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Begin New Search Topic Free Trade Political Geography North America

1. A "new Washington consensus"

Author:
Johannes Späth
Publication Date:
01-2024
Content Type:
Special Report
Institution:
Austrian Institute for International Affairs (OIIP)
Abstract:
This oiip trend report delves into the shift in the U.S. and the EU towards protectionist foreign trade policies, diverging from traditional free trade principles. Despite initial expectations of a return to free trade under President Joe Biden, the administration has maintained and expanded protectionist measures, emphasizing a labor-centered approach with import tariffs. This departure is situated within a broader global context, reflecting a growing alignment on economic security policies and strategic autonomy between the transatlantic partners. The phenomenon, termed "polite protectionism," reveals bipartisan support, influencing upcoming elections. The text elaborates on the evolving dynamics of global trade, highlighting the multifaceted motivations and consequences of the contemporary protectionist trend.
Topic:
Free Trade, Trade, Protectionism, and Joe Biden
Political Geography:
Europe, North America, and United States of America

2. Misconceptions about US Trade Deficits Muddy the Economic Policy Debate

Author:
Maurice Obstfeld
Publication Date:
08-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The distrust of openness to the global economy shared by Republican and Democratic leadership derives in part from a faulty premise that persistent US trade deficits have been imposed on the United States by foreign countries and have contributed significantly to US deindustrialization. In fact, the deficits have important domestic sources, and the main drivers of US manufacturing employment decline lie elsewhere. Two theories that blame foreign countries for deficits hold that deficits arose from unfair competition by trade partners or from a “global savings glut.” The author says the first theory is wrong, the second is incomplete, and economic isolationism is not a solution. Trade and current account deficits result generally from an economy’s collective decisions to save and invest. Freer trade does not necessarily raise investment more than saving, and an investment-driven deficit is likely positive for the economy. The years 1998–2001 during and after the Asian financial crisis led to the dollar appreciating and a rise in the US deficit, consistent with the global saving glut theory. But subsequently in the 2000s, foreign capital was not pushed into the United States from abroad; rather it was pulled and the dollar depreciated. The causes were easy financial conditions, a housing bubble, and strong US consumption—trends that ended in a financial crisis. Understanding this history is essential if the United States is to avoid destructive protectionism and other harmful economic policies.
Topic:
Economy, Economic Policy, Free Trade, Trade Deficit, and Deindustrialization
Political Geography:
North America and United States of America

3. Formula for a Crisis: Protectionism and Supply Chain Resiliency—the Infant Formula Case Study

Author:
Scott Lincicome, Gabriella Beaumont-Smith, and Alfredo Carrillo Obregon
Publication Date:
01-2023
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
It has become accepted wisdom in Washington that the COVID-19 pandemic revealed how openness to international trade and investment increases U.S. vulnerability to economic shocks and contributes to widespread shortages of food, medicine, and other essential goods. This official narrative, however, ignores ample economic research showing that, while disruptions are inevitable in a modern economy, the alternative to free trade—a protectionism‐​driven onshoring of global supply chains—carries its own risks and can even heighten vulnerability by inhibiting natural market adjustments to economic shocks. The infant formula crisis, which lasted for most of 2022 and was unique to the United States, provided an unfortunate real‐​world lesson in this regard.
Topic:
International Trade and Finance, Free Trade, Resilience, COVID-19, and Supply Chains
Political Geography:
North America and United States of America

4. The Rapid Response Labor Mechanism of the US-Mexico-Canada Agreement

Author:
Chad P. Bown and Kathleen Claussen
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The US-Mexico-Canada Agreement (USMCA) introduced a new compliance institution for labor rights in trade agreements: the facility-specific Rapid Response Labor Mechanism (RRM). The RRM was developed to tackle one particular thorn in the side of North American integration—labor rights for Mexican workers—which had had detrimental, long-term political-economic consequences for the two countries’ trade relationship. This paper reviews the unique political-economic moment in the United States and Mexico that prompted the creation of this tool. It describes how the RRM works and the considerable financial and human resources the two governments have brought to bear to operationalize it. The paper then reports a number of stylized facts on how governments used the RRM during its first three years, largely in the auto sector. It proposes paths of potentially fruitful political-economic research to understand the full implications of the RRM and concludes with preliminary lessons as well as a discussion of the potential for policymakers to transpose facility-specific mechanisms for labor or other issues, such as the environment, into future economic agreements.
Topic:
Treaties and Agreements, Labor Issues, Free Trade, and Disputes
Political Geography:
Canada, North America, Mexico, and United States of America

