Why is the US running away from "FREE TRADE"?
Summary
TLDRThis video explores the United States' economic dominance and its historical approach to global trade. It delves into the origins of international trade agreements, the U.S.'s shift from isolationism to a key player in global commerce, and its complex relationship with the World Trade Organization. The script also discusses the Biden administration's recent initiative, the Alliance for Economic Prosperity in the Americas, aimed at fostering regional trade and investment, potentially countering China's influence and promoting resilient supply chains.
Takeaways
- 🌐 The United States has the largest economy globally, accounting for nearly a quarter of the world's GDP.
- 🛑 Historically, the U.S. has been somewhat isolationist, focusing on domestic market development and security rather than international trade.
- 🤝 The first free trade agreement dates back to 1860 with the British Empire's Treaty of Cobden-Chevalier with France.
- 🏛️ Post-World War II, the U.S. played a significant role in establishing international trade norms, including the General Agreement on Tariffs and Trade (GATT).
- 🛑 The U.S. has not always been successful in its trade initiatives, as seen with the rejection of the Free Trade Area of the Americas (FTAA) in 2005.
- 🌳 The U.S. has a relatively low average tariff rate of 3.5%, indicating a generally open trade policy.
- 🔄 The U.S. often uses the WTO's most-favored-nation clause to manage trade, which provides political control over tariff settings.
- 🌎 The Biden administration is currently promoting the Alliance for Economic Prosperity in the Americas, which could be seen as a revised approach to the FTAA.
- 🤔 The U.S. has been cautious in signing new free trade agreements, focusing on strategic partnerships and regional integration.
- 💡 The U.S. continues to influence global trade significantly, despite not leading in the number of free trade agreements compared to other countries.
Q & A
What is the significance of the United States' economy in the global context?
-The United States has the largest economy in the world, with a gross domestic product of nearly 24 trillion dollars, accounting for almost a quarter of the world's entire GDP. It is considered the most important and lucrative market globally.
What was the first free trade agreement in history?
-The first free trade agreement was the Treaty of Cobden-Chevalier, signed between the British Empire and France in 1860.
How did the United States' geopolitical situation contribute to its economic success?
-The United States' geographical security allowed it to focus on economic development and the arts of peace without major war conflicts, contributing to its economic success.
What was the role of the United States in the creation of the General Agreement on Tariffs and Trade (GATT)?
-The United States played a significant role in the creation of GATT, pushing for low tariffs, common rules, and the full mobility of goods, which helped to accelerate reforms in the 1950s.
Why did the United States not join the International Trade Organization (ITO) proposed in the Havana Charter?
-The United States did not join the ITO because President Truman announced he would not submit the Havana Charter to the Senate, where the majority was opposed to joining the organization.
What was the significance of the Kennedy Round in the context of GATT?
-The Kennedy Round, initiated in 1964, was significant because it represented a major leap forward with reductions in tariffs on many raw materials by half and the elimination of numerous non-tariff barriers.
How did the fall of the Berlin Wall impact global trade negotiations?
-The fall of the Berlin Wall marked a turning point that led to a new world needing a new system of trade cooperation, which eventually resulted in the establishment of the World Trade Organization (WTO).
What was the North American Free Trade Agreement (NAFTA) and its significance?
-NAFTA was a trade agreement signed in 1994 between the United States, Canada, and Mexico, marking a major step for the United States to join the wave of free trade and economic integration.
Why did the Free Trade Area of the Americas (FTAA) initiative fail?
-The FTAA initiative failed due to strong opposition from many Latin American countries, which saw it as an attempt by the United States to impose its economic dominance on the region.
What is the Alliance for Economic Prosperity in the Americas and what are its objectives?
-The Alliance for Economic Prosperity in the Americas is an initiative announced in June 2022 by the Biden administration, aiming to boost trade, investment, and the application of common regulations among the participating countries, potentially to reduce China's influence and promote regional production chains.
