trade sanctions against Cuba.¶ Many of these nations have pursued increased trade with the island
nation. Cuba imports approximately $1 billion annually from many U.S. allies, rendering the U.S. embargo increasingly ineffective.¶ Growing
International Support for Trade.¶
Our 42-year experiment with Cuba has shown that trade sanctions do not
work. Not only has the embargo failed to remove Fidel Castro from power, it has done little to foster
democratization.¶ Unsurprisingly, domestic support for the policy is dwindling. Last summer the House voted 262-167 to repeal the
travel ban on Cuba, and the Senate considered similar legislation. Also, according to a recent poll by the Cuba Policy Foundation, Americans
support lifting the sanctions by 52 percent to 32 percent. A large majority of Americans want the United States to start a formal dialogue with
Cuba now.¶ In May 2002, President Bush announced his Initiative for a New Cuba, which would take a quid pro quo approach to opening up
trade. Should Cuba hold free and open elections, the president would take significant steps toward repealing trade sanctions. Helms-Burton
does not allow the president to change U.S. policies toward Cuba. However, Helms-Burton comes under sunset review next year, and the 108th
Congress should allow it to expire. This would free the president to negotiate the repeal of the trade embargo and to implement other changes
by executive order.
Trade Bad
Trade Bad – Environment
Free Trade tanks the environment
Kirkpatrick et al. – 8 ( Colin Kirkpatrick works for International Business Development in the UK and
Serban Scrieciu is a Reader in Economics for Sustainability at Natural Resources Institute, University of
Greenwich. “Is trade liberalisation bad for the environment? A review of the economicevidence”
http://www.tandfonline.com/doi/full/10.1080/09640560802116988#.UdHD9yvwJZW )
The issue of whether increased levels of trade and investment will lead to increased pressures on the
environment has fuelled much of the ongoing trade-environment debate. According to the classical
theory of trade, trade liberalisation will lead to structural changes in a country's economy, allowing
specialisation in those goods or services where the country has a comparative advantage, for example,
in low labour costs, natural resource abundance or high availability of skills and socio-economic
infrastructure. The theory of comparative advantage is a static analysis that is concerned with the
efficiency gains that result from the reallocation of resources in response to the change in relative price
incentives resulting from a reduction in protective trade barriers. Standard trade theory also allows for
the potential dynamic gains from trade liberalisation, where the lowering of trade barriers ‘opens’ the
domestic economy to imported technology and know-how. Broadly similar effects are predicted to
follow the reduction of constraints on foreign investment, with an increased flow of foreign direct
investment to the liberalising economies. Trade liberalisation may theoretically affect the environment
through a variety of channels. First, the overall increase in the level of economic activity is likely to be
accompanied by an increase in the use of natural resources and higher levels of pollution (scale
effect). However, although freer trade and increased production levels might be accompanied (ceteris
paribus) by adverse environmental effects, a number of other factors make it difficult to isolate ‘pure’
scale effects and identify a strong pattern in the commonly-assumed detrimental relationship between
increased economic activity and environmental performance. Environmentally beneficial income effects
might arise when augmented financial capacity supplies more resources for environmental protection
(supply-side effects) and fosters greater demand for environmental quality (demand-side effects) (Esty
and Ivanova 2003).2 Nevertheless, although it may be difficult to isolate the ‘pure’ scale effect, it is
increasingly acknowledged that anthropogenic activities (in terms of scale and methods of production,
as well as consumption effects) are having a net negative impact on the environment, particularly with
reference to climate change and global warming (IPCC 2007, Stern 2007). To summarise, the effect of
trade and investment liberalisation on the environment is theoretically ambiguous. This is hardly
surprising, given the complex interdependencies that exist between trade, investment, regulation and
environmental quality. The different assumptions and possibilities in the theoretical literature suggest
that the impact of trade liberalisation on environmental quality may not necessarily follow a single or
unique pattern, and may depend on country specifics, the nature of the environmental problem under
investigation, as well as policy and institutional measures accompanying the trade reform process
Trade results in more greenhouse gas emissions
Horween 13 ( Matt Horween was a U.S. foreign service officer for the U.S. Agency for International
Development “Free trade Explodes Emerging Markets’ Massive Pollution”
http://realmoney.thestreet.com/articles/03/05/2013/free-trade-explodes-emerging-markets-massivepollution )
This week President Obama castigated his own country for not doing enough to control greenhouse
gasses while at the same time not saying one word about the real polluters of this world. I am talking
about the entire emerging markets world led by China who is exempt from doing anything about carbon
emissions or any other kind of pollution. Environmentalists have the same head in the sand attitude and
never protest what the emerging market is doing to foul their own air and water and to increase their
greenhouse gas emissions. Instead environmentalists endlessly badmouth the industrialized world,
which has done a huge amount of pollution control while losing millions of jobs to the emerging markets
since NAFTA and the Kyoto Protocol came into existence and the emerging markets joined the World
trade Organization. Does free trade coupled with the Kyoto Protocol actually make global warming
worse overall? I think they do. I think that ignoring the massive polluters in the emerging markets
created a situation where no matter how hard the industrialized countries try to limit their emissions
the overall world situation gets worse and more people in the industrialized countries will stay
unemployed. This is why Canada withdrew from the Kyoto Protocol in December 2011. The Canadian
government said at the time that they were not going to lose any more jobs because of the ridiculous
goals in the Kyoto Protocols and they were not going to pay any fines to the emerging markets for not
meeting their goals. I suggest that the EU, U.S. and Canada put a carbon tax on all products
manufactured in the emerging markets unless they reduce their greenhouse gas emissions and reduce
their other forms of pollution. Now the emerging market countries like China are demanding that we
pay to clean up their pollution because they are poor. The emerging market countries are not just
gigantic greenhouse gas emitters but they also are destroying rain forests and polluting rivers and of
course their air. The industrialized world is heavily in debt now and cannot afford to pay for cleaning up
the pollution that the emerging market countries have created over years since they joined the WTO.
