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Home > Liberal Moments(SM)
#23. 'Free Trade' and the Environment
by Bob Powell, 2/28/08
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Here is this Liberal Moment (SM) Handout in pdf and doc formats that include many links to the information presented.

Understanding "trade"

1. It's not "trade"; it's "transfer of the factors of production": labor & capital.

2. Corporations build products over there so they don't build them over here at a labor cost that can support an American mortgage payment.

3. It's "reverse protectionism" because US policies subsidize offshoring. Stopping "reverse protectionism" is not protectionism!

4. It's not about "protectionism." US "free trade" agreements have 100s of pages to protect intellectual property & private capital, not environment & labor.

How the U.S. Subsidizes Offshoring of Jobs

  • Corporations can defer paying taxes on income from foreign subsidiaries ... indefinitely. Congress also gives them "tax holidays".
  • Tax loopholes such as moving headquarters to a tax haven.
    Allowing R&D and other investment tax credits for companies that move manufacturing off shore ... the U.S. doesn't fully benefit.
  • Corporations engage in flawed transfer pricing schemes to avoid U.S. taxes, i.e.: sell components to foreign subsidiary at very low profit, and buy back product after manufacture with a very high foreign markup & profit.
  • Not including labor & environmental standards in trade pacts is a subsidy. The costs of environmental degradation and injuries to workers are externalized onto the public at large. Without standards, democracy is undermined: individuals don't value & "purchase" clean environment & workplace safety, governments do; if a government isn't a democracy, it doesn't represent the interests of its citizens.
  • Corporations are allowed to write-off the costs of shutting down a U.S. factory when it transfers the work to a factory offshore.
  • Corporations are allowed to write-off the costs of bringing foreign employees to train in the U.S., requiring its U.S. employees, as their last duties before being fired, to train the foreign replacements to do their jobs.

Exploding US "trade" deficit

US "trade" deficit with China

Environmental and Other Effects of Offshoring to China:
CO2 Emissions per dollar of output significantly higher in China and India where corporations are sending jobs

URL: http://www.exponentialimprovement.com/cms/tradenv.shtml

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© 2003 Continuous Improvement Associates
#28. Petroleum Prevarication
#27. Trade Truth #2: The Dollar & the Deficit
#26. The NAFTA Nemesis
#25. The Liberal Mind: The Psychological Causes of Political Madness (April Fool edition)
#24. Employment & Unemployment
#23. 'Free Trade' and the Environment
#22. John Edwards on 'Trade' - Why We Need Edwards for President
#21. Principles of Economic Development
#20. Serving the Corporatocracy
#19 - Nineteen Eighty-Four by George Orwell