Outlines
🌐 The Colossus of Global Economy: U.S. Economic Dominance
The United States boasts the world's largest economy, with a GDP of nearly 24 trillion dollars, accounting for nearly a quarter of the global GDP. This economic might is unmatched, making the U.S. market the most significant and lucrative globally. The video delves into the U.S.'s openness to world trade and its historical role in shaping the global trading system. It begins with a historical overview, highlighting the U.S.'s economic growth and its initial isolationist stance, which kept its thriving domestic market somewhat distant from global trade. The script also touches on the U.S.'s unique geopolitical situation, which has historically allowed it to focus on economic prosperity while other nations were preoccupied with war.
📜 The Evolution of Global Trade: From Cobden-Chevalier to WTO
The script traces the evolution of global trade agreements, starting with the first free trade agreement, the Treaty of Cobden-Chevalier in 1860, to the establishment of the World Trade Organization (WTO) in 1994. It discusses the U.S.'s pivotal role in shaping these agreements, particularly in the post-World War II era. The U.S.'s focus on security issues and its occasional protectionist measures are highlighted, as well as its efforts to promote free trade as a means to counter Soviet influence. The narrative also covers the creation of the General Agreement on Tariffs and Trade (GATT) and the challenges it faced, including the U.S.'s isolationist tendencies that resurfaced, leading to the failure to establish an International Trade Organization.
🌉 The Shift Towards Globalization: From Isolationism to Integration
This section of the script discusses the U.S.'s shift from economic isolationism to a more integrated approach with the global economy. It outlines the significant milestones in the U.S.'s trade policy, including the creation of NATO and the Marshall Plan, which were part of a broader strategy to counter Soviet influence. The script also details the U.S.'s efforts to reduce trade barriers through various GATT rounds, culminating in the establishment of the WTO. The U.S.'s focus on trade as a geopolitical tool is emphasized, as well as the challenges it faced in promoting its trade agenda, particularly in Latin America with the failed Free Trade Area of the Americas (FTAA) initiative.
🚪 The U.S. Trade Policy Today: Openness and Strategic Engagement
The final paragraph examines the current state of U.S. trade policy, highlighting its use of the most-favored-nation clause under WTO rules to manage tariffs and trade. It points out that despite having fewer free trade agreements compared to some countries, the U.S. continues to be a significant player in global trade, with a large portion of its imports entering tariff-free. The script also discusses recent initiatives, such as the Alliance for Economic Prosperity in the Americas, which aims to strengthen trade and investment ties in the Western Hemisphere. The U.S.'s approach to trade is depicted as more measured and strategic, with a focus on reducing China's influence and promoting regional production chains.
Mindmap
Keywords
💡Gross Domestic Product (GDP)
💡World Trading System
💡Free Trade Agreement (FTA)
💡Protectionism
💡Isolationism
💡General Agreement on Tariffs and Trade (GATT)
💡World Trade Organization (WTO)
💡Economic Integration
💡Tariff
💡Trade Barriers
💡Geopolitical Advantage
Highlights
The United States has the largest economy in the world, with a GDP of nearly 24 trillion dollars.
The U.S. economy accounts for almost a quarter of the world's entire GDP.
The U.S. is the most important and lucrative market globally, with a significant impact on world trade.
The first free trade agreement dates back to 1860 with the Treaty of Cobden-Chevalier between the British Empire and France.
The 1919 Treaty of Versailles considered trade as a key axis for global prosperity.
The U.S. promoted free trade during the Cold War but maintained protectionist measures in strategic sectors.
Global trade significantly expanded in the 1990s and the beginning of the 21st century.
The U.S. has a history of isolationism, avoiding deep integration with the global economy.
The Atlantic Charter in 1941 set goals for equal access to world trade and raw materials.
The U.S. focused on security issues and economic cooperation as tools against the Soviet Union during the Cold War.
The General Agreement on Tariffs and Trade (GATT) was established in 1947 to reduce trade barriers.
