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tv   Great Decisions in Foreign Policy  PBS  November 9, 2017 12:00am-12:31am PST

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- [narrator] international trade has transformed the way we live. the question of how open markets should be to competition can lead to intense political debate and occasionally war. since world war ii the us has been a staunch supporter of free trade. but support is ebbing and calls for protectionism are emerging. - i'm going to issue a notification of intent to withdrawal from the trans pacific partnership, a potential disaster for our country. - [narrator] supporters of free trade say it creates the greatest amount of wealth for the highest number of people. representing the most efficient use of the world's resources. opponents say free trade eliminates jobs at home and makes the nation weak. international trade next on great decisions.
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(dramatic instrumental) - [narrator] great decisions is produced by the foreign policy association. in association with thomson reuters. funding for great decisions is provided by pricewaterhousecoopers llp. - [narrator] everywhere around us are signs of international trade. - the basic idea of trade as economists have understood it now for two centuries is that trade expands the pie, it makes the economy more efficient, it directs resources to comparative advantages as economists say. but it also changes the income distribution. - we've come through this very long period in which the united states went from being a relatively closed economy to being quite an open one. and the result of that was a lot of competition
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for jobs, for wages, for export opportunities in sectors that really hadn't faced competition before. - [narrator] advances in communication, technology, and transport have thrown open the door to trade like no other time in history. - globalization is history, history is globalization, now everybody anywhere can trade with anybody anywhere else fairly easily due to improvements in infrastructure and technology. - international trade has become this central drum beat in our lives and that is very new and very unusual in human history. - [narrator] the exchange of goods and services between nations has grown 27 fold since 1950. and accounts for nearly 60% of the world's gdp. - what that means now is that more and more people are affected by what happens in foreign markets by foreign competition in the us market.
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and that has led to increased use of new technologies, labor saving technologies, that have dampened the growth of employment and particularly in the manufacturing sector. and people who are adversely effected by that competition are becoming much more vocal and politically active. - believe it or not, how much of global gdp trade accounts for is a very controversial question because it depends how you're measuring it. there isn't actually a really great statistic on what the real volume is, the value is, and therefore all these comparisons you see of since 1900 bla bla and global trade, is like comparing apples to orangutans. - more open trade has made it more competitive for manufacturers in the united states, but even more we've had a lot of technological change which means we can manufacture things more efficiently and with fewer people. and those two clauses get mixed up.
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the most important clause is probably the second one rather than the first one. - [narrator] opening up a domestic market to global competition is risky. no nation engages in completely free trade. governments can impose a tariff or a tax on imports to favor domestic producers or to protect against unfair practices. - the fact that we all pay more for sugar because we have restrictions on imports of sugar from brazil and other countries, those costs are very dissipated, they're very small for any one individual. but the benefits for sugar beet farmers in north dakota are very concentrated and so there's a natural political lobby in favor of those things. so that's why tariffs tend to get put in place. - there's a political rationale for tariffs and there's an economic rationale. the economic rationale for tariffs doesn't
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exist, it doesn't hold water. tariffs are coercion, they are the government stepping in to influence private transactions in a way that is unfair. we permit tariffs to be imposed if a foreign government is engaging in unfair practices. - there's other kinds of tariffs called non-tariff barriers. a country might say, you can't bring that car into this country because the place for the license plate is one inch too far to the right. now that sounds like nonsense because it is nonsense, non-tariff barrage is just other ways to block imports coming into your country that don't sound like a tax, but really work the same way. - [narrator] governments can also provide financial support to an industry in the form of subsidies. - we're still quite protectionists in agriculture. heavy subsidies for farmers that make it difficult for foreign producers to compete. if you look at the history in agriculture
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there are many people would argue that under certain circumstances it actually makes a lot of sense to subsidize your farm production. you wanna ensure that you're self sufficient in food in case a crisis arises. - the other problem is the indirect subsidies that come into the production of goods in other countries that actually lower their price. for instance the lack of environment standards, the lack of labor standards, the government structures where you have direct government subsidies into business versus ours are more indirect. all of these create an unbalanced playing field for trade and people are beginning to perceive this intuit and say i'm not so sure this works for america anymore. - i think it's very dangerous for the world economy that we see a rise in protectionism because we know when you look back in history this is what helped bring down the us economy in the 30's. it was really a push in protectionism that accelerated the problems.
