Arnold Kling  

Trading with Weasels

PRINT
Basic Supply and Demand... Savings, Capital Deployment, a...

In this essay, I argue against excluding France, Germany, and Russia from trading with Iraq.


Private-sector companies from France, Germany, and Russia should be allowed to compete for Iraq's business, along with other private-sector companies. Even if we have a quarrel with the governments of the Weasels, it is not productive to take revenge on the private sector.

For Discussion. In the essay, I make a case for unilateral tariff reductions instead of trade negotiations. What purpose, if any, do trade negotiations serve?


Comments and Sharing


CATEGORIES: Trade Barriers



COMMENTS (7 to date)
John Thacker writes:

Hypothesis:

It is generally accepted that part of the difficulty in reducing tariffs is that the benefits are diffuse and spread out through the population as a whole, whereas the pain is concentrated on a few. This means that the few have much greater motivation to politically agitate against tariff reduction.

Trade negotiations result in tariff reductions by other countries that benefit small groups domestically by a great deal, giving them political impetus to argue for tariff reduction with the same fervor of tariff proponents.

Factory writes:

One should also remember that the negotiations are done to get the other side drop their tariffs. Unilaterally dropping your own tariffs leaves you with less bargaining chips, ergo you are prolly not going to be able to the other side to drop their tariffs as easily.
Also there is an issue of political will. Not all groups in the US desire free trade, and it seems that the Republican party is one of them. :)

--

As for a FTA with Iraq, first you have to get Iraq to agree to it. This will prolly be a big issue, it is in Iraq's rational interest to be a part of OPEC, moves of the US to prevent OPEC participation, or to control what Iraq does in OPEC will make the Iraqi government look more like a puppet, which is bad for obvious reasons.

Bernard Yomtov writes:

It's not only counterproductive to prevent countries from tading with Iraq, it's also anti-democratic.

Shouldn't the Iraqis be the ones to decide who they will deal with? Or was it all about the oil after all?

John Thacker writes:

The Republican Party, like the public as a whole, is broadly in favor of free trade-- except for their particular interests. "Free trade for me but not for thee." Representatives and people from steel areas want steel tariffs, but not others, etc. But individual tariffs always have more passionate defenders than attackers.

The Republican Party may be not be good, but at least in my home state of NC, the Democrats are worse. Most of Bowles's ads attacking Elizabeth Dole last year were from a trade basis-- he charged that she wanted to let in cheap Mexican and Chinese goods, and that he was against it. I'm not saying that Sen. Dole is necessarily a principled free-trader, but it's clear from that that a Sen. Bowles would have been worse.

Thorley Winston writes:

Factory wrote:

>>One should also remember that the negotiations are done to get the other side drop their tariffs. Unilaterally dropping your own tariffs leaves you with less bargaining chips, ergo you are prolly not going to be able to the other side to drop their tariffs as easily.


Good point. I’m all for dropping the steel tariffs and a number of other trade barriers we’ve imposed but why not use them as leverage for say getting Canada to drop its price controls on prescription drugs which affect American pharmaceutical companies and American consumers who subsidize artificially lowered drug prices? Or how about getting nations like China to clamp down on pirates who rip-off American copy-rights?

Trade barriers are generally a bad thing but they also may have valuable leverage in getting other nations to lower theirs or adopt policies more respectful of property rights.

>>Also there is an issue of political will. Not all groups in the US desire free trade, and it seems that the Republican party is one of them. :)

It seems to me that President Bush is concerned about keeping West Virginia’s electoral votes and getting Pennsylvania’s in the 2004 presidential election. In increasing steel tariffs to “protect jobs” Bush is doing what he did with the Farm Bill, the Department of Education, illegal immigration, and a number of other issues – basically giving the Democrats most of what they want to deny them an issue in the next election.

Bad policy and bad politics, IMNHO.

David Thomson writes:

"Shouldn't the Iraqis be the ones to decide who they will deal with?"

We are caught in an awkward Catch 22 situation: there is no way of currently discerning the true voice of Iraq! Thus, we will likely have to make most of these tough decisions for at least the next six months.

David Thomson writes:

"The Republican Party may be not be good, but at least in my home state of NC, the Democrats are worse."

You are restricting your comments to free trade issues. However, I must add that the Republican Party is the lesser of evils in most instances. This is especially true regarding foreign policy. I cringe when realizing that Al Gore might have been our current President.

Democrats cannot be trusted on defense issues. They have yet to sufficiently marginalize their leaders who are still obsessed by Vietnam. I strongly believe that an Al Gore presidency would have resulted in another 9/11 terrorist attack.

Comments for this entry have been closed
Return to top