The U.S. did not join the International Trade Organization due to Senate opposition in 1950.
The World Trade Organization (WTO) was established in 1994, marking a significant step in global economic integration.
The U.S. has been cautious about signing new free trade agreements, focusing on geopolitical advantages.
The U.S. has 19 free trade agreements, focusing more on political control over trade management.
The U.S. applies a low customs tariff, averaging 3.5 percent, one of the lowest in the world.
The Biden administration announced the Alliance for Economic Prosperity in the Americas, a potential new trade initiative.
The new initiative aims to boost trade, investment, and common regulations among member countries.
The alliance could be a strategy to reduce China's influence and promote regional production chains.
Transcripts
[Music]
for the gross domestic product of nearly
24 trillion dollars the United States
has by far the largest economy in the
world in fact the U.S economy is so
large that it accounts for almost a
quarter of the world's entire GDP North
Americans devour more products than
anyone else and virtually everyone wants
to trade with them it is by far the most
important and lucrative Market in the
world no other country comes even close
to the economic capacity of this
superpower but how open is Uncle Sam
really to World Trade what role does the
world trading system play are you
familiar with the Biden administration's
latest bid to integrate the U.S economy
with much of Latin America well in this
video we will answer all these questions
but first we need to know exactly where
this whole story began let's get started
[Applause]
[Music]
humans have been trading for Millennia
if not for our entire history however
the idea of a world made up of
international commercial networks and
production chains scattered here and
there is a much more recent development
on a large scale it has only been with
us for a few decades for example the
very first free trade agreement between
countries dates back to 1860 the
instigator was not surprisingly the
British Empire with the signing of the
Treaty of Cobden Chevalier with France
in January of that same year decades
later the 1919 Treaty of Versailles was
one of the first multilateral documents
that considered trade between countries
as a key axis for Global Prosperity
however the second world war and the
Cold War would cast a shadow on the
following decades for example in its
confrontation with the Soviet Union the
United States promoted free trade but at
the same time it also maintained many
protectionist measures in sectors
considered strategic and at the
international level it focused mainly on
security issues and so the great
explosion of global trade would not come
until the 1990s and the beginning of the
21st century a process that surprisingly
was not clearly led by the United States
listen up
from isolationism to rivalry with Moscow
it seems there is a broad consensus
about the United States a large part of
its enormous success in exploiting its
immense economic and political potential
was due to its particular geopolitical
situation and you know what this Theory
goes way back check it out the United
States finding no enemy abroad who can
seriously threaten it the American
people are always engaged in the task of
improving their situation Alexis
Democracy in America 1835-1840.
peculiar security of American geography
gave the United States an economic
security that enabled it to concentrate
on the Arts of Peace while leaving other
nations to indulge their taste for war
David Potter people of Plenty economic
abundance and the American character
1954. the reality is that the U.S
flourished in a climate free of major
war conflicts and yes I know obviously
the Civil War and some relatively minor
military friction such as the Mexican
war eventually made them get their guns
out but obviously it is nothing in
comparison to the constant conflicts
that inundated the history of Old Europe
for centuries nor has the United States
ever suffered the consequences of having
major tyrants at the helm who were more
concerned with filling their pockets
than with the country's economic
performance and general prosperity and
what can I say it shows
in any case the point is that for years
and years Americans grew their economy
and developed a huge and thriving
domestic Market which nevertheless was
kept somewhat distant from the rest of
the world until one way or another the
world came to them this is what is
commonly known as American isolationism
but do you want a concrete example of
what this political and economic
vocation entailed well the United States
avoided joining the League of Nations
the Forerunner of the UN at all costs
even though its own President Woodrow
Wilson had been one of its great
promoters at that time the United States
was not particularly interested in the
rest of the world don't you remember all
that it cost them to jump into World War
II but of course it was during that
conflict that a turning point occurred
