For decades now it has been almost impossible to have a healthy debate/discussion on global trade without the 4-letter word of trade “Protectionist” being used in a derogatory manner. Quite often I and many like minded trade “Realists” have been so classified. People who understand that, most all, global trade is managed by governments to their advantage, they are not the “protectionists” as the word is used. We just have had to live with, and literally fought with, the heavy hand of foreign governments who practice various levels of trade “Mercantilism” or predatory trade. We have had to do this with little proactive support of our own government. In short we find ourselves competing against Governments and not profit motivated, market based Companies.
Global trade is supposed to take place within an agreed upon framework of rules and laws so as to prevent trade mercantilism and promote open, free market driven trade. You will note I don’t use the term “Free Trade” and for good reason. It only exists in text books and in the minds of academics or those who use the ideology for their own self interests. Free trade does not exist in our world, it never has and never will. Governments can’t resist the opportunity to game the system to suit there political agenda. They sign on to playing by the rules in numerous trade agreements, the WTO membership, and various ” Favored Nation Agreements” but they more often than not (and some all the time) cheat and ignore the trading rules they agreed to to gain access to our markets. We call them “ Trade Cheaters”!
Now the world’s true ” Protectionists” are those countries who game the system to be able to flood our markets with illegally dumped products and services, and keep us out of theirs. Or they put tariffs and worse, “ non- tariff trade barriers”, up to make it uncompetitively expensive to sell there or keep us out altogether. But there is another group of “True Protectionists” who, by their inactions or down right opposition to holding our “Trading Partners” accountable for breaking the rules of trade are enablers of the Trade Cheaters. In so doing they actually are “Protectionist” of the Trade Cheaters rule breaking. They are the true protectionists to the detriment of our economy, the American MiddleClass, and the creation of the good paying jobs that come from manufacturing…..the innovating, making and building of things here at home.
It’s past time to reveal them for who they are, the protectors who have enabled the destruction of our manufacturing sector as it has gone from over 20% of our GDP to a low of 10% today. Along with it has gone our “Envy of the World”-our American MiddleClass, we have an ever widening wealth gap with the wealthiest amongst us, and prolonged and painfully slower recoveries in GDP and job growth as witnessed by this Great Recession. The recovery has averaged ~2.4% GDP growth over the last 6+ years versus the more than double that after the recessions of the 80′s and 90′s. The recovery in jobs has been even worse as job creation is still 10-12 million jobs behind those of the same two recessions at this same point in time or 85 months after their starts.
The missing link is a manufacturing sector that drove these earlier recoveries. The mercantilist/predatory trade practices of China in particular, since the mid nineties, have been allowed to decimate our Manufacturing sector by who? By bad government trade negotiating and enforcement and by the “True Protectionist” amongst us. They know whom they are, their the ones calling Domestic Manufacturers and their Champions, protectionists!
Dan
Dan DiMicco, A Trade Realist
