FREE TRADE COSTS BERLIN, NY MOST OF ITS INDUSTRIES

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The devastation of Free Trade is obvious in my community which was thriving before this shibboleth shipping scheme was foisted upon  us for economic and political reasons.  Before the Doha Free Trade Rounds, businesses in Berlin, NY, were expanding.  Now, they are rapidly vanishing.  These events are totally connected!  This week, one of the insane trade negotiators struggles to figure out how he screwed up.  Of course, being stupid, he can’t figure out the obvious.  So I suppose it is time for him to tour my little town’s dead businesses.

 

Foreign Policy In Focus | The Failed Expectations of U.S Trade Policy

Robert Cassidy

We failed to address the underlying fundamental market distortions that skew the benefits toward the few while leaving the rest of the economy less well off. As George Soros, in a Bloomberg News interview on the financial crisis, recently said, “…the system, as it currently operates, is built on false premises.” The premise on which our trade agreements are negotiated is at best flawed, if not broken.

The next administration has to take a hard look at the trade agreements currently on the table – especially with South Korea – and ask: who benefits? The answers should lead to a fundamental reassessment of what needs to be included in those trade agreements so that the benefits flow to broader and more equitable segments of the economy.

Flawed?  Like when that criminal con man, Greenspan, told Congress that his economic theories had ‘flaws’?  Flaws that are fatal are not mere flaws: they are deadly viruses, deadly diseases.  They are FATAL FLAWS.  And US trade negotiators have made so many errors in working on trade deals, the mind just boggles.  It is one long, unending story of one disastrous deal after another, all of which, uniformly, destroyed our own base here in the US.  This uniform failure on all fronts, all the time can’t possibly be accidental.

 

Mr. Cassidy, just for example, seems to be literate.  He can read and write.  I bet, he also mastered basic addition and subtraction while in grade school.  Heavens, I bet he even knows how to multiply and divide!  And can use a pocket calculator if that is too difficult.  Then, I also bet, he knows how to look at charts and graphs.

 

So, the real question is, why is he and his host of similar idiots so stupid?  Eh?  What is this, anyway?  How can they possibly miss 40+ years of US trade DEFICITS?  Eh?  How?  I am flabbergasted.  Every year, these idiots blame someone aside from themselves.  The latest whipping boy is China, of course.  We accuse China of doing what nearly ALL of our trade partners are doing to us.  The Chinese ignore this.  Or they stop doing it but then prevent us from doing what we want to do.  We get the present impasse. 

 

I would dearly love to take Mr. Cassidy to tour the dying town of Berlin, NY.  A town he and his buddies devastated.  This week, Israel is bombing Gaza to smithereens.  But Israeli flower importers are building more and more greenhouses to raise the exact same flowers our own town used to raise in identical greenhouses.  But our greenhouses stand empty while Israel’s business grows, just for example.  Israel and Columbia where the US spends a fortune ‘fighting drug growers’ has utterly destroyed the Berlin, NY rose growing business.

 

The deals the US made over and over again were all designed to help other nations not just build businesses which is fine with me, but to build EXPORT businesses focused mainly on exporting to the US.  This is killing our nation.  The photo at the top of this story, for example, is the door of one of the newest and biggest greenhouses built here in Berlin just one decade ago.  It is not merely empty, it is being destroyed by snow, wind, rain and vandalism.

 

We may as well have planes dropping bombs on us.  Our community, which used to have thriving stores of every sort, is now nearly an economic ghost town and all of this has happened not 100 years ago but in the last decade.  Below is some parts of the US flower export/import markets published several years ago as the greatest damage to our native industry was being negotiated:

 

Tariff and Trade Agreement Terms:

In the Harmonized Tariff Schedule of the United States (HTS), chapters 1 through 97 cover 

all goods in trade and incorporate in the tariff nomenclature the internationally adopted 

Harmonized Commodity Description and Coding System through the 6-digit level of product 

descriptionSubordinate 8-digit product subdivisions, either enacted by Congress or 

proclaimed by the President, allow more narrowly applicable duty rates; 10-digit 

administrative statistical reporting numbers provide data of national interestChapters 98 and 

99 contain special U.S. classifications and temporary rate provisions, respectively. The HTS 

replaced the Tariff Schedules of the United States (TSUS) effective January 1, 1989. 

Duty rates in the general subcolumn of HTS column 1 are normal trade relations rates; many 

general rates have been eliminated or are being reduced due to concessions resulting from 

the Uruguay Round of Multilateral Trade Negotiations. Column 1-general duty rates apply 

to all countries except those listed in HTS general note 3(b) (Cuba, Laos, and North Korea) 

plus Serbia and Montenegro, which are subject to the statutory rates set forth in column 2. 