that would change the history of the
world when Japanese forces bombed Pearl
Harbor it suddenly changed the U.S
perspective forever from that moment on
the land of the Stars and Stripes would
never look the other way again but okay
okay I know what on Earth does any of
this have to do with the subject of this
video
foreign
well you see the point is that in 1941
in the well-known Atlantic Charter
agreed upon after a secret meeting
between Churchill and Roosevelt these
two countries set the following goal
Clause 4 to extend to all states small
or large Victorious or defeated the
possibility of equal access to World
Trade and raw materials necessary for
their economic Prosperity letter from
the Atlantic 14th of August 1941. and so
when the war ended and later when the
Iron Curtain was lifted Washington fell
into a period of pactomania that is to
say a kind of almost compulsive
Obsession to reach new agreements with
other countries we're talking about the
time of the Marshall Plan or the
creation of NATO itself it's only
logical that the United States should do
everything and its power to contribute
to the return of normal economic health
in the world without which there can be
no political stability and no secure
peace governments political parties or
groups which seek to perpetuate human
misery for the purpose of political or
other gain will meet with opposition
from the United States speech by
Secretary of State George Marshall on
the 5th of June 1947. the priority then
was absolutely clear all the tools of
economic cooperation were added to the
instruments that the United States could
employ in its particular Crusade against
the Soviet Union and this was perhaps
the only problem let's just say the
American Obsession was focused on
reaching agreements that would give them
a geopolitical advantage over Moscow and
the Soviet threat in other words trade
was so to speak a resource to fight with
not so much an end in itself but even so
very important progress was made
in 1947 the city of Geneva hosted
multiple multilateral meetings where the
various Powers tried to finalize a new
treaty that would give rise to the Gat
the general agreement on tariffs and
trade at this Summit the most heated
debates were between London and
Washington the old Power did not trust
in a rapid opening up of markets while
the United States made its
unquestionable Western leadership debut
accelerating reforms even further than
its own Partners expected him
low tariffs common Rules full mobility
of goods and almost total freedom of
exchange and so you get the idea if
these things are difficult to make
happen today imagine in the 1950s when
there was still a widespread distrust of
the newly created bipolar International
order so yes Gat was passed but it did
not succeed in forcing the Western
powers to reduce their tariffs rather
this was left to the discretion of the
various governments
[Music]
in addition shortly after 1948 the
United Nations conference on trade and
employment took place in Havana and on
24th of March of the same year 53
western states signed a charter seeking
the creation of the now well-known
International Trade Organization however
it was right here that the Specter of
U.S isolationism reappeared with a
Vengeance in 1950 President Truman
announced that he would not submit the
Havana Charter because in the Senate the
majority of legislators were opposed to
joining this organization of course at
the time if the United States stayed out
it meant that the proposal was
automatically canceled thus the
premature dream of having an
International Trade Organization came to
an end the negotiations and promotions
of international trade would be carried
out in various Gat rounds the problem is
that it was a great deal with many
limitations the treaty had very little
power to enforce the rules was very
limited when it came to resolving the
various disputes and only covered the
Goods Market it did not cover Services
intellectual property or foreign
investment let's just say that it was a
kind of minimum agreement which when it
came down to it many countries did not
respect what's more as more countries
joined this agreement the various
negotiations became never-ending however
as the Cold War began to thaw the old
ideas of integration gathered weight in
the United States and with it throughout
the West the fall of the Berlin Wall was
emblematic a real Turning Point
[Music]
fall of the wall and economic
unipolarity
between 1947 and 1990 about eight rounds
of negotiations took place within the
framework of the Gat agreement in them
the state's parties met to agree on new
measures to facilitate foreign trade the
problem is that these negotiations were
very long on average each round lasted
29 months yeah yeah that's right on
average every time they wanted to reduce
a trade barrier they were negotiating
for more than two years nevertheless
progress what we understand as progress
was made for example the round initiated
in Switzerland in May 1964 known as the