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- [narrator] in the us the smoot-hawley tariff act signed in 1930 was a package of tariffs put on thousands of imported products. it's now blamed for deepening the great depression. - it actually happened in the middle of the great depression it did not cause the great depression, it was a response to the great depression. and the idea behind it was because we had huge unemployment, we're in the middle of the great depression. we'd had the wall street crash. that this would be a way to try and keep our money domestically. - trade barriers were raised precipitously and basically blocked imports coming in the united states. it contributed to a decline in economic output and a precipitous drop in employment and a great depression. - they were originally trying to protect the farmers and then you know, other industries said well what about me, what about me, what about me? that really laid the foundation for today's tariff regime. - [narrator] emerging from the devastation of world war ii, nations had to choose a strategy for growth
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within the newly formed bretton woods system. - there was a consensus that increased trade barriers contributed to the war. - you can think of it broadly bretton woods and the gap together as the two big liberalizing trade and monetary and investment liberalization after world war ii. in those days we were by far the biggest steel makers in the world. by far the biggest airplane producers, car producers, whatever you wanted to look at we had half of the world's gdp. i think we thought we were taking and did take a constructive approach by opening our markets to others, but we expected their markets to be open to us. - [narrator] how a nation approaches the concept of trade has a profound impact on whether american free trade agreement,h nafta, is still debated today. - our economic teams are gonna continue
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to work together. - i am gonna renegotiate nafta. - nafta has led to the loss of more than 680,000 jobs. - the reason that nafta has been so controversial is it marked a sea change in us trade policy. so if you look at the history of the global trade regime post world war ii, what they called the gap negotiations, which eventually became the creation of the world trade organization. the countries involved in those were almost all reasonably wealthy countries. - we seek a new and more open global trading system. - it was the first of its kind agreements between very disparate levels of development economies. the us and canada in 1988 had a free trade agreement and george bush the first thought about having mexico join it, which meant all of a sudden we're gonna have a free trade agreement with a country with whom our median wage differential was one to 16. which is to say the median wage here versus there was 16 times poorer in mexico.
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- i was one of them, i was a trade official in the clinton administration. i sold nafta, i sold the round. you know i was out there pushing it, we oversold the upside, we undersold the dislocations that are involved. and if you went out right now and you asked the average american, was nafta a success? they'd say oh no, but nafta was a huge success. it created many, many jobs. it created much, much growth. and if you really want a stabilized population flows you want the mexican economy to do well. - [narrator] unions in particular have been vocal in demonizing nafta, claiming it has undermined their collective bargaining power and led to stagnant or declining wages. - we were afraid that it would accelerate outsourcing of good jobs mostly to mexico. but that also it established a set of rules that were not good for democracies because
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it elevated the in investor estate dispute settlement which was the first time that was ever put into a trade agreement. it protects corporate interests and it leaves workers in the environment vulnerable. and our view is that the 25 years or so since nafta's been in place have definitely validated the criticisms that we made at that time. - the unions pulled out all the stops to persuade the democrats and of course president bill clinton was a democrat, to defeat nafta. at the end of the day, they lost. - clinton believed and i agreed with him then, i continue to agree with him now that the future of the united states lay in figuring out how to compete more successfully in this new world economy. - the fact is nafta has not had these ill effects. manufacturing jobs have been in decline since 1979, nafta took effect in 1994. between 1979 and 1993, those 14 years, united states lost 2.7 million manufacturing jobs.
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and the 14 years between 1994 and 2007 the united states lost 2.7 million manufacturing jobs, same amount, the trajectory's been the same. - [narrator] new trade deals are now under consideration by us law makers. the trans-pacific partnership, or tpp, would be a free trade agreement between the us and 11 other pacific nations. - it's a trade agreement that would eliminate most not all, but most trade barriers among the united states, japan, and 10 other countries in the asia pacific region, including some quite low wage economies like vietnam. - it's not just a pure lowering of trade barriers, it's a sort of negotiated withdrawal from our protectionist perspective. and it makes great politics to argue that trade agreements like that are gonna
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hurt american workers. they're also gonna benefit american consumers. - who will benefit from tpp? we've done calculations and simulated the effect and what we find for instance is that for the united states in the aggregate our incomes would rise by something like a half of percent of gdp, that's half the percent of income, 131 billion dollars by the year 2030. - there was sort of a million different small provisions about it will have a huge impact on copyright law and intellectual property and is meant to boost us services exports. we think about exports as being mostly about manufacturing, but the us sells lots of services overseas. so it's economic on the one hand, but a lot of what tpp is looking to do is to build relations with other pacific nations, with asian nations, to counterbalance china. - [narrator] proponents of the tpp argue that if the us does not ratify it, china will be more likely
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to succeed with its own trade agreement and set the tone of future global trade deals. - it's about american leadership in the world. we have negotiated this, we have led this negotiation and if we can't deliver this i don't understand how countries are negotiate with the united states in the future. - are we joining peaceably with most of asia or are we turning our back on 'em? you can't escape the important political prevention when you talk about that particular trade agreement. that will be more important in my judgement than the economic impact. - [narrator] china has been accused of implementing protectionist policies like currency manipulation to drive growth and create an uneven playing field. - they manipulate their currency better than any country in the history of the world in history. history, they're killing us. - the chinese government has intervened in currency markets to buy up us dollars.
