Smith: Global trade meets art of the deal

President-elect Donald Trump meets with Senate Majority Leader Mitch McConnell (R-Ky.) on Capitol Hill in Washington on Nov. 10. Congressional leaders confirmed hat seemed inevitable with the triumph of Trump: The far-reaching Trans-Pacific Partnership trade agreement is dead.
President-elect Donald Trump meets with Senate Majority Leader Mitch McConnell (R-Ky.) on Capitol Hill in Washington on Nov. 10. Congressional leaders confirmed hat seemed inevitable with the triumph of Trump: The far-reaching Trans-Pacific Partnership trade agreement is dead.
photo Robin Smith

Many who are informed are quick to know that our nation's federal debt - the amount spent that exceeds the incoming taxes collected from citizens and business - is currently just under $20 trillion. On Jan. 20, 2009, this figure stood at $10.6 trillion, which reveals the almost doubling of our deficit spending during the years of President Barack Obama.

To appreciate the new focus on trade in our recent elections, hang on as we navigate a few economic numbers and facts.

How many know the figures and impact of America's trade deficit? A January 2015 Forbes article boils the topic of trade down for us: "National income accounting makes it clear that gross domestic product (the U.S. economy) is the sum of four factors: consumption, investment, government procurement and net trade (exports minus imports)."

So, part of our nation's economy, the GDP, involves the value of net trade that's measured by a monthly trade balance. The most recent data, through September, shows that each month America buys an average of $36.44 billion more in imports from other nations than those nations reciprocate in purchasing American goods.

That doesn't sound too bad, right? But, the current trade deficit, which is listed in the accounting world as more debt (in addition to deficit spending) is $732.25 billion so far this year.

So what? America's purchase of this three-quarters of a trillion dollars just through November this year of foreign-made and imported goods supports the jobs and manufacturing in other nations. For 39 straight years, according to a second Forbes article from January 2016, America has had a trade deficit now totaling more than $8 trillion. Again, so what?

The money Americans spend on imported goods could be spent for American-made products if trade deals among several nations, such as the current North American Free Trade Agreement (NAFTA), and the embattled Trans-Pacific Partnership with China and eleven other Pacific Rim nations, truly leveled the playing field. Equitable terms about government regulation and interference that affect wages, environmental controls and taxes applied to American-made goods do not exist; therefore, there truly is no free trade.

Let's look briefly at only China. In the January 2016 publication of the National Bureau of Asian Research, a Brookings Institute fellow noted America's chief competitor in manufacturing has more than 150,000 state-owned enterprises employing more than 30 million Chinese producing more than $15 trillion in assets annually. These "zombie enterprises" have one boss - the communist government that funds their operations, provides bailouts when necessary, forces consolidation when necessary to protect market share and control costs, etc.

The New York Times in an October piece quoted Chinese President Xi Jinping, "Party leadership and building the role of the party are the root and soul for state-owned enterprises," meaning that profits, stockholders, budgets and worker protections have no role in "nearly 40 percent of China's industrial assets."

Why are American companies forced to either compete with these communist properties or enter into its state-owned economy to tap into its socialist workforce?

Outside of China, 148 of America's trading partners have a value-added tax or goods and service tax on their nation's imports ranging from 2 percent to 27 percent. While not a "tariff," these financial hits on American-made goods proves again there is no authentic free trade.

The Trump-Pence victory tapped into these facts that have manifested the reality of unemployment in America's working class. The international trade war has a new general with no loyalties to lobbyists or multinational interests. The art of the deal shouldn't tolerate such incredible trade inequities.

Free trade, indeed.

Robin Smith, former Tennessee Republican Party chairwoman, is owner of the Rivers Edge Alliance.

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