Kennedy round represented a major Leap
Forward tariffs on many raw materials
were reduced by half and a lot of
non-tariff barriers were eliminated of
course the following rounds would be
quite different much more bogged down
with more or less constant but often
excessively timid progress
this was the case until September 1986
when the eighth round began in Uruguay
this would last no less than 87 months
more than seven years in which key
events took place the fall of the Berlin
wall and the dissolution of the Soviet
Union when the round began in Uruguay
Ronald Reagan was in the white house but
after months and months of negotiations
in Montevideo Geneva Brussels Washington
DC and Tokyo the US government changed
hands Twice first to Bush senior and
then to Bill Clinton in 1993 however the
participating Nations finally reached an
agreement once and for Rule and we're
not talking about just any agreement
with the end of the Cold War a new world
had emerged a world that needed a new
system of trade cooperation and so
visualpolitik viewers the idea of a
multilateral organization a body to
govern World Trade was successfully
revived listen up
[Music]
Clinton the WTO and the integration that
wasn't
April 15 1994 was a a historic day for
the world economy on that day 123
countries including the US signed the
Marrakesh agreement which established
the World Trade Organization WTO and
this was by far the definitive takeoff
of global economic integration the
definitive leap of globalization and the
construction of the world as we know
today as you can see from that moment on
trade agreements multiplied faced with
such a scenario Bill Clinton's
presidency went all out with this new
organization achieving some significant
Milestones such as the entry of the
People's Republic of China into the
organization however and here is the
most curious thing of all Washington's
efforts were particularly focused on the
rest of the world that is to say within
the White House itself there was still
no Landslide of new free trade
agreements that it was planning to sign
with a world that was abandoning
socialism at full speed in order to
throw itself into the arms of trade
capitalism and globalization at that
time the only relevant free trade
agreement that the United States had was
a 1988 agreement with Canada an
agreement that Clinton would convert in
1994 to include Mexico in the North
American Free Trade Agreement the
well-known NAFTA this was the first
major step taken by the United States to
join the new wave of free trade that was
sweeping the world
I'd also like to welcome here the
representatives from Mexico and Canada
and tell them they are in fact welcome
here they are our partners in the future
that we are trying to make together of
course it would take time for U.S
enthusiasm to bear fruit it was not
until 2004 that the United States signed
new free trade agreements with Chile
Australia Jordan Singapore the Dominican
Republic and Central America the
president of the time George W Bush was
a strong supporter of extending and
expanding this policy however in 2005
there was a terribly painful door
slamming that would leave many scars in
the White House what are we talking
about well listen closely
[Applause]
[Music]
thank you
a superpower rejected by its neighbors
in November 2003 34 countries
practically the entire American
continent as a whole met in Miami to
discuss a plan devised by the White
House an unprecedented plan that sought
to extend the North American free trade
agreement between Canada Mexico and the
United States to the entire region thus
creating what is known as the free trade
area of the Americas ftaa the agreement
was to be concluded within two years but
by 2005 at the fourth summit of the
Americas held in Argentina George W bush
came face to face with the red wave that
was sweeping the region at the time just
as it is today and it almost doesn't
matter what year you watch this video
foreign
[Applause]
[Music]
[Music]
America it was an offer from Washington
that incredibly was projected which was
one of the most humiliating days for the
U.S foreign policy in recent decades
[Music]
the idea the plan the great gamble of
the Oval Office had been publicly and
notoriously mistreated by the great
socialist leaders of that time at the
end of that Summit bush left Argentina
ending the integration Adventure
ironically this time it was the world in
this case Latin America that was saying
no to the US which naturally meant
rejecting a golden opportunity to
integrate Latin America with the largest
economy on the planet seeing is
believing why you wouldn't want to have
access to U.S markets trade agreements
reduce
barriers and tariffs that's what they do
that's why you have a trade agreement
they don't make it harder to access
markets that make it easier to access
markets
and why wouldn't people want to access
our best Market I don't know it was a
failed gamble which was yet another
turning point for the United States
listen up
[Music]
post ftaa everything much more measured
