AmericanEconomicAlert.org | Fighting for American Companies, Fighting for American Jobs

Lifezette: America Gets Raw Deal Protecting Trade Partners

By Kevin L. Kearns
Thursday, January 26, 2017

The New York Times certainly loves the globalist agenda. In a misleading  infographic, they recently touted the benefits that America gains from its military defense of Europe and the Asia-Pacific region. The Times has, of course, bristled at president-elect Donald Trump’s questioning of “what America puts in and gets out of global alliances.” And so, reporters Max Fisher and Sergio Pecanha offered a seemingly data-driven counter-assessment of U.S. military spending throughout the world—an obvious rebuke of the incoming president’s questioning of “internationalism.”

Overall, Fisher and Pecanha see the benefits of global trade as a great motivator for U.S. military positioning throughout the world. Regarding U.S. defense treaties, for example, they cite America’s $577 billion in cross-border trade with Canada in 2015, and $699 billion exchanged with the EU. And then there’s the $194 billion in trade that the United States carried on with Japan in 2015, and the $115 billion in commerce with South Korea.

Sounds great, doesn’t it? Lots of goods and cash sloshing back and forth among free peoples under the watchful eye of the U.S. military. Unfortunately, the Times’ representations are more than disingenuous—they’re fake analysis.  The large sums that allegedly benefit the United States represent total trade, not the U.S. portion, which is a better measure of how the country is doing financially through its engagement with the rest of the world.

No, Fisher and Pecanha fail to mention that, in each case, the United States runs depressingly large trade deficits with the countries and regions in the graphic. Revealing these trade deficits would open to question the entire political/military/economic engagement of the United States abroad—certainly not something that globalization cheerleaders at the Times want to do. They might as well include a graphic that shows total world trade and allege that the people of Syria or Venezuela are well off because, to some extent, they participate in the large total figure.

Yes, the United States ‘enjoyed’ $194 billion in trade with Japan in 2015. But Japan out-exported America by $68.9 billion that year. And Canada trade did indeed reach a whopping $577 billion. But Canada came out $15.5 billion ahead.

And ready for the bottom line with the European Union? That lucrative $699 billion in commerce netted the EU a massive trade profit of $155.6 billion. South Korea fared pretty well, too, finishing 2015 with a trade surplus of $28.3 billion against the United States—in spite of a recent, best-practices Obama trade deal.

According to Fisher and Pecanha, all of this trade brings “stability to the most
economically and politically important regions”—maybe, if the United States is excluded. Such lopsided trade flows are steadily weakening America at its wealth-generating industrial core and degrading its ability to provide for peace and security in the future.

The authors also argue that not only does this commerce in Asia, for example, help to “counter the influence of China and to support allies against North Korea,” but these countries also proudly contribute to their own defense. The Times happily praises Japan because it “covers 75 percent of the United States’ basing costs there, worth $4.4 billion annually.” And South Korea “covers 40 percent of the United States’ basing costs there, worth $843 million annually.”

A question then: How hard is it for Tokyo to pay $4.4 billion in annual military costs for U.S. bases—when it can draw from a trade surplus of roughly $69 billion? And as for Seoul, coughing up $843 million in basing costs is simply the cost of kimchi when drawn from $28 billion in trade profit. One wonders why  these countries can’t pay the full tab—if the benefits they’re receiving are so great?

Yes, collaboration on “Counterterrorism and intelligence sharing” among America’s allies is a good thing. But surveillance, collection, and networking is mutually beneficial among industrialized nations. Simple self-interest justifies such work, even if the United States did not maintain bases abroad while stripping away chunks of its own national wealth and feeding them to voracious allies.

There may be reasons to support an American military presence among allied nations, but these are not-self-evident and certainly not supported by the obscurantist Times graphics.

The toll of 40 years of lopsided trade balances poses serious questions for America’s longevity as a world power and viability as an industrial economy. In fact, and contrary to the Times cheerleading, ordinary Americans are paying double for the putative benefits—first with the good jobs displaced by unfair trade practices, and second with the taxes necessary to support our global military presence.

President Trump is right. It is way past time to reexamine U.S. alliances and security commitments to see if they actually benefit the American people. The elites’ myopia, cheerleading, and fake analysis must be thrown aside in favor of taking a hard, realistic look at the nation’s balance sheet and making the tough decisions necessary to keep the country economically and militarily viable over the long run.


http://www.lifezette.com/polizette/kearns-america-gets-raw-deal-protecting-trade-partners/


Kevin L. Kearns is President of The United States Business and Industry Council. Prior to joining USBIC in 1993, he was a Senior Fellow at the Manufacturing Policy Project, a Washington, DC think tank. For 13 years before that he was a U.S. Foreign Service Officer with overseas assignments in Germany, Korea, and Japan, where he witnessed firsthand the operation of highly cartelized, mercantilist economies.
(c)Copyright 2001-2017 AmericanEconomicAlert.org, USBIC