Auto production and light vehicles in China will exceed that of Europe this year. Jobs and pollution have
gone to the emerging markets under the Kyoto Protocol and free trade that exempts the emerging
market countries from having to do anything about global warming or other forms of pollution. The
efforts to reduce global warming gasses in the industrialized world under the Kyoto Protocol coupled
with free trade has made the overall situation worse in the world because of the massive increase in
greenhouse gasses in the emerging market countries and also their much higher birth rates. The more
we increase the cost of energy in the industrialized world the more overall pollution will rise in the world
because people in the emerging markets who use very little carbon are now using much more carbon
based fuels at work and for their own personal use. Our leaders and all green groups seem blind to
what's happened and what is happening every day now. In fact the greens protest all the time against
the Keystone pipeline and against Canada for its development of shale oil and tar sands oil while they
NEVER protest in front of the Chinese embassy or the Mexican embassy about the massive pollution in
those two countries and the degradation of life itself from massive regular pollution plus global warming
gas pollution. The emerging market countries have become our creditors and have run up gigantic trade
surpluses with the U.S. due to many factors including unlimited capacity to pollute, very weak labor
laws, child labor, close to slave labor in the North Korean special manufacturing zones that South Korean
companies utilize, manipulated currencies, special rules for them under the WTO rules that allow them
to control investments in their countries and percentage ownership by outsiders and to block our
products while we cannot easily block their products. Even with unemployment at record high levels in
the southern states of the EU that rely heavily on tourism, the EU wants to implement a carbon tax on
airlines which is really a carbon tax on tourism. All the emerging market countries are against this
carbon tax on airlines and the U.S. is against it as well. The amazing thing is that none of the southern
countries in the EU has protested against this silly tax on tourism. The EU of course could care less, as it
is a bureaucracy second to now in the world and answers only to itself until very recently when the
British forced a slight cut in its budget.
Trade causes warming – movement of goods
Vaughan & Nordstrom 09’
Scott Vaughan & Hakan Nordstrom/ Scott Vaughan is the commissioner of the Environment and
Sustainable Development of the Government of Canada/Hakan Nordstrom is the Chief Economist and
Senior Adviser of the National Board of Trade, the central administrative body in Sweden dealing with
foreign trade and trade policy./Trade and the Environment/ World Trade Organization (WTO)/2/27/09/
http://dspace.cigilibrary.org/jspui/bitstream/123456789/21048/1/Trade%20and%20the%20Environmen
t.pdf?1
Global warming is caused by the increasing emissions¶ of carbon dioxide from sources that burn fossil
fuel, including energy-intensive processing industries, fossil-fuelled power plants, automobiles, and so
on. Since the early 1800s, when people began burning large amounts of ¶ coal and oil, the amount of
carbon dioxide in the earth’s¶ atmosphere has increased by nearly 30 per cent, and average global
temperature appears to have risen between¶ 0.3° and 0.6° on the Celsius scale. Carbon dioxide gas¶ traps solar
heat in the atmosphere in the same way as¶ glass traps solar heat in a greenhouse. For this reason, carbon dioxide is sometimes called a
“greenhouse gas.” Besides carbon dioxide, human emissions of methane and¶ nitrous oxide contribute to the process of global warming.
Turning now to the trade dimension of the issue, trade¶ itself is arguably a contributing factor to
global warming¶ through the carbon dioxide emitted when goods are¶ shipped between different
parts of the world. Of course,¶ the problem is generic to all kinds of transportation using¶ fossil fuel,
whether domestic or international. The firstbest policy follows: a tax on fossil fuel to curtail excessively long shipments of goods
with a low value relative to¶ weight or volume. While trade barriers could possibly be¶ used as a second-best measure to reduce transport
emissions, such measures would be only partially effective¶ since they would not address emissions from
domestic¶ shipping. The effective policy would be one that does not¶ discriminate between
international trade and trade within national boundaries.
Trade Bad – War
Trade leads to war – increases vulnerability to disruptions
Kinne 12
Brandon J Kinne, 2012, assistant professor of political science at The University of Texas at Dallas, PhD in political science
from Yale University, “Multilateral Trade and Militarized Conflict: Centrality, Openness, and Asymmetry in the Global Trade
NetworkӦ
http://journals.cambridge.org/download.php?file=%2FJOP%2FJOP74_01%2FS002238161100137Xa.pdf
&code=26756df0ac55f890a239898b8d35813a
This dyadic logic is directly extensible to multilateral trade. Increased integration corresponds to
increased trade partners, strengthened trade ties, and shorter commercial distances to nonpartners.
Each of these aspects of trade increases a state’s sensitivity to market dynamics and its vulnerability
to disruptions in the global trade network. As Dorussen and Ward observe, dyadic conflict ‘‘generates
external effects on the system of states,’’ including reductions in trade¶ (2008: 195). An extensive array
of trade partners (breadth) creates potential disruption points in a¶ state’s trade relations, and stronger
trade ties (depth) increase the costs of those disruptions. Commercial proximity to nonpartners
(closeness) also increases costs for conflict. Referencing Angell (1933), Gartzke asserts that
‘‘interdependence ensures that damage inflicted on one economy travels through the global system,
afflicting even aggressors’’ (2007, 170). Similarly, Maoz argues that states avoid conflict even against
enemies they do not trade with, as the¶ ‘‘uncertainty and instability associated with conflict may cause
their trading partners to look for other markets’’ (2009, 225). These indirect costs may disrupt global
value-added chains or intrafirm trade by, for example, affecting availability and costs of intermediate
goods and other productive inputs. When states use force, even toward nonpartners, they risk
disrupting the complex economic linkages that feed their domestic industries and drive demand for
their own products (cf. Brooks 1999). Thus, by ex ante increasing opportunity costs, multilateral trade
unilaterally inhibits uses of force.