the United States had begun to open up
trade with its closest neighbors Mexico
and Canada it then wanted to take this
gamble to the entire American continent
with the slamming of the door on the
ftaa soon made Washington tired of it
currently these are the only 19 U.S free
trade agreements in Fords
[Music]
new trade agreements we
AK agreements we can see how the
openness of the North American Giant is
much more limited but how on Earth is it
possible that countries such as Peru
turkey China or even Ukraine have signed
more trade agreements than the United
States is the United States really such
a closed country well the truth is that
there are several nuances to be noted
here starting with this
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the United States continues to conduct
most of its trade under the most favored
nation clause awto Clause that
guarantees that the best treatment that
one member country gives to another
member has to reply to all except in
cases of free trade agreements in this
way the United States sets its tariffs
then applies them across the board this
results in for example 49.9 of all U.S
Imports entering tariff free in 2021
around 14.8 percent of imports benefited
from tariff reductions and 0.9 benefited
from unilateral preferences in favor of
poorer countries
in other words it is not that the United
States has closed itself off from the
world or renounced the benefits of trade
but rather that it has used WTO rules on
tariffs to the hilt for example
negotiating and setting the level of
tariffs for each type of product this is
given Washington much more political
control over trade management and that
is what explains news items like this
the million dollar crisis of the Spanish
black olive due to the U.S tariff the EU
and the U.S diffused their tariff war on
steel and aluminum it must be said
however that the United States generally
applies a customs tariff that is among
the lowest in the world we're talking
about an average of 3.5 percent
nevertheless in recent years the United
States has been working on the possible
creation of a U.S Middle East free trade
zone a trans-pacific partnership
agreement and a utopian transatlantic
trade and investment partnership with
the European Union however the arrival
of trump in the White House meant that
all of these efforts by the Obama
Administration fell by the wayside of
course now that position could change
again and what's more it could do so in
Latin America have you heard about the
Biden administration's latest bet on
trade are we facing a new Gringo Landing
in Latin America well stay tuned
[Applause]
Alliance for economic prosperity in the
Americas ftaa 2.0 in June 2022 the
creation of the alliance for economic
prosperity in the Americas was announced
an initiative whose member countries are
Barbados Canada Chile Colombia Costa
Rica Dominican Republic Ecuador Mexico
Panama Peru Uruguay and which is
beginning to look like a more moderate
ftaa but aimed at building a new close
alliance with a strong commercial
commitment sooner or later all among
close friends of course
this dialogue brings together the
strength Ingenuity and diversity of an
incredibly Dynamic region we are 90 of
the GDP of the Western Hemisphere almost
two-thirds of its population there is
nothing we can't do together Anthony J
blinken U.S Secretary of State few
details aren't known yet but for the
moment the White House has made it clear
that this initiative is designed to
boost trade investment and the
application of common regulations among
the countries that are part of this new
initiative among other things it is one
of the formulas with which the Biden
Administration aims to reduce China's
influence how by promoting Regional
production chains the near Shoring that
we have already mentioned here on
visualpolitik the America's partnership
will accelerate our shared work to
strengthen Supply chains and to make
them more resilient to Future shocks so
that the goods and products that our
populations rely on are affordable and
available and workers rights are
respected in the doing
[Music]
in any case if one thing is clear it
could be a golden opportunity one more
for Latin America to take a huge leap
forward once and for all how well if its
leaders are smart enough to take
advantage of the largest consumer and
investment Market on the planet in any
case I think you'll agree that it is
somewhat amusing that the United States
the great capitalist power that won the
Cold War has failed to lead the World
Trade system but having reached this
point it's your turn do you think the US
should be much more ambitious with its
trade policy would this be a good thing
or a bad thing what role will the
alliance for economic prosperity in the
Americas come to play leave us your
thoughts in the comments and let's open
up a debate if you found this video
interesting don't forget to like And
subscribe to visualpolitik if you
haven't already done so all the best see
you next time
[Music]
foreign
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