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The U.S. and the Current Free Trade Problems

Essay by   •  November 20, 2011  •  Case Study  •  1,034 Words (5 Pages)  •  1,253 Views

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The U.S. and the current free trade problems.

The United States economy is very vast and plays a large part in the world's economy. Currently the way countries determine how well they are doing in this grand stage is by calculating there gdp and trade surplus or defects. Two of the five parts of our country's Gross domestic product (gdp) is exports and imports. We subtract our imports from our exports and we come up with either a positive number our negative depending on how much we import in. We always have a negative number with in the past 30 years now because we import in more than we export which can be a real problems. These problems range from currency manipulation, entering into trade agreements that are lopsided to begin with and labor rules and regulations.

Just recently some new changes in our countries trade agreement were passed. These new agreements were aimed at developing free trade with Colombia, South Korea and panama. In which would greatly increase our exports to these countries and here by increasing our gdp and jobs in the U.S. economy. But on the other side of the problem is the United States already has trade deficits with South Korea and Columbia. This would mean when the agreement starts we would never get out of that deficit and also would have a more imports coming into the U.S. as well as some job loss as well. "Rapid import growth and the existence of trade deficits before trade agreements take effect combine to ensure that trade deficits continue to grow when the trade agreements were concluded. Because exports were less than imports in the base year, then the trade deficit tends to expand if imports and exports both grow at the same rate. These deficits tend to persist and grow following implementation of trade agreements with the United States, as illustrated by

The cases of Mexico and China. The only way to eliminate trade deficits with these countries is for the rate of growth of exports to these countries to accelerate, while import growth rates fall. That has not been the case for the most important U.S. trade agreements, especially with low- and middle-income developing countries such as China and Mexico." (t, 2010) With this in mind, we need to look at how to solve the problem in the first place. "First, we should stop making things worse. The rule when you find yourself in a hole is to stop digging. Today, the Obama administration is still promoting more of the same trade agreements that have consistently failed in the past. We are told that free trade agreements with countries like Colombia and Korea will increase exports. That's probably true. But as we have learned over the last 30 years, they will increase imports more. The net result will be to destroy U.S. jobs and add to our global debts." (Faux, 2010)

Another dilemma the United States has to deal with is the manipulation of foreign currency. A couple of countries like to keep their currency artificially low so they can be able to increase their exports to foreign countries, china is the most abusive of this practice and south

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