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and what that does essentially is it makes american products expensive and chinese products artificially cheap. makes it very hard for american businesses and workers to compete effectively. we don't have any enforceable currency rules in tpp. - china was a huge offender in that regard and it's one of the reasons why our trade deficit with china went through the roof in the 2000s and why so many of our communities were really very much laid low by really unfair competition with those cheap exports from china. - [narrator] americans in the manufacturing sector see factories shutting down while foreign made goods flood the shelves of american stores. to them the us appears to be getting a raw deal. - when you see factories closing and you're reading that china's the world's second largest economy that causality is easy to make. but it's not necessarily trade that's causing those factories to close. today our manufacturing sector produces
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3.5 times the output per worker hour, you know, as we did in 1979 when we were in peak employment. - once upon a time we had close to 20 million manufacturing workers in this country. we're now down to about 12 million. so what we have seen is jobs move, jobs decline, we haven't seen output decline. - you'll see the destruction from trade, you'll see the impact on the community, but what you won't see is the fact that american consumers who now get those appliances at much lower prices will have more resources to spend on other us products and services. or to put in the bank. - the fact of the matter is the middle class in this country has been squeezed. and so the rich have gotten richer, the poor have gotten poorer. and the middle class has been squeezed. and so there's a lot of discontent about where has the huge amount of equity gone since the 2008/2009 crisis.
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and it's gone to very few. - the powers that be if they are gonna continue to be the powers that be, are gonna have to find a way to address and improve the lives and the economic equality and opportunity of those people who were feeling marginalized by globalization. - [narrator] for a long time the story of trade was that it lifts all boats equally. yet the benefits of trade are diffuse. and the costs concentrated. - the average american family is spending half on clothing what it spent back in the early 1970s so a lot of us have benefited economically. but the costs have been quite concentrated in certain places and what i think we're seeing is the cumulative discomfort caused by decades of rising economic competition for the united states. - so you go tell the employees who work for vise grip in southern nebraska that all
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their jobs have went over to mexico, don't worry about it, that's actually good for america. after 30 years old i put my life's work into making this product, i was pretty proud of it too, i have three kids in high school. my mother's down the street sick. and i'm supposed to just subscribe to macroeconomic theory that says there's a free move of the labor, that's not human, that's not real. so the painful aspects of trade, the dislocations are very really and they're localized. - that is a problem, but the us economy has been good over the years at redeploying people who've lost their jobs finding other jobs in other sectors. although for the past decade or so the economy has not been very good at that. there are a lot of labor market frictions. it's hard for people to move because their healthcare's often tied to their jobs. - we have a program called trade adjustment assistance which was designed to help workers who are displaced because of trade. and that's been around for many decades, but i think what we've said about taa
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is there's not quite enough of it and it hasn't been that effective. - [narrator] still most economists argue that free trade strengthens the economy in the long run. - in the abstract, free trade is inherently good because it enlarges the economic pie and allows societies to specialize on what they do best. but you know in practice we see that in a partially liberalized trade regimes and some countries which are trying to you know protect home markets while trying to open markets have created lots of dislocations and frictions. - the onus is not on trade, the trade does its job, it's supposed to grow the pie, it's done that. the onus is on domestic policies, how do we overcome labor market frictions so that people that lose their job can be reemployed elsewhere? - the defenders of trade talk about how the pie is increased, this is almost a nonstop rhetoric.
