The NYT editorial board continued its dogmatic pursuit of selective free trade in its lead editorial this morning. The piece includes typical spin tactics, using arguments or claims that they presumably know are misleading. Here are my three favorites: 1) The U.S. is the world leading exporter, therefore we gain from trade -- Put this in the big "huh?" department. On an exchange rate basis (the appropriate measure here), the U.S. is more than twice as large as the next biggest economy. We better be the world's largest exporter, or we're a basket case. 2) U.S. tariff reductions benefit poor countries like Bangladesh and Cambodia -- This is a yes and no story. Bangladesh and Cambodia have benefitted from being able to export to the United States. But, one of the things that protects their export markets are the restrictions on imports from China. A paper called the New York Times had some good articles on this issue a couple of years ago. The multi-fiber agreement that assigned import quotas by country ended in 2005, and imports from China quickly began to displace production in countries like Bangladesh and Cambodia. The U.S. quickly negotiated temporary caps on exports from China that last through 2008, thereby leaving some space for exports from poorer countries. Are these caps on Chinese exports free trade? The other misleading part of this story is that much of the U.S. trade agenda is not focused on reducing barriers but rather on increasing protection for U.S. patents and copyrights. These restrictions raise the prices that people in developing countries have to pay for drugs and other products. Maybe the NYT editorial board can explain how developing countries are benefitted by trade agreements that make it impossible for many of their citizens to afford life-saving drugs. 3) The workers who lose their jobs because of trade need more assistance -- This one wins the prize in being misleading. The NYT editorial board presumably knows that the vast majority of workers who get hurt by trade are not the ones who directly lose their job due to import competition, but rather the tens of millions of workers who stay on the job but get lower wages because they now have to compete with imports produced by low wage workers. That is the way markets work. The NYT is playing a game of three-card Monte here. They are distracting readers from the real issue: trade has been an important factor in lowering the wages for large segments of the U.S. workforce over the last quarter century. Those who lose their job directly because of import competition are the ones most affected, but this is a very small minority of the actual number of workers impacted by the current pattern of trade. The NYT views on trade will be taken more seriously when they adopt a consistent standard, instead of their current support for selective protectionism. When they call for measures that subject doctors, lawyers, and other highly paid professionals to the same international competition as autoworkers and textile workers face, then they will have a coherent position. And, they will also have to evaluate the patent and copyright protection that the U.S. wants to impose on the developing world by the same standard as other forms of protection. Until the NYT is prepared to adopt a consistent position on trade, their editorials should be viewed as presenting a brief for making the wealthy wealthier.
-- Dean Baker
