Hafiz Noor Shams on FTAs, external trade, and the TPPA (excerpt):
[2713] Is Bantah TPPA right about FTA causing trade balance to deteriorate?
One claim made by Bantah belong to the latter categories is that free trade agreements will hurt a country’s trade balance. This is based on their assumption that free traders claim that FTA will increase trade balance.
But, “free trade” itself says nothing about trade balance. “Free trade” has an agnostic a priori assumption on trade balance. In fact, if one trades, somebody has to have a surplus and somebody has to have deficit at any particular point of time. To say free trade/FTA increases trade balance ignores the fact there are at least two sides trading. “Free trade” does not make that argument that Bantah opposes. Bantah is opposing a straw man here.
The traditional argument is that free trade increases total trade (not trade balance). That means the sum of exports and imports for a country increases (not the net of the two, which is net exports). Bantah misunderstands this.
My thots? What he said…
I have no qualms over TPPA with respect to trade. The whole issue in my mind revolves around the non-trade provisions. Even for many of those, I can find economic or cost-benefit justifications that make sense for all parties.
Some however, are indefensible, and those are the real stumbling blocks. But trade isn’t one of them.
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