public citizen

Tricks Against Trade

by Fran Smith on September 15, 2010

in International, Trade

Public Citizen’s Global Trade Watch is up to its tricks against trade again.  Noted for its past expertise in destroying the Seattle WTO negotiations, the group is now taking a new stance against free trade agreements (FTAs), though not by their usual rhetoric that they cost jobs and a “race to the bottom.”  Their new approach is that FTAs actually lower exports. The group just published a “study” purportedly showing that exports to countries that have free trade agreements with the U.S. showed less export growth than did exports to countries that don’t have FTAs.

I guess they are saying that even though these pacts lower tariffs and other trade barriers on many goods and services–making U.S. products and services cheaper for trade partners to import–they have a negative effect on U.S. exports.  A bit counter-intuitive, but theirs is not to reason why — Public Citizen states that quite clearly — but to show that past and, of course, future trade agreements will harm rather than help the U.S. economy.

“It is beyond the scope of this paper to explore in detail why the United States has had lower export growth with FTA partner countries: the central point is that the claim that export growth to FTA partners has been higher than export growth to non-FTA partners is not supported by the actual U.S. government trade flow data.”

In a quick perusal of the 42-page report, what I found most interesting is that the FTA countries were listed in numerous charts and graphs, but nowhere could I find a listing or a mention of which non-FTA countries were included in the analysis.

Isn’t that a somewhat basic analytic flaw — to have specifics about one group you’re analyzing and to use aggregate numbers for the group you’re comparing?

Here are a few more quick observations on the study.  Nowhere do the authors discuss other factors that might explain lower exports than expected in FTA countries.  What was happening in the specific countries?  Could the fact that Mexico had a devastating currency crisis in 1994 — right when the North America Free Trade Agreement went into effect — have anything to do with their diminished ability to import goods and services from the U.S.? After all, Mexico’s GDP declined approximately 7% in 1995.

Also, is China included in the non-FTA countries? If so, then that country’s phenomenal growth over the past 10 years would almost by itself affect the results.  In 2009, China had an 8.7 percent GDP growth rate and imported $69.6 billion of goods and services from the U.S.  The global financial crisis affected U.S. exports to China much less than those to other important markets feeling the brunt of the economic downturn.

In addition, of the top ten countries in terms of U.S. exports, only two have free trade agreements with the U.S. But, of course, since we don’t know which countries Public Citizen used for its “non-FTA” group, there’s no way of knowing if some or most of the top ten were in the list or of analyzing their economic conditions.

Despite what I consider are considerable problems with this report, it’s bound to be used by the anti-trade forces arming themselves for future battles on the pending FTAs with South Korea, Colombia, and Panama.  Betcha too the report will be used in the lead-up to the November elections, as trade-bashing seems to be becoming one of the defining Democratic issues.

Fraud in More Ways Than One

by Iain Murray on February 19, 2009

in Deregulate to Stimulate, Economy, International, Legal, Regulation, Sanctimony

The news of the federal fraud charges against billionaire Texan financier Sir Allen Stanford (he got the knighthood from his dual citizenship from Antigua) has been greeted with glee by pro-regulatory forces because he dared to lobby against financial regulations in the early part of the decade. The Huffington Post huffs and puffs:

Though tough anti-money-laundering legislation overwhelmingly sailed through the House Banking Committee in 2000, it had difficulty getting to another vote as powerful GOP lawmakers — then-House Majority Leader Dick Armey, then-House Majority Whip Tom DeLay and then-Senate Banking Committee chair Phil Gramm stymied its future.

DeLay was among the largest recipients of Stanford’s largesse. And “DeLay’s committees paid for flights on Stanford’s jets at least 16 times since 2003, including on Oct. 20, the day the former House majority leader was booked in a Houston courthouse on money-laundering charges,” according to Bloomberg News.

There are a few problems with this black-and-white evil-GOP-lawmakers-stand-in-way of-good-regulation narrative. First, as Ralph Nader’s Public Citizen relates (Case Study #3 here), it was actually Democrats who controlled the Senate at the time, and Majority leader Tom Daschle was a prime recipient of Stanford’s cash:

Stanford became the single largest contributor between July 1, 2000 and June 30, 2001 to the 527 groups of Daschle and Frost. (Public Citizen’s efforts to discuss these contributions were rebuffed by a Stanford Financial Group spokesperson.)

Stanford also contributed the maximum allowed to Daschle’s 527, given Daschle’s self-imposed limit of $10,000 per donor per year. Stanford contributed $10,000 from his company and $10,000 from himself in both 2000 and 2001.

Why? What was Stanford trying to get from Daschle, the highest-ranking Democrat in the Senate, and Frost, the third-highest ranking Democrat in the House?

We should also note that the bills Stanford appears to have lobbied against were also opposed by that strongly conservative body, the ACLU (see quote from Greg Nojeim, legislative counsel, here).

Finally, as Public Citizen notes, the legislation Stanford lobbied against passed through Congress, with Daschle as a prime mover, after 9/11. It appears to have done nothing to prevent his alleged fraud.

Oh, and look who he’s been palling around with lately.

The only lesson from Stanford’s lobbying appears to be that lobbying is an equal-opportunity employment opportunity, and that the only way to get less government corruption is to have less government, not more.