- Thread starter
- #21
"Protectionism is not the answer.Protectionism is not the answer.
Trade benefits both parties.
Trade benefits both parties."
Well thats the theory. Each nation should be allowed to do what it can do best. For example, if Mexico produces the best tomatoes at the best price and the US produces the best grapefruits at the best price then each country should be allowed to sell their product without tariffs or quotas. Mexico gets the best grapefruits at the best price and the US gets the best tomatoes at the best price. But suppose the Mexican government decides to give a little boost to their grapefruit growers in the form of product research, a few restrictions to make sure those imported grapefruits are up to par, and maybe a few subsides. Then free trade is not so free anymore.
As long as American companies doing business in China are not competing with Chinese industry things go pretty smoothly, but if there is any competition with local industry, American companies find they face a wall of regulations. Often the only course of action is bribes to government official at all levels which of course puts the business under the thumb of the government. China has been caught a number of times manipulating the currency market in order to keep the Yen low relative to the US dollar. This helps keep Chinese good cheap in the US and American good expensive in China. Then there is the massive amount of government subsidies to exporters etc, etc.
When Boeing bids against Airbus, they find they are bidding against Airbus/the government of France. France and the EU pumps money into Airbus as needed just to make sure they have a leg up on the competition.
What does the US do about all this? Nothing really. We dont want to start trade wars, we dont want to be considered a protections nation, and we certainly dont want to hurt WalMart or Target.
BBC NEWS | Business | Europe considers Airbus soft loan
Dave Johnson: Chinese Currency Manipulation Is Just One Part of the Problem