5. The (Updated) Case for Free Trade

Author:
Scott Lincicome and Alfredo Carrillo Obregon
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The long‐​standing bipartisan consensus in favor of free trade in the United States has unraveled as the nation’s commitment to the multilateral trading system is increasingly subordinated to inward‐​looking ideological priorities. Like all forms of market competition, trade can be disruptive for some companies and workers, and various trade agreements may require updating to address both an increasingly authoritarian China and the 21st‐​century global economy. Nevertheless, both the seen and unseen economic benefits that free trade has delivered to countless individuals, businesses, and communities in America are undeniable and irreplaceable. Furthermore, the lone alternative to free trade, protectionism, has repeatedly proven to impose high costs for minimal benefits. In short, the case for free trade is an economic no‐​brainer.
Topic:
Geopolitics, Economy, Free Trade, and Protectionism
Political Geography:
North America and United States of America

6. Hard Times: The United States and Mexico in NAFTA’s “Renegotiation” Process

Author:
Roberto Goulart Menezes, Karina Lilia Pasquariello Mariano, and Flávio Contrera
Publication Date:
05-2022
Content Type:
Journal Article
Journal:
Contexto Internacional
Institution:
Institute of International Relations, Pontifical Catholic University of Rio de Janeiro
Abstract:
After a tense process of renegotiating the terms of the NAFTA (North American Free Trade Agreement), the governments of the United States, Mexico and Canada established a new regional agreement, the USMCA (United States, Mexico and Canada Agreement), whose purpose is to overcome problems that emerged since the NAFTA came into force in 1994. The ratification of this document by the national congresses of the referred countries has generated new tensions and instabilities in their political scenario, especially due to the existing structural asymmetries between them. This work aims to analyse the impact of that imbalance in the NAFTA renegotiation process, considering the behaviour of the United States in relation to its partners, especially Mexico.
Topic:
Treaties and Agreements, NAFTA, Free Trade, and Regional Economy
Political Geography:
Canada, North America, Mexico, and United States of America

7. For First Time, Half of Americans Favor Defending Taiwan If China Invades

Author:
Dina Smeltz and Craig Kafura
Publication Date:
08-2021
Content Type:
Commentary and Analysis
Institution:
Chicago Council on Global Affairs
Abstract:
2021 Chicago Council Survey data show a majority of Americans support a range of US policies towards Taiwan: recognition as an independent country, inclusion in international organizations, and a US-Taiwan free trade agreement. Tensions between Beijing and Taipei are running high. Chinese intimidation of Taiwan has increased since 2016, demonstrated by naval drills in the Taiwan Strait, incursions into Taiwanese airspace, and economic coercion targeted at Taiwanese industries. In turn, the United States has sold advanced weapons to Taiwan and normalized US warship transits nearby. While past administrations have not made formal commitments to defend Taiwan, the just-completed 2021 Chicago Council Survey finds that for the first time, a slim majority of Americans now favor sending US troops to defend Taiwan if China invades.
Topic:
Security, Foreign Policy, Defense Policy, Treaties and Agreements, Public Opinion, Free Trade, and Survey
Political Geography:
Asia, North America, and United States of America