Specified goods from designated general-rate countries may be eligible for reduced rates of 

duty or duty-free entry under  preferential tariff programs, as set forth in the special 

subcolumn of HTS rate of duty column 1 or in the general notes. If eligibility for special 

tariff rates is not claimed or established, goods are dutiable at column 1-general rates. The 

HTS does not list countries covered by a total or partial embargo. 

The Generalized System of Preferences (GSP) affords nonreciprocal tariff preferences to 

designated beneficiary developing countries. The U.S. GSP, enacted in title V of the Trade 

Act of 1974 for 10 years and extended several times thereafter, applies to merchandise 

imported on or after January 1, 1976, and before the close of September 30, 2001. Indicated 

by the symbol “A”, “A*”, or “A+” in the special subcolumn, GSP provides duty-free entry 

to eligible articles the product of and imported directly from designated beneficiary 

developing countries (see HTS gen. note 4). Eligible products of listed sub-Saharan African 

countries may qualify for duty-free entry under the African Growth and Opportunity Act 

(AGOA) (see HTS gen. note 16) through September 30, 2008, as indicated by the symbol 

“D” in the special subcolumn; see subchapter XIX of chapter 98. 

As this official report notes back in 2003, ‘many general rates have been eliminated or are being reduced due to concessions resulting from the Uruguay Round of Multilateral Trade Negotiations.‘  The US threw away the keys to our own front door and look at the vandalism this has caused!  The greenhouse below is virtually new.  It was used for only 4 years before being abandoned.  And the company ended up becoming an IMPORT company with its headquarters at the Albany International Airport.  Which was not very international until free trade turned it, like all our ports of entry, into a funnel to move foreign goods into domestic markets, and thus, kill our own industrial base.

Back to the complete idiot who negotiated the death of one of our important industries in Berlin, NY:

 

Foreign Policy In Focus | The Failed Expectations of U.S Trade Policy

The beneficiaries of the agreement with China fall into two groups: multinational companies that moved to China and the financial institutions that financed those investments, trade flows, and deficits. Foreign direct investment (FDI) in China accelerated at a time when such investment to other parts of Asia was declining and, in 2001, even matched FDI to the United States. Sourcing from China, whether from direct investment or through licensing arrangements, has allowed companies to cut costs and increase profits, as reflected in increased corporate profits and the surge in the U.S. stock market.

Conversely, it is doubtful that the U.S. economy or its workers are better off. U.S. manufacturing jobs declined by more than 2.5 million since China joined the WTO in 2001. While services jobs increased during this period, with the exception of telecommunications, non-tradable jobs accounted for the most significant portion of that increase. Wages have been stagnant and real disposable income for three-quarters of U.S. households has been stable or declining. Only the top quartile of families has seen significant increases in real disposable income.

The beneficiaries of these trade agreements try to divert attention by arguing that our trade in services has increased or that our competitiveness has declined. Those arguments are simply diversions because they don’t explain why our exports of goods to countries that made no concessions increased more than our exports to China, which made significant tariff and non-tariff concessions. Such arguments also fail to explain why our imports of goods from China increased more than our imports from other major trading partners. Is there any wonder that the people on Main Street think that trade agreements do not work?

Did this negotiator, who finally, after many years of the US screwing around, finally throw down the gauntlet and at an international meeting, did he yell, ‘I am going outside to the demonstrators and I will tell them, they are right!’  No.  Did he come back to America and announce, ‘I am a traitor to this nation and all my fellow negotiators are traitors.’  No.  Did he go to the New York Times and tell them, ‘I am going to picket your paper until you put me in the news.’  Heh.  Of course not.

 

Instead of taking the fight to the streets, he collected his paychecks.  Now, in some small alarm, he is admitting he was part of the fraud.  Geeze, so the multinational companies and banks made out like bandits with the trade deals?  DUH big time, buddy boy!  And what, in heaven’s name, were all those anti-free trade demonstrators bellowing?  I suspect he heard the uproar since they mobbed these meetings as best as possible.  

 

No more, of course!  Severe, brutal police repression took care of that troublesome mob.  Now, there is dead silence.  Or rather, a total collapse in global business.  My town’s Main Street which is Greenhollow Road and Rt. 22, is dead or dying.  Rapidly.  And we are not happy with this.  People were pleased to get cheap stuff from the rest of the world.  But this joy turned rapidly into alarm as they saw jobs either vanish or pay collapse.  The greenhouses, before giving up entirely, dropped wages so low, only probably illegal aliens ended up working there, living in a group house.