If countries close to conflict had strong bilateral trade ties, the probability of a MID
(militarized interstate dispute) would decrease.
Philippe Martin et al; 2006 (Phillipe Martin is a Professor of economics Sciences Po, Chairman of the
department of economics, Member of the Conseil d'Analyse Economique of the Prime Minister; Thierry
Mayer is a Professor of Economics at Sciences-Po, Scientific advisor in CEPII, Research Fellow at CEPR
(International Trade Programme) ; Mathias Thoenig is Professor of Economics at the University of
Geneva and associate researcher at Paris School of Economics and research affiliate at CEPR in the
international trade and macro programmes; “Make Trade Not War?”
http://www.ecore.be/Papers/1177063947.pdf)
This seemingly pessimistic message illustrates the importance of the pattern of trade openness¶
(bilateral vs multilateral): this pattern, which exhibits wide variations across country pairs, directly¶
influences the probability of conflicts. Let us consider the following illustrative example. France and¶
Germany have in 2000 an average bilateral trade openness of 3.4% of GDP and an average
multilateral¶ trade openness (excluding bilateral trade) of 22%. India and Pakistan, which experienced
36 conflicts¶ since 1950, exhibit a different pattern: respectively 0.1% and 14%. We can use our
econometric model¶ to address the following thought experiment: What would be the probability of
conflict between¶ India and Pakistan if those countries mimicked the Franco-German trade pattern?
Using in-sample¶ predictions for 1995, our estimates show that the India-Pakistan probability of
conflict drops from¶ 57% to 49%, mostly due to the increase in bilateral trade openness. The result is
even more striking¶ if the trade structure was to mimic the Canada-US pattern as the estimated
probability of war would¶ then drop to 39%. Interestingly, India and Pakistan are in the process of
negotiating a large cut in¶ their tariffs within the South Asia Free Trade Area Agreement (SAFTA).
Trade leads to war—WWI proves
Alexander 2005 (Bevin Alexander-military historian and author, How America Got It Right, 2005,
http://bevinalexander.com/books/how-america-got-it-right.htm)
Until [World War I] occurred, the imperial powers of Europe—notably Britain, France, and Russia—
controlled much of the world’s underdeveloped territory and most of the world’s seaborne trade.
Britain was incomparably the leader. It had outperformed all other countries industrially until the last
few years of the nineteenth century. Moreover, by means of the Royal Navy, it had seized a quarter of
the earth’s surface, which made Britain the paramount force in world commerce, commanding trade
with the new dominions of Canada, Australia, New Zealand, and South Africa, with its crown jewel,
India, and with most of Latin America.¶ Since its unification in 1871, however, Germany had become a
major contender, seeking a large colonial empire of its own and expanding its trade, especially at the
expense of Britain. Right-wing political leaders began to claim for Germany status as a world power—
Weltmacht. Around the turn of the century Germany passed Britain in industrial development and
overall economic power. At the same time it began a fatal program of building a modern fleet to
challenge the Royal Navy, which set in motion a fierce naval arms race. By 1909 Britain had won the
contest. Its navy was double the size of Germany’s, and the disparity was growing, not shrinking.
Nevertheless, the damage had been done. Fearful of Germany’s economic growth, Britain signed a
series of agreements with France in 1904 that grew into a secret military alliance, and signed a similar
agreement with Russia in 1907. Meanwhile Germany had allied itself with Austria-Hungary. Thus two
powerful coalitions arose in Europe, each ready to challenge the other.¶ In 1907 Arthur Balfour, British
prime minister from 1902 to 1905, told an American diplomat, “We are probably fools not to find a
reason for declaring war on Germany before she builds too many ships and takes away our trade.”
Trade Bad – Economy
Free Trade Leads to Economic Collapse
Heffner 2012 (THOMAS HEFFNER-writer for EconomyInCrisis Inc., Free Trade – Destined to Lead to America’s Collapse, APRIL 30, 2012,
http://economyincrisis.org/content/free-trade-destined-lead-americas-collapse)
Too many Americans are blissfully or blatantly unaware of the true nature of America’s economic
condition. Yes, Americans can see the U.S. is hurting, but few know the root causes of our pain.¶
Americans are saddled with debt, both personal and national. However, many Americans do not feel the
pain and economic destruction this debt is causing to its full extent. Our lifestyle is being temporarily
supported by debt and imports. When the money from our creditor nations stops, so will the imports –
we will become a bankrupt nation.¶ We have sold 16,613 of our best companies in just 30 years.¶ This
means our wealth, our technology and our jobs have been moving to other nations, replacing highpaying jobs with jobs in the service sector. With the absence of these companies, we no longer have the
means to provide for ourselves — we have sold off our self-sufficiency.¶ We are borrowing more and
more money from the same foreign countries that we are getting our imports from.¶ Not only are we
losing $600 billion every year due to our trade deficit, we are $14 trillion in debt! This is the highest
recorded debt in U.S. history. Taxing the trillions of dollars in imports we receive every year would go a
long way toward bringing jobs and financial stability back to America.¶ We are encouraging outsourcing
at almost every level, not just manufacturing – we are outsourcing our phone support, customer service,
R&D, and more.¶ How can we support ourselves as a nation, if we cannot provide for ourselves? Our
government needs to implement policies that support and encourage homegrown industries.
Companies that outsource American jobs should pay higher taxes; those that keep jobs at home should
get tax breaks and other incentives.¶ With agreements like the North American Free Trade Agreement
and our treaty with the World Trade Organization, our domestic companies do not stand a chance.¶ If we
cannot be in control of our own laws and future, we will never break free from our present troubles.