8. Mexico and the United States: a new beginning | México y Estados Unidos: un nuevo comienzo

Author:
Agustín Barrios Gómez, Henry Cuellar, Juan Carlos Baker, and Kenneth Smith
Publication Date:
02-2020
Content Type:
Special Report
Institution:
Mexican Council on Foreign Relations (COMEXI)
Abstract:
North America started 2020 as a bloc of three democratic countries with shared values that trade freely in the context of regional peace and cooperation. We are nearly 500 million North American citizens who came together to sign the North American Free Trade Agreement (NAFTA) of 1994 and its successor, the United StatesMexico-Canada Agreement (USMCA) of 2018, providing a legal framework for commercial freedom on our continent. The world often conducts its affairs with a zero-sum game mentality, meaning that one country’s gain is another’s loss. This is why agreements like NAFTA, in 1994, and the USMCA, today, are particularly valuable. It is also the reason that we must not take them for granted. The effort invested in creating the USMCA was born precisely from the understanding of a fundamental idea: restricting the liberty of our people to trade freely is a mistake. It was not an easy case to make. The current U.S. president based his political campaign on animosity towards Mexico, in particular, and against exchange with the world, in general. However, he was led to a position of saving free trade in North America by the millions of his fellow citizens who saw their economic livelihood threatened by protectionism and the possibility of severing close economic ties with their neighbors. At the same time, a sector of Mexican society that has always been antagonistic to two pillars of trade in our continent: integration with the United States, and economic freedom, came to power in Mexico. This raised the specter of a challenge to free trade from Mexican socialists. However, the overwhelmingly positive results and obvious benefits of NAFTA for Mexico were of such magnitude, that protectionism was not an issue in the return to power of the nationalist Left. It now looks like a given, but both in the case of the U.S. and in the case of Mexico, the survival of the framework of openness born on January 1, 1994, is a testament to enormous political and economic success. In a world that increasingly favors the Pyrrhic victories of political symbolism, the triumph of reason over nativist fervor is well worth highlighting. For each of the three countries, the USMCA was the way to protect these gains, but each country placed its own emphasis on their priorities. Canada, currently the most politically stable country of the three, clearly sought to uphold a system that provides the country with access to its main market, as well as to another market (Mexico) in which it has fewer interests, but which is still important. The United States, the former architect of the world order that promoted economic freedoms for 71 years (1945-2016), was set to become its spoiler. Fortunately for the general interest, despite the rhetoric, with the USMCA it was possible to find a compromise that safeguarded the gains made from economic integration since 1994. Sectors of society, such as farmers and border communities which had never organized to defend their markets, got together to successfully make their case directly to the Administration. Mexico’s interests were clearer: manufactured exports are the most dynamic and competitive part of its economy. They not only provide a major source of hard currency, but in conjunction with the imports made possible by income from exports, they support the internal market, as well. For Mexico, even more than for Canada, protecting free trade of North America was imperative. The result was an Agreement that protected the benefits of North American commercial freedom, at the same time as it brought certain aspects up to date. It also addressed a number of the concerns that had been raised by blue collar workers in the United States, particularly pertaining to the automotive sector. This document helps us understand these changes and provides perspective from three authors who were directly involved in making the USMCA a reality.
Topic:
Treaties and Agreements, Bilateral Relations, Economy, NAFTA, Free Trade, Trade, and USMCA
Political Geography:
North America, Mexico, and United States of America

9. Japan’s Trade Policy in the Midst of Uncertainty

Author:
Yuka Fukunaga
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The multilateral trading system under the World Trade Organization (WTO) has been of the utmost importance for Japan's trade policy. In particular, Japan strongly supports the WTO’s rule-based dispute settlement mechanism, and frequently uses it. At the same time, in recent years, the adoption and implementation of regional and mega-regional trade agreements have become critical in Japan’s trade policy, with the stalling of the Doha Round negotiations in the WTO. Although the core of its trade policy remains the same today, Japan has been forced to rethink and modify it in response to the aggressive and unilateral trade policy of the Trump administration.
Topic:
World Trade Organization, Governance, Internet, Free Trade, and Trade Policy
Political Geography:
Japan, China, Asia, South Korea, North America, United States of America, and European Union

10. The U.S.–China Trade Imbalance and the Theory of Free Trade: Debunking the Currency Manipulation Argument

Author:
Anwar Shaikh and Isabella Weber
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The U.S.–China trade imbalance is commonly attributed to a Chinese policy of currency manipulation. However, empirical studies failed to reach consensus on the RMB misalignment. We argue that this is not a consequence of poor measurement but of theory. At the most abstract level the conventional principle of comparative cost advantage suggests real exchange rates will adjust so as to balance trade. Therefore, the persistence of trade imbalances tends to be interpreted as arising from currency manipulation facilitated by foreign exchange interventions. By way of contrast, the absolute cost theory explains trade imbalances as the outcome of free trade among nations that have unequal real costs. We argue that a disparity in real costs is the root cause of the U.S.–China trade imbalance.
Topic:
Exchange Rate Policy, Free Trade, Trade, and Purchasing Power
Political Geography:
China, Asia, North America, and United States of America