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but the losers are saying that's fine, but you're getting all the big slices, what about us? and since american politics internally turned away from income redistribution 35 years ago when ronald reagan became president and it never turned back. the losers from trade are saying stop we don't wanna hear about your pie. we wanna hear about our slice. - [narrator] the trans-atlantic trade and investment partnership, or ttip, is a proposed agreement between the us and the eu. two of the world's dominant trading powers. - all the trade talks, the time, the ball is rolling right now. - the ttip is a negotiation between the united states and the european union. and of course until britain exited, britain was one of the 28 countries that we were collectively negotiating with.
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the aim of the ttip like the tpp was to achieve much deeper integration between the us and the european economies. (people protesting) - there's a lot of anxiety around particularly consumer protections and environmental protections. and what it will mean for europe to tie its economy more closely to the united states, i think they worry that us corporations will take advantage of that to weaken some of the european environmental and consumer protections. - [narrator] the perspective is different in the developing world. wealthy nations became industrialized before modern globalization. emerging economies say they're at an unfair disadvantage because they're forced to compete on the global stage while their industries are still developing. - climate change is sort of a major area that we see this push, that developed nations are saying, you know, we have to pull down carbon emissions,
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that has to be a global effort. and so you're gonna have to sort of pull back on your carbon emissions as to india to brazil to china and those nations say hey wait a second, you got to globalize spewing coal into the air and now you know, you're expecting us not to do the same. - [narrator] growing anti-trade rhetoric has challenged mainstream washington thinking on globalization and its consensus on free trade. - when i was a young man the argument was the rest of the world will never be able to catch up, they'll never be able to compete with us. we were so efficient, we came out of the war unscathed, well that began changing in 1960s and 1970s, it was a story the free world over. but at the time they rebuilt, they grow modernize, we got fat and happy. now we're fat and unhappy. - i think we are at the end of an era. so this era that began post world war ii in which we've seen a steady growth of these trade liberalizing agreements across the world,
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i think that has more or less run its course. - in the old days the debate was free trade versus protection and it was fundamentally an economic debate. what's happened as trade has moved to behind the border regulations is that we're now talking about issues that involve the protection of consumers or the regulation of financial firms, and so we're moving more deeply into areas that we used to think of as part of domestic policy. but are now becoming part of international policy. - when we negotiate trade agreements it really matters who's sitting at the table and doing the negotiation. when you're writing the rules of the road, you can write them on behalf of multinational corporations or you can write them on behalf of working people, or you can try to find a balance. that balance has been completely lost. - what people are now increasingly aware of,
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in congress but also the public, is that our trade agreements have been hijacked. and that awakening which has been transparted in the us, i think has permanently changed what will be tolerable both in trade agreement policy making. like i think the days of the closed door negotations with 600 corporate advisors and everyone else locked out so you get these agreements that have no place to go but the recycling bin, i think that's over. - what took so long for us to begin to argue about this? because the folks who have been hurt by globalization and their communities and they're not a trivial group. i mean to be clear they've also been helped by low cost goods, but their jobs, their wages, their factories, their towns have really been hurt. they finally found their voice in recent years. (instrumental music) - [narrator] as the breakneck growth of trade we have seen since world war ii slows,
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calls are increasing to do more to help those left behind and to account for increasing inequality. but it is clear that no nation can compete today without finding a way to harness the power of the global marketplace. - [narrator] great decisions is america's largest discussion program on global affairs. discussion groups meet in community centers, libraries, places of worship, and homes across the country to discuss global issues with their community. participants read the eight topic briefing book, meet to discuss each topic, and complete a ballot which shares their views with congress. to start or join a discussion group in your community visit greatdecisions.org or call 1-800-477-5836. great decisions is produced by the foreign policy association. in association with thompson reuters.
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funding for great decisions is provided by price waterhouse coopers llp. - [narrator] next time on great decisions, china is building up its maritime presence. its ambitiously advancing its territorial claims to disputed island chains in the south and east china seas. is this maritime expansion an effort to project power and deny access to what were once international waters? or a reasonable assertion of china's expanding capabilities? china, next time on great decisions.
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ñ[qupowowú!úú% ♪ ♪ >> welcome to in good shape. today's topics -- living with borderline personality syndrome. how writing helped one patient. a tipple too many -- why alcohol makes you fat. vaccinations -- which ones are recommended and how safe are they? and here's your host -- dr. carsten lekutat. >> hello, and welcome. we will talk about vaccinations. it more and more people are saying vaccines are dangerous and can harm you or even kill you. what kind of people are those? i have a clear opinion about this, but what do experts say? i will speak about this with a

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