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Originally posted by Not Bob
So, what exactly are the proper subjects to be included in a free trade agreement? I assume that forbiding a governmental subsidy to a local industry is one. Why? Because this makes the competition unfair, and penalizes the firm not getting the subsidy. That's why Boeing is pissed about Airbus.
Similarly, if a country doesn't enforce labor and environmental laws, businesses that operate in that country have an unfair advantage. Their costs are kept artificially low relative to businesses in other countries by the actions of their governement. Thus, Not Free Trade.
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We seem to all agree on tariffs. Government subsidies are bad but I think they screw the country that provides them as much as it screws everyone else. The country that provides them taxes their own people, so the tax payer of the subsidizing country is paying so people all around the world can get cheaper products.
However a treaty that cuts tariffs is not defective because it does not also cut subsidies. A treaty that cuts only tariffs is fine. Everyone is better off. That is the way GATT and then the WTO works. They first just starting cutting tariffs. Then later they moved on to other stuff like subsidies and other "Non-tariff Barriers. So a treaty that goes after tariffs is good. So is a treaty that goes after subsidies. One that goes after both is better. However, they don't need to be connected to be good. Boeing is complaining about Airbus because the subsidies violate the WTO rules. We already have a treaty in that area. However, thirty years ago the GATT (the precurser to the WTO) did not addres subsidies, so Boeing would have nothing to complain about. Before these rules European government subsidized the hell out of everything and yet nonsubsidized American companys still dominated the world market. Should the original GATT rules not have been passed because they did not include subsidy cuts. Hell no. We would have never gotten anywhere. The original GATT rules that just cut tariffs were good on their own even though they did not address subsidies. Now that we have international rules on subsidies we are even better off.
The next issue is labour and environmental laws. Free trade treaties that don't address these issues are still beneficial to everyone involved. The idea of an unfair advantage is just a bogus issue because you will never have a level playing field. If that is a requirement for a treaty then you will never pass one (which is exactly what labor - look I spelled it correctly - wants). Think about the US. We have internal free trade between the states. However, environmental laws are stricter in California and we have tougher labor laws - including a higher minimum wage. So does that mean that the California should impose a tariff on all goods coming from Alabama because they have a lower taxes, less strict environmental laws, and a lower minimum wage. etc. No. Tariffs and such would hurt everyone involved. Would it be nice if Alabama had better labor laws and environmental laws - yes - but just because they don't does not mean we should sacrifice free trade.
A free trade agreement between the US and the Caribean benefits everyone. If we cut tariffs and subsidies everyone is better off. Even if that is all the treaty addresses. It would be nice to include environmental standards and labor rules but it is hard to now where to draw the line. The central american countrys could never have our labor laws or environmental laws. They can't afford them. If they had our minimum wage no one would work. If they imposed our air polution standards every factory and car would have to be shut down. So no matter what rules we impose they are going to have an "advantage" that the labor and environmental groups can point to.
The CAFTA cuts subsidies and tariffs between our countrys. This is a good thing. It would be nice to have more but you can never get everything you want. Any step towards free trade is the step in the right direction. Any argument against CAFTA is really an argument against free trade. All the countrys involved will be better off there is just special interest groups that are going to be hurt so they are going to try and kill it. These same objections have been brought up in every free trade treaty. Every GATT round, NAFTA, the European Free Trade Area (precurser to EEC and EU), ASEAN, the labor groups and enviornmental groups have complained citing labor rules and the environment. But every one of these treatys has made all the member states invovled better off.
CAFTA is going to make every signatory state better off. Some individual groups will get hurt but that is the way the free enterprize system works. If you try and make it so no one gets hurt, you would have to shut down the system.