They will continue to spiral down until there is nothing left and the United States becomes a hollow shell
of its former glory.¶ Without reform to our tax structure we can’t compete with the foreign value-added
tax (VAT) we must get our own and lower the income tax if we do not or cannot offset it domestically.
Our tax disadvantages are too great to compete internationally. Our tax system no longer works for us
– it works against us. This must change.¶ We need to wake up and let our leaders in Washington
know that these issues are important to us – our economy and our national security.
Latin America Specific
LA Trade Good – General
Increasing trade is essential for maintaining the US economy
Noriega and Cárdenas 12 (Roger F., former assistant secretary of state for Western Hemisphere
affairs and José, former assistant administrator for Latin America at the U.S. Agency for International
Development, “An action plan for US policy in the Americas,” American Enterprise Institute, 12/5/12,
http://www.aei.org/outlook/foreign-and-defense-policy/regional/latin-america/an-action-plan-for-uspolicy-in-the-americas/)
Expanding regional economic cooperation is crucial to US economic growth. An aggressive trade
promotion and investment strategy in today’s hypercompetitive, globalized economy is not a policy
option; it is an imperative. Clearly, prosperity at home depends on success abroad. The economic
opportunities in the Western Hemisphere are enormous, and US policy-makers and the private sector
must recognize them as critical to US economic growth.
In 2011, US exports reached a record $2.1 trillion in total value, despite the fact that only 1 percent of
US businesses export their products to foreign markets. The United States must expand on these
opportunities. Exports benefit the US economy by offering companies opportunities to tap new
markets, expand their production, and earn more consumer dollars. Today, 95 percent of the world’s
consumers live outside the United States, and the International Monetary Fund predicts that, through
2015, some 80 percent of economic growth will take place beyond US shores.
It is indisputable that an aggressive US trade policy—meaning selling US goods and services in as many
markets as possible—is essential for the US economy to hone its competitive edge in the 21st century.
In this sense, America’s future is inextricably linked to the future of its neighbors in its own
hemisphere. A prosperous hemisphere means a more prosperous United States.
US/Mexico Trade High
Trade with Mexico good now
Schoichet and Rodriguez 2012
Catherine E. Schoichet and Cindy Y. Rodriguez, Writers for CNN in international affairs, Key Issues on
Obama’s Mexico Trip: Trade, immigration and drug war, May 1, 2013,
http://www.cnn.com/2013/05/01/world/americas/mexico-obama-visit
The United States is Mexico's largest trading partner, and Mexico is America's third-largest trade
partner, after China and Canada. Imports and exports between the two countries totaled nearly $500
billion last year. Officials on both sides of the border have said they want economic relations to be a
focal point during Obama's visit. Obama's trip comes as Peña Nieto's government has said it's on the
verge of pursuing reforms in the country's state-run oil company -- a politically divisive issue in Mexico
and something U.S. and global investors are watching closely.
U.S and Mexico trade strong now – both depend on each other
Fischler 2013
Jacob Fischler, Reporter for The Monitor, Mexican Trade-and tourist- are a boon for the U.S businesses,
May 28, 2013, http://www.themonitor.com/news/local/article_3bf218a2-c734-11e2-b19a001a4bcf6878.html
As the Congress debates immigration reform legislation, millions of tourists and billions of dollars
continue to cross the U.S.-Mexico border in both directions. A study released earlier this month by
NDN, a center-left think-tank based in Washington, D.C., shows trade and tourism between the two
countries is at an all-time high. Trade between the two nations in 2012 was estimated at $535 billion.
That number is up from $300 billion in 2009, a number that’s projected to double by this year, said
Simon Rosenberg, the president of NDN. Texas leads all states with almost $200 billion in imports and
exports with Mexico. Trade with Mexico sustains almost 6 million U.S. jobs, the NDN study said. In the
Rio Grande Valley, tourists provide the biggest Mexican boost to the economy.
“We really rely heavily on the Mexican market,” said Nancy Millar, the director of the McAllen
Chamber of Commerce’s Convention and Visitors Bureau. The economic downturn in 2008 — which
coincided with a spike in cartel violence — hurt Mexican tourism to the Valley, Millar said. Prior to those
phenomena, 35 percent of income to McAllen’s tourism industry came from Mexico, she said, and it
remains a vital part of McAllen’s economy. “There’s no doubt we have a much stronger economy than
we would without them — 35 percent stronger,” she said.
US/Mexico Trade Good
Trade with Mexico leads to loss of U.S. jobs
Amadeo 2012
Kimberely Amadeo, Writer for About.com over the U.S. economy, Disadvantages of NAFTA, U.S. Jobs
Were Lost, May 3, 2012, http://useconomy.about.com/od/tradepolicy/p/NAFTA_Problems.htm
Since labor is cheaper in Mexico, many manufacturing industries moved part of their production from
high-cost U.S. states. Between 1994 and 2010, the U.S. trade deficits with Mexico totaled $97.2
billion, displacing 682,900 U.S. jobs. (However, 116,400 occurred after 2007, and could have been a
result of the financial crisis.) Nearly 80% of the losses were in manufacturing. California, New York,
Michigan and Texas were hit the hardest because they had high concentrations of the industries that
moved plants to Mexico. These industries included motor vehicles, textiles, computers, and electrical
appliances.
