Media coverage of trade issues is so badly distorted that many readers will no doubt think that the assertion that "protectionists promote foreign investment" is an oxymoron. After all protectionists are supposed to be xenophobic rubes who want to build walls around the United States. Of course, the United States and many other countries have often used protectionist measures quite explicitly as way to promote foreign investment. Trade and direct investment are alternative ways to service a market. If it is more difficult to import goods into a country, then foreign firms will be more likely to invest in that country so that they can circumvent the trade barrier. This is one of the main reasons that Japanese auto manufacturers have been so anxious to build factories in the United States. This point was effectively acknowledged in an NYT article on Korea: "South Korea�s handicaps are not only cost-based or technological, analysts say. 'Japan has worked assiduously to reduce antagonism in the U.S.A. from industrial sectors.' said Usha Haley, professor of international business and director of the Global Business Center at the University of New Haven. 'For example, Toyota makes most of the cars it sells in the U.S.A. in this country � Korean car companies do not.'" Earlier this week, the Wall Street Journal quoted former Clinton administration economist Alan Blinder as saying that the Clinton administration basically lied to sell NAFTA, by claiming that it would lead to substantial job gains. This fact should have been hugely embarassing to the media. After all, not one of the reporters at a major media outlet was sufficiently knowledgeable to catch this lie before the fact, and there has not even been a good analysis published after the fact. It would be nice if the media could get beyond the "free traders" good guys, "protectionists" bad guys story and try to seriously examine what is at issue. The editorializing on this topic should be be confined to the editorial pages.
--Dean Baker
