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Free trade deal would benefit all in the long run

All five of New Mexico’s representatives and senators have voted in ways to defeat the proposed Trans-Pacific Partnership Treaty.

The administration has asked for “fast-track” authority, which would limit Congress to just voting yes or no on the final draft of the treaty. Without this authority, Congress can amend the treaty, adding more time and uncertainty to the almost 10 years that have been devoted to drafting it.

The treaty deals with freer trade as well as numerous other issues such as intellectual property rights and trading practices. A major concern is that many components of the treaty have not been revealed. Its complexity and secrecy can provide legitimate reasons for objecting to it.

Still, much of the criticism leading to the votes by our delegates deals with trade and its effect on jobs in the United States. This debate reveals a lack of understanding of the benefits of trade.

The benefits of trade are clearly stated in all elementary economics textbooks based on the principles of comparative advantage and economies of scale. If particular goods are produced abroad at a higher cost, it is advantageous for some local goods to be exported.

Of course, local producers benefit, but local consumers face higher prices, with their losses being far less than the benefits to the local producers.

Meanwhile, if particular goods are produced abroad at a lower cost, it is advantageous for those goods to be imported.

Of course, local producers and workers are hurt, but local consumers benefit, with their benefits far outweighing the loss to the local producers.

Additional imports, however, create a particular problem (as reflected in our representatives’ concerns) because those hurt (producers and workers) are much more aware of their costs than the consumers are aware of their benefits. It is common for some workers to resist freer trade although their societies would benefit.

If this process occurs gradually, those hurt – producers and workers due to imports and consumers due to exports – can adjust gradually. If trade patterns change more rapidly, which could be the case with the Trans-Pacific Partnership Treaty, trade treaties usually include programs to financially assist displaced workers with money and training.

It may be helpful to consider trade in other situations. Take you and me. I am an economist. Through markets, I use the income generated by my skills to trade for goods and services that I need. I do not make my own clothes or grow my own food – and would be much worse off if I did. Meanwhile, my students benefit from the services that I provide at UNM. This process benefits me, clothing manufacturers (at home and abroad), farmers (at home and abroad), and my students.

Take it up to the next level. What would life be like if New Mexico was independent and restricted trade with other states and countries? I am terrified to think about the vehicles that would be available and I would miss my “fresh” salmon – among numerous other staples. We New Mexicans currently benefit from trading the income generated by federal research and military facilities, numerous tourists and a few movie productions for goods produced elsewhere. Again, both we and those with whom we trade benefit from our exchanges.

International trade has been important for the quality of our lives as imports have increased from $25 billion in 1960 to $2.3 trillion in 2014, permitting us to buy a much broader and less expensive array of goods and services. Meanwhile, exports have increased from $22 billion to $2.8 trillion over the same period, with the United States continuing to be a major exporter of sophisticated products such as aircraft, industrial machinery and semiconductors.

In conclusion, societies benefit from trade. However, it requires some members of those societies to adapt.

We have an obligation to assist those people in this process through education and job placement. Since New Mexico does not produce many products in competition with the countries participating in this treaty, and yet we consume products from those countries (check where your Nikes were made), we would definitely benefit from freer trade, especially if the other components of the TPPT are acceptable.

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