US/Venezuela Trade Good
Trade is key to relations and Venezuelan stability
O’Neil 3/6 (Shannon, Senior Fellow of Latin America Studies at the Council on Foreign Relations,
“Viewpoint: New era for US-Venezuela relations?,” BBC News, 3/6/13,
http://www.bbc.co.uk/news/world-us-canada-21680885)
The US remains the largest recipient of Venezuelan oil - some 40% percent of Venezuelan oil exports
(and oil makes up over 90% of the country's total exports).¶ In turn, the US has continued to send
machinery and cars, and even increased exports of natural gas and petroleum products to the South
American nation.¶ The hard currency and goods are vital to the functioning of Venezuela's economy,
government and society, and may become even more so through the anticipated tough economic
times ahead.¶ Despite the increased government management of the economy through price controls
and the nationalisation of hundreds of private companies over the last decade, many well- and lesserknown US companies still work in Venezuela, providing not just goods but ongoing links with the
United States. In addition to these commercial links, the more than 200,000 Venezuelans living in the US
and the hundreds of thousands more that have ties through family, friends and colleagues, could also
bring the two countries together. Finally, as subsequent Venezuelan governments look to adjust their
economic policies in the coming months and years, the experience of their neighbours provide
incentives to forge a more amicable bilateral relationship.
US/Cuba Trade Good
Lifting embargo boosts U.S. economy
Reuters 9-20-2012 (“Cuba says ending U.S. embargo would help both countries” September 20, 2012, Reuters U.S. edition, Jeff
Franks <http://www.reuters.com/article/2012/09/20/us-cuba-usa-embargo-idUSBRE88J15G20120920>).
(Reuters) - Both
the United States and Cuba would benefit if Washington would lift its longstanding trade
embargo against the island, but U.S. President Barack Obama has toughened the sanctions since
taking office in 2009, a top Cuban official said on Thursday.¶ The embargo, fully in place since 1962, has done
$108 billion in damage to the Cuba economy, but also has violated the constitutional rights of
Americans and made a market of 11 million people off limits to U.S. companies, Foreign Minister Bruno
Rodriguez told reporters.¶ "The blockade is, without doubt, the principal cause of the economic problems of
our country and the essential obstacle for (our) development," he said, using Cuba's term for the embargo.¶ "The
blockade provokes suffering, shortages, difficulties that reach each Cuban family, each Cuban child,"
Rodriguez said.¶ He spoke at a press conference that Cuba stages each year ahead of what has become an annual vote in the United Nations on
a resolution condemning the embargo. The vote is expected to take place next month.¶ Last year, 186 countries voted for the resolution, while
only the United States and Israel supported the embargo, Rodriguez said.¶ Lifting
the embargo would improve the image of
the United States around the world, he said, adding that it would also end what he called a "massive,
flagrant and systematic violation of human rights."¶ That violation includes restrictions on U.S. travel to the island that
require most Americans to get U.S. government permission to visit and a ban on most U.S. companies doing business in Cuba, he said.¶ "The
prohibition of travel for Americans is an atrocity from the constitutional point of view," Rodriguez said.¶ Cuba has its own limits on travel that
make it difficult for most of its citizens to leave the country for any destination.¶ Rodriguez said the elimination of the embargo would provide a
much-needed tonic for the sluggish U.S. economy.¶ "In a moment of economic crisis, lifting the blockade would contribute to the United States
a totally new market of 11 million people. It would generate employment and end the situation in which American companies cannot compete
in Cuba," he said.¶ Obama, who said early in his presidency that he wanted to recast long-hostile U.S.-Cuba relations, has been a
disappointment to the Cuban government, which expected him to do more to dismantle the embargo.¶ He has lifted some restrictions on travel
and all on the sending of remittances to the island, but Rodriguez said he has broadened the embargo and its enforcement in other areas.¶
Fines against U.S. and foreign companies and individuals who have violated the embargo have climbed from $89 million in 2011 to $622 million
so far this year, he said.¶ U.S.-Cuba relations thawed briefly under Obama, but progress came to a halt when Cuba arrested U.S. contractor Alan
Gross in Havana in December 2009.¶ Gross was subsequently sentenced to 15 years in prison for setting up Internet networks in Cuba under a
controversial U.S. program that Cuba views as subversive.¶ Rodriguez dodged questions about how U.S. policy toward Cuba might change if
Obama is re-elected in November or if Republican candidate Mitt Romney wins the presidency, but said whoever is in office will have a chance
to make history.¶ "Any American president would have the opportunity to make a historic change," he said. "He would go into history as the
man who rectified a policy that has failed."
Free Trade popular with Cubans- increases quality of life with no backlash
New York Times 2012 (“Easing of Restraints in Cuba Renews Debate on U.S. Embargo” Damien Cave, New York Times, November
19, 2012 <http://www.nytimes.com/2012/11/20/world/americas/changes-in-cuba-create-support-for-easingembargo.html?pagewanted=all&_r=0>).
