Free trade still has a Chance?

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US President, Donald Trump has his own ideas. Not only that, he sorted straight friend and enemy of the USA, he also wants to rebuild the world trade: in The trade, there will be only a profiteer: United States of America.

In early July of 2018, the European Union and Japan signed the largest and most comprehensive free-trade agreement, they created a trade zone, the economic power of a third of the accumulated gross social products in the world. However, a question remained in the room: Can resist the advocates of unfettered global trade, the pressure of the protectionists of the United States?

EU trade Commissioner Cecília Malmström is convinced: “The EU-Japan agreement sends a strong Signal against US protectionism.” You said on Tuesday last week, shortly after the President of the United States, had described Europe as America’s “foe”. “Foe” depending on the context or reading, either an opponent or an enemy.

The continents drift apart

Others are not so sure: “for the First time since the end of the second world war, those in the trade want to break down barriers, on the Defensive. The Ghost of protectionism is haunting the old continent,” said Pieter Cleppe, head of Think tank “Open Europe” in Brussels, the DW.

“In more developed economies, trade and globalization, are facing an existential crisis, because large parts of the European and North American citizens hold the current trade model more representative, and even undemocratic. It was, as you suspect, and often rightly so, for their own economic interests.”

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EU-Japan free trade

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EU-Japan free trade

Others point to the shocks to the labour markets, since China, India and many countries of the former Eastern bloc are there to become competitors, while at the same time, many jobs for unskilled workers due to Automation have become obsolete. In addition, the lack of capital control measures has meant that capital has become much more mobile and Investments in Overseas often more lucrative than those in the home market.

“Arrogant Elites”

“For decades,” said Jared Bernstein from the “Center on Budget and Policy Priorities” the U.S. news website “Politico”, “declared arrogant elites, voters, and entire communities suffered the negative consequences of global trade, they do not know to appreciate the blessings of a global Economy. You have failed, and not previously seen that progress accept losers of low wages only reluctantly, and the insight to deny that the loss of your previous jobs is a reasonable price for the blessings of free trade.”

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What wage is it, really?

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What wage is it, really?

“Those among us”, he added, “the social costs and nevertheless, the globalization attachments, you must now formulate a new model, or the reactionary policy of a Trump or of the Brexiteers.”

The Symptom is: Trump

Donald J. Trump is more the Symptom than the cause. Some go even further and hold it for possible that Trump could have with its trade policy.

China’s admission to the world trade organization WTO was based on the assumption that the leadership in Beijing would pursue its market reforms continue. That no longer seems so clear, since the Beijing semi-public enterprises, with hidden subsidies, supports, and the exchange rate of its currency uses the Export boost. The United States has not seen clearly that China is pursuing this neo-mercantilist trade and investment policies.

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In the relationship of the US to the EU to talk about is not as it has been for many years. “To prevent a trade war, should adopt the EU Trumps proposal, and the import duties on cars, at least on the level that the United States is applying,” says the Brussels expert Cleppe. “Germany,” he adds, “seems to be ready, but France is not. The current counter-measures of the Europeans are risky, are not the Trump to convince and meet the European consumers.”

Free Trade? But only if it fits!

“Ask not whether free trade is dead! Ask rather, whether he has ever lived!” So Peter Chase formulated by the “German Marshall Fund” to DW. Since the Scottish Economist, had written to Adam Smith in 1776, of the benefits of free trade, to determine its ideas to the economic discourse. Truncated: What I use, it will also do you good. Or: By trading both of our interests are satisfied. It is the opposite of trump’s idea that trade is a zero-sum game in which at the end only the winner gets everything.

Is it really so, or is it just wishful thinking? “Nations were, are and will remain sovereign,” continues Chase. “You set the rules for all the Goods that are traded on their territory and to collect the duties, the pay providers for the privilege of offering their Goods for sale,. No trader or Investor has ever had “free” access to another country.What we call “free trade” is merely the decision of two or more countries, a largely unrestricted trade between themselves. But even then, foreign traders and investors must follow the applicable laws. No government will ever submit to a foreign Power.”

The United States and the United Kingdom are widely regarded as the bastions of free trade per se, but they have acted over the years in different intensity protectionism: Britain had withdrawn its protecting Hand from its industrial products, as to the middle of the 19th century. Century, its technological edge thanks to almost unrivalled. About one hundred years later, at the beginning of the Cold war, this lead was gone, and the government reintroduced duties of 23 percent on industrial goods.

In the USA, it was similar to the first: In the inter-war period of the 20th century. Century, a protectionist is there organic trade model. Only after the second world war and especially during the so-called Cold war, the US became a proponent of free trade.

Battle of the ideologies

Since Economics as a science is established, since the time of Adam Smith, the modern Form of free trade, as formulated, the ideas of free trade with mercantilist, protectionist, isolationist, Communist, populist, or even other ideas and theories in competition.

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Mexico in times of Trumps

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Mexico in times of Trumps

Trump used in fact, various of these ideas when he said that the TRANS-Pacific partnership – a trade agreement of a dozen Pacific rim countries – was an attempt to rape the United States. Or that the NAFTFA agreement about the “worst trade Deal in history”.

And what now?

“There is a growing counter-movement against the unequal profits in the trade. Since these are now more and more a matter of politics, it remains to be hoped that this is the “boundlessness” of ideas and trips, which characterizes the trade our time,” said Linda Yueh, author of “The great Economists”, for the DW.

Caroline’s friend from the “Petersen Institute for International Economics,” said to “Politico”, in your view, a change of strategy was necessary: “protectionism has to be kept in check. Important parts of the (free trade agreement) and TTIP, for example, can be saved, of the agreements reached as an individual agreement.”

Other issues, such as a positive economic effect for wider layers of the population experience could be made. Because, as Mark Wu, a lawyer from the Harvard Law School, “Politico”: “Even if people know the commercial leads you into a prosperous future, they still fear that they could keep to the short end of the sausage in the Hand.”