On August 2, 1,028 US economists signed a petition opposing the protectionist policies proposed by some US Congressmen against China. They hold that "We believe barriers to free trade destroy wealth and benefit no one in the long run."
Of the 1,028 economists, four are Nobel Laureates and many are former congressmen.
Meanwhile, the US government also has defined similar position. US Treasury Henry Paulsen, Secretary of the Department of Commerce Carlos Gutierrez, and Trade Representative Susan C. Schwab issued a joint letter to Congress leaders and strongly opposed to the two bills regarding Chinese yuan exchange rate disputes. They believe that this approach will cause worldwide trade protectionism retaliatory action.
US benefits quite a lot from free trade to create its economic achievements. Thanks to free trade, Coca-Cola, McDonald's and Hollywood films spread through the global market; thanks to free trade, the average salary of employees of US transnational corporations is 18% higher than that of domestic employees.
In a recent congressional hearing, Senator Debbie Stabenow said: "In order to protect American industry and workers, we should take the most severe measures against China." She may not know that it is precisely the American industry and workers who will seriously suffer "the most severe measures."
According to the report issued by the US-China Trade Commission in early 2006, in step with the growth of US trade volume with China and investment in China, job number in US manufacturing industry does decline. However, it creates more job opportunities in financial, marketing and service industry. From 1996 to 2005, US lost a total of 3 million jobs in manufacturing, but created 15 million new jobs in service industry. Can 3 million compare 15 million? Which figure is more favorable to the United States industry and American workers? Obviously, short-term protection of certain jobs will only lead to more job loss and reduced quality of life.
In fact, some American politicians clearly understand the consequences of trade protectionism. They only have the biased perspective because they look through a political distorting mirror. Just as the associate director of the Cato Institute's Center for Trade Policy Studies Daniel J. Ikenson said, as a result of political manipulation by some local voters, the Congress is showing a stronger trade protectionist sentiment, which has broken away fro economic analysis. US 2008 presidential election is coming. Shall the politicians advocate trade protection for the short-term interest of some voters or adopt open and free trade policies for the long-term interests of the American people? This should not be a difficult question to answer for wise people.
Globalization and free trade has brought the United States both prosperity and changes. Actually, decrease of job opportunities in certain areas is inevitable. When urging other countries to conform to the changes, should the US reflect whether it should comply with the changed situation? American economist John Rutledge pointed out that it is the strength of resistance which refuses changing that revives trade protectionism, which is considered "the biggest threat to the current global economic development." Change is inevitable, Rutledge said. To actively cope with the changes, the United States must strengthen vocational education, improve the labor market and maintain currency stability.
77 years ago, there were also 1,028 economists signed a joint petition and asked the Congress not to pass the "Smoot-Hawley Tariff Bill", which aimed to raise import tariff in the name of protecting domestic industries, but were rejected. The bill finally was approved, which, as a result, only added frost to the snow of the US and even global economic slump. Taking the history as a mirror, we can both see advantages and disadvantages easily. Here, US politicians are expected to learn from historical lessons, so as to formulate popper strategy to foster the Sino-US trade in the future.
By People's Daily Online
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