HAVANA — “If I could just get a lift,” said Francisco López, imagining the addition of a hydraulic elevator as he stood by a rusted Russian sedan
in his mechanic’s workshop here. All he needed was an investment from his brother in Miami or from a Cuban friend there who already sneaks
in brake pads and other parts for him.¶ Multimedia¶ ¶ Slide Show¶ Changes in Cuba Create Support for Easing Embargo¶ Related¶ Cuba’s
Prospects for an Oil-Fueled Economic Jolt Falter With Departure of Rig (November 10, 2012)¶ Times Topic: Cuba¶ Connect With Us on Twitter¶
Follow @nytimesworld for international breaking news and headlines.¶ Twitter List: Reporters and Editors¶ Enlarge This Image¶ ¶ The New York
Times¶ Cuba’s Capitol building in Havana. Any Obama administration effort to relax the trade embargo could face diplomatic, Congressional and
other political obstacles. More Photos »¶ Readers’ Comments¶ Readers shared their thoughts on this article.¶ Read All Comments (109) »¶ The
problem: Washington’s 50-year-old trade embargo, which prohibits even the most basic business dealings across the 90 miles separating Cuba
from the United States. Indeed, every time Mr. López’s friend in Florida accepts payment for a car part destined for Cuba, he puts himself at risk
of a fine of up to $65,000.¶ With Cuba
cautiously introducing free-market changes that have legalized
hundreds of thousands of small private businesses over the past two years, new economic bonds
between Cuba and the United States have formed, creating new challenges, new possibilities — and a
more complicated debate over the embargo.¶ The longstanding logic has been that broad sanctions are necessary to
suffocate the totalitarian government of Fidel and Raúl Castro. Now, especially for many Cubans who had previously
stayed on the sidelines in the battle over Cuba policy, a new argument against the embargo is gaining
currency — that the tentative move toward capitalism by the Cuban government could be sped up
with more assistance from Americans.¶ Even as defenders of the embargo warn against providing the
Cuban government with “economic lifelines,” some Cubans and exiles are advocating a fresh
approach. The Obama administration already showed an openness to engagement with Cuba in 2009 by removing restrictions on travel and
remittances for Cuban Americans. But with Fidel Castro, 86, retired and President Raúl Castro, 81, leading a bureaucracy that is divided on the
pace and scope of change, many have begun urging President Obama to go further and update American policy by putting a priority on
assistance for Cubans seeking more economic independence from the government.¶ “Maintaining
this embargo, maintaining
this hostility, all it does is strengthen and embolden the hard-liners,” said Carlos Saladrigas, a Cuban exile and cochairman of the Cuba Study Group in Washington, which advocates engagement with Cuba. “What we should be doing is helping the
reformers.”¶ Any easing would be a gamble. Free enterprise may not necessarily lead to the embargo’s goal of free elections, especially
because Cuba has said it wants to replicate the paths of Vietnam and China, where the loosening of economic restrictions has not led to
political change. Indeed, Cuban officials have become adept at using previous American efforts to soften the embargo to their advantage,
taking a cut of dollars converted into pesos and marking up the prices at state-owned stores.¶ And Cuba has a long history of tossing ice on
warming relations. The latest example is the jailing of Alan Gross, a State Department contractor who has spent nearly three years behind bars
for distributing satellite telephone equipment to Jewish groups in Havana.¶ In Washington, Mr. Gross is seen as the main impediment to an
easing of the embargo, but there are also limits to what the president could do without Congressional action. The 1992 Cuban Democracy Act
conditioned the waiving of sanctions on the introduction of democratic changes inside Cuba. The 1996 Helms-Burton Act also requires that the
embargo remain until Cuba has a transitional or democratically elected government. Obama administration officials say they have not given up,
and could move if the president decides to act on his own. Officials say that under the Treasury Department’s licensing and regulation-writing
authority, there is room for significant modification. Following the legal logic of Mr. Obama’s changes in 2009, further expansions in travel are
possible along with new allowances for investment or imports and exports, especially if narrowly applied to Cuban businesses.¶ Even these
adjustments — which could also include travel for all Americans and looser rules for ships engaged in trade with Cuba, according to a legal
analysis commissioned by the Cuba Study Group — would probably mean a fierce political fight. The handful of Cuban-Americans in Congress
for whom the embargo is sacred oppose looser rules.¶ When asked about Cuban entrepreneurs who are seeking more American support,
Representative Ileana Ros-Lehtinen, the Florida Republican who is chairwoman of the House Foreign Relations Committee, proposed an even
tighter embargo.¶ “The sanctions on the regime must remain in place and, in fact, should be strengthened, and not be altered,” she wrote in an
e-mail. “Responsible nations must not buy into the facade the dictatorship is trying to create by announcing ‘reforms’ while, in reality, it’s
tightening its grip on its people.Ӧ Many Cubans agree that their government cares more about control than economic growth. Business owners
complain that inspectors pounce when they see signs of success and demand receipts to prove that supplies were not stolen from the
government, a common practice here. One
restaurant owner in Havana said he received a large fine for failing to
produce a receipt for plastic wrap.¶ Cuban officials say the shortages fueling the black market are
caused by the embargo. But mostly they prefer to discuss the policy in familiar terms. They take reporter after reporter to hospitals of
frail infants, where American medical exports are allowed under a humanitarian exception. Few companies bother, however, largely because of
a rule, unique to Cuba, requiring that the American companies do on-site monitoring to make sure products are not used for weapons.¶ “The
Treasury Department is asking me, in a children’s hospital, if I use, for example, catheters for military uses — chemical, nuclear or biological,”
said Dr. Eugenio Selman, director of the William Soler Pediatric Cardiology Center.¶ As for the embargo’s restriction on investment, Cuban
officials have expressed feelings that are more mixed. At a meeting in New York in September with a group called Cuban Americans for
Engagement, Cuba’s foreign minister, Bruno Rodríguez Parrilla, said business investment was not a priority.¶ “Today the economic development
of Cuba does not demand investments of $100,000, $200,000, $300,000,” he said, according to the group’s account of the meeting. Rather, he
called for hundreds of millions of dollars to expand a local port.¶ Owners
of Cuba’s small businesses, mostly one-person
operations at this point, say they know that the government would most likely find ways to profit
from wider economic relations with the United States. The response to the informal imports that come from Miami in the
suitcases of relatives, for instance, has been higher customs duties.¶ Still, in a country where Cubans “resolve” their way
around government restrictions every day (private deals with customs agents are common), many
Cubans anticipate real benefits should the United States change course. Mr. López, a meticulous mechanic who
wears plastic gloves to avoid dirtying his fingers, said legalizing imports and investment would create a flood of the supplies that businesses
needed, overwhelming the government’s controls while lowering prices and creating more work apart from the state.¶ Other Cubans, including
political dissidents, say softening the embargo would increase the pressure for more rapid change by undermining one of the government’s
main excuses for failing to provide freedom, economic opportunity or just basic supplies.¶ “Last month, someone asked me to redo their
kitchen, but I told them I couldn’t do it because I didn’t have the materials,” said Pedro José, 49, a licensed carpenter in Havana who did not
want his last name published to avoid government pressure.¶ “Look around — Cuba is destroyed,” he added, waving a hand toward a colonial
building blushing with circles of faded pink paint from the 1950s. “There is a lot of work to be done.”