 

http://hotdocs.usitc.gov/docs/pubs/industry_trade_summaries/pub3580.pdf

Virtually no fresh cut flowers were imported into the United States prior to 1960. At that time, it was difficult to transport perishable products such as flowers over long distances and large-scale production of cut flowers largely was limited to the United States and Europe. In the mid-1960s researchers at Colorado State University identified Bogota, Colombia, as
the ideal place in the Western Hemisphere to cultivate standard carnations due to excellent year-round growing conditions, favorable wage rates, and relatively low investment costs.

 At about the same time, first generation jet aircraft such as the Boeing 727 were becoming too inefficient for use in passenger travel and their freight rates were reduced for use as cargo planes. These factors, along with the cooperation of the local government in Bogota, led to the development of the export-oriented cut flower industry in Colombia.

Similarly, governments in Africa, Asia, and other Latin American countries have encouraged flower industries in their countries as a mechanism to employ large numbers of semiskilled workers and to attract U.S. dollars to their economies. By the early 1980s, offshore cut flower production began to overtake U.S. domestic production, particularly of chrysanthemums, carnations, and roses. Greater supplies of cut flowers at ever lower prices also had the effect of increasing the overall demand for cut flowers in the U.S. market.

 

We can see from the table here that fresh cut flower production in the US declined.  Today, the decline is tremendous.  More flowers are sold and fewer flowers are from the US.  I can see the US struggling with a high importation deficit from energy products.  But for flowers?  Something used as decorations?  To run a rising deficit to fund flowers is pure madness.  Completely stupid!  Back in the 1980’s, trade negotiators could clearly see that flower sales from imports were already threatening our economy.  So what did they do?

 

More trade deals that increased this dangerous trade!  You see, we cannot afford the luxury of cheap foreign flowers if this means we destroy our economic base!  Below is a photo of the inside of one of the many abandoned greenhouses showing its long beds standing idle.

When a country is under assault from trade, it behooves the negotiators to work out deals where they can restrict UNNECESSARY imports.  We certainly have zero reason to import ANY food.  Japan and England must import food because they are small, dense islands.  The US has one of the world’s mightiest agricultural bases on earth.  And we import massive amounts of food we do not need at all.  Here, below, is one of the very few working farms left within a 100 mile radius of my own town which used to have many working farms, nearly all of which have totally vanished:

It is a SLUM!  This is what price depression is doing to my community!  The Great Depression began long before 1930 in the US farming community.  This depression began with the floating currency and has only picked up steam and is worse and worse, to the point now that most of our farms are dead and gone.  I remember the media and Congress fretting about the ‘small American farmer’ then they all went off on the ‘free trade’ RR and off the cliff went the remaining farmers.

 

I see plenty of hand wringing but no one at the top is being particularly confrontational, are they?  This trade negotiator who wrote about his crimes isn’t running around, screaming.  He thinks, all he has to do is muse about things and all will be worked out.  But this is a false hope.  One has to actively fight to change what one has ruined.  He has to go much further than I, a person who has opposed free trade for many years, to undo the damage he has done to my own community, to this nation.

 

Foreign Policy In Focus | The Failed Expectations of U.S Trade Policy

Similar arguments can be made for our “free trade” agreements. For example, Canada fosters oligopolies and in some provinces, monopolies that restrict both foreign trade and internal trade. Like China, South Korea, which recently concluded its FTA with the United States, has notoriously undervalued its currency, as automakers will attest. In addition, most countries have value-added taxes that are rebated on their exports to the United States, while our exports receive no such treatment because our federal tax system relies on income and corporate taxes.

This is also an example of ‘knowing that is wrong but not able to understand how to fix it’ syndrome.  So, our trade partners use VAT—value added taxes—to greatly reduce consumerism?  HAHAHA.  Well, DUH!  Japan even tried, while pretending to be helpless with a depression, to raise this tax just two years ago.  The beleaguered consumers there revolted so the plan was dropped.  But they all do this, all but the US.  This is why we have a trade deficit from hell.  

 

Lots of cheap knick nacks and even very expensive knick nacks.  But no jobs and no future.  Anyone calling for a VAT tax is told to jump in the lake.  Our trade rivals also have much higher gas taxes.  Again: DUH!  We have to imitate them if we insist on ‘free trade’.  Our refusal to hold foreign currencies in our corrupt little Federal Reserve FOREX funds, our refusal to tax energy at the same level as rivals, our refusal to have stiff consumer taxes has doomed our economy, millions of jobs were lost, well-paying jobs are vanishing and we are now heading into a depressionary spiral we can’t escape except by destroying our currency.

 

Oh, and that certainly will fix our trade deficit!  Monetary suicide.  What a fabulous solution.  Total chaos means no trade deficits.  Great going, trade negotiator traitors!

* FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net

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