US/LA Trade Declining
Despite growth, US influence as an importer declining in Latin America due to China
competition
Martinez and Iyer ’13 (Rutilio, Assoc. Professor of Business Statistics and International Business,
and Vish, Professor of Marketing, at the University of Northern Colorado, “U.S. Trade In Goods With
Latin America ¶ (2001-2010): Trends And Perspectives,” International Business & Economics Research
Journal, May 2013, http://www.cluteonline.com/journals/index.php/IBER/article/view/7825/7887)
U.S. imports of goods from Latin America grew between 2001 and 2010 at a yearly average rate of 6.7%
-¶ from $192.4 billion in 2001 to $350.6 billion in 2010. All 19 nations of Latin America participated in
this high and ¶ unprecedented growth which meant that by 2010, every single Latin American country
was exporting more to the ¶ U.S. than in 2001 (U.S. Census Bureau, 2011). ¶ Yet, between 2001 and
2010, the U.S. ceased to be the largest buyer or importer of goods from an ¶ increasing number of
Latin nations. In 2001, the U.S. was not the main buyer or importer for Argentina, Cuba, ¶ Paraguay
and Uruguay. By 2010, this group was joined by Bolivia, Brazil, Chile and Panama; that is, between
2001 ¶ and 2010, the number of Latin countries for which the U.S. was not the main importer of their
goods went from four ¶ to eight (ECLAC 2010). ¶ Along with the increase in the number of Latin
nations for which the U.S. was not the number one importer ¶ came the reduction in the percentage
or share of Latin American exports that went to the U.S. This percentage ¶ progressively declined
between 2001 and 2010 - from 56% to 39.5% (ECLAC, 2010). Thus, despite the 6.7% annual ¶ growth rate
of U.S. imports from Latin America during the period 2001-2010, the relative importance of the U.S. as ¶
importer of Latin American goods underwent a steady and marked decline.¶ The main cause of this
decline was the fast increase of Latin American exports to China. These exports ¶ grew 32.5% per year
during this period - from $5.4 billion dollars in 2001 to at least $68.7billion in 2010. Due to ¶ this high
growth, China went from being (in 2001) an importer of very marginal importance for the Latin
American ¶ nations to being (in 2010) the number one importer for Brazil, Chile, Cuba and Peru, and the
number two importer ¶ for Argentina, Costa Rica and Venezuela. Also as a result of the high growth of
their exports to China, Argentina, ¶ Brazil, Chile and Peru were - of all the 19 Latin American nations - the
first ones to recover from the recession that ¶ afflicted many countries between 2007 and 2009 (Kay and
Canaveri-Bacarreza, 2011; and Central Intelligence ¶ Agency [CIA], 2011)
China's imports from Latin America grew so much during the period 2001-2010 because China's
economy ¶ grew at an annual rate of 10.2% during these years (Kay and Canaveri-Bacarreza, 2011). Thus,
if the direct ¶ correlation between the growth of China's economy and its imports from Latin American
continues, the projected ¶ five to seven percent yearly growth of China's GDP for the 2012-2016
period should result in a significant reduction ¶ of the rate of growth of Latin American exports to
China. Very likely, this reduction may not, however, be enough ¶ to allow the U.S. to reverse - or at
least to stop - the decline of its relative importance as importer of Latin American ¶ goods. Two
obstacles preclude such a reversal.¶ The first of these obstacles is the slow - current and projected growth of the U.S. economy. In 2011, the ¶ U.S. economy grew less than two percent and for the
period 2012-2017, the U.S. economy is projected to expand at ¶ no more than 2.5 percent per year
(U.S. Government Printing Office, 2011). Therefore, the U.S. economy is growing ¶ and is expected to
grow at rates that are no more than one-half of the projected rates of China's growth in economy. ¶ Such
differential practically guarantees that the rate of growth of imports from Latin America is bound to
be ¶ significantly smaller for the U.S. than for China for the next four years. The second of these
obstacles is the limited capacity of Latin America to produce high-income goods. This ¶ limitation is
indicated by the dominance of Mexico in the exports of these products to the U.S. Between 2001 and ¶
2010, Latin American exports to China were almost exclusively primary goods; while manufactured
goods were, on ¶ average, 60% of the Latin American exports to the U.S. Of this 60%, however, at
least 90% consisted of cars, ¶ complex chemical inputs, high-tech electronics, components of hightech machinery, and other high-income goods ¶ made or assembled in Mexico (Kay and CanaveriBacrreza, 2011, and Banco de Mexico, 2011).
Despite growth, US influence as an importer declining in Latin America due to China
competition
Martinez and Iyer ’13 (Rutilio, Assoc. Professor of Business Statistics and International Business,
and Vish, Professor of Marketing, at the University of Northern Colorado, “U.S. Trade In Goods With
Latin America ¶ (2001-2010): Trends And Perspectives,” International Business & Economics Research
Journal, May 2013, http://www.cluteonline.com/journals/index.php/IBER/article/view/7825/7887)
U.S. imports of goods from Latin America grew between 2001 and 2010 at a yearly average rate of 6.7%
-¶ from $192.4 billion in 2001 to $350.6 billion in 2010. All 19 nations of Latin America participated in
this high and ¶ unprecedented growth which meant that by 2010, every single Latin American country
was exporting more to the ¶ U.S. than in 2001 (U.S. Census Bureau, 2011). ¶ Yet, between 2001 and
2010, the U.S. ceased to be the largest buyer or importer of goods from an ¶ increasing number of
Latin nations. In 2001, the U.S. was not the main buyer or importer for Argentina, Cuba, ¶ Paraguay
and Uruguay. By 2010, this group was joined by Bolivia, Brazil, Chile and Panama; that is, between
2001 ¶ and 2010, the number of Latin countries for which the U.S. was not the main importer of their
goods went from four ¶ to eight (ECLAC 2010). ¶ Along with the increase in the number of Latin
nations for which the U.S. was not the number one importer ¶ came the reduction in the percentage
or share of Latin American exports that went to the U.S. This percentage ¶ progressively declined
between 2001 and 2010 - from 56% to 39.5% (ECLAC, 2010). Thus, despite the 6.7% annual ¶ growth rate
of U.S. imports from Latin America during the period 2001-2010, the relative importance of the U.S. as ¶
importer of Latin American goods underwent a steady and marked decline.¶ The main cause of this
decline was the fast increase of Latin American exports to China. These exports ¶ grew 32.5% per year
during this period - from $5.4 billion dollars in 2001 to at least $68.7billion in 2010. Due to ¶ this high
growth, China went from being (in 2001) an importer of very marginal importance for the Latin
American ¶ nations to being (in 2010) the number one importer for Brazil, Chile, Cuba and Peru, and the
number two importer ¶ for Argentina, Costa Rica and Venezuela. Also as a result of the high growth of
their exports to China, Argentina, ¶ Brazil, Chile and Peru were - of all the 19 Latin American nations - the
first ones to recover from the recession that ¶ afflicted many countries between 2007 and 2009 (Kay and
Canaveri-Bacarreza, 2011; and Central Intelligence ¶ Agency [CIA], 2011)
China's imports from Latin America grew so much during the period 2001-2010 because China's
economy ¶ grew at an annual rate of 10.2% during these years (Kay and Canaveri-Bacarreza, 2011). Thus,
if the direct ¶ correlation between the growth of China's economy and its imports from Latin American
continues, the projected ¶ five to seven percent yearly growth of China's GDP for the 2012-2016
period should result in a significant reduction ¶ of the rate of growth of Latin American exports to
China. Very likely, this reduction may not, however, be enough ¶ to allow the U.S. to reverse - or at
least to stop - the decline of its relative importance as importer of Latin American ¶ goods. Two
obstacles preclude such a reversal.¶ The first of these obstacles is the slow - current and projected growth of the U.S. economy. In 2011, the ¶ U.S. economy grew less than two percent and for the
period 2012-2017, the U.S. economy is projected to expand at ¶ no more than 2.5 percent per year
(U.S. Government Printing Office, 2011). Therefore, the U.S. economy is growing ¶ and is expected to
grow at rates that are no more than one-half of the projected rates of China's growth in economy. ¶ Such
differential practically guarantees that the rate of growth of imports from Latin America is bound to
be ¶ significantly smaller for the U.S. than for China for the next four years. The second of these
obstacles is the limited capacity of Latin America to produce high-income goods. This ¶ limitation is
indicated by the dominance of Mexico in the exports of these products to the U.S. Between 2001 and ¶
2010, Latin American exports to China were almost exclusively primary goods; while manufactured
goods were, on ¶ average, 60% of the Latin American exports to the U.S. Of this 60%, however, at
least 90% consisted of cars, ¶ complex chemical inputs, high-tech electronics, components of hightech machinery, and other high-income goods ¶ made or assembled in Mexico (Kay and CanaveriBacrreza, 2011, and Banco de Mexico, 2011).
LA Trade Bad – Econ
Free trade in Latin America is not successful and drags down their economies globally.
Vos et al. 2013 (Rob Vos is Director of the Development Policy and Analysis Division at the
Department of Economic and Social Affairs of the United Nations. Jomo K. S. is Assistant Secretary
General for Economic Development based in the Department of Economic and Social Affairs (DESA) of
the United Nations Secretariat. Jose Antonio Ocampo is Under-Secretary General for the Department of
Economic and Social Affairs (DESA) in the United Nations Secretariat. “Who Gains from Free Trade:
Export-Led Growth, Inequality and Poverty in Latin America” Publisher: Routledge, 2013)
1.3 Overview of the main findings. Chapter 2 analyses growth trends and the vulnerability to external
shocks of the¶ countries in Latin America and the Caribbean over almost a quarter of a century¶ since
1980. It is shown that as a consequence of the process of economic opening to world markets, growth
hits become export-led in virtually all countries of¶ the region. However, unlike the experience with
export-led growth in East Asia.¶ Latin America's new growth strategy seems to come with a number
of less¶ virtuous characteristics. First, while more reliant on exports, economic growth¶ did not
significantly increase after trade opening. Instead, growth slowed down¶ and economic performance
was worse in the second half of the 1990s than in the¶ first and most countries slipped to negative
per capita income growth at the turn¶ of the century. Second, vulnerability to fluctuations in global
commodity markets¶ (i.e. terms-of-trade shocks and volatility in global demand) remains high and is
a¶ first indication of insufficient diversification of trade. This vulnerability to trade¶ shocks cannot by
itself explain the dismal growth performance, as in fact for most¶ countries terms of trade and world
demand for their exports improved during¶ the 1990s.¶ Third, for most countries of the region export
growth has been below that of¶ world trade, implying lower export penetration in global markets as a
result of¶ losses in competitiveness. At the same time, import dependence has risen more¶ strongly
than the capacity to export. As a result, capital flows have become more¶ important to sustain a growth
path built on this paradoxical combination of¶ increasing reliance on exports and a structural rise in the
trade deficit. Capital¶ flows in turn have both initiated (to the extent exogenous) and reinforced this¶
pattern by pushing up real exchange rates, cheapening imports and squeezing¶ profits for exporters in
the short run. As capital flows themselves have been¶ volatile, to a large part for reasons exogenous to
the economic conditions of the¶ countries of the region, macroeconomic adjustment has become more
difficult to¶ steer, resulting in short-lived booms as access to foreign borrowing eases and¶ demand
deflation as it contracts with important implications for employment and¶ wages. Trade reforms
therefore must be studied in conjunction with such macro-¶ economic constraints.