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The Case for Free Trade

In international trade, Hoover fellow Charles Wolf Jr. argues above, deficits don't much matter. Here Milton Friedman and Rose Friedman discuss what does: freedom. A ringing statement of logic and principle.

It is often said that bad economic policy reflects disagreement among the experts; that if all economists gave the same advice, economic policy would be good. Economists often do disagree, but that has not been true with respect to international trade. Ever since Adam Smith there has been virtual unanimity among economists, whatever their ideological position on other issues, that international free trade is in the best interests of trading countries and of the world. Yet tariffs have been the rule. The only major exceptions are nearly a century of free trade in Great Britain after the repeal of the Corn Laws in 1846, thirty years of free trade in Japan after the Meiji Restoration, and free trade in Hong Kong under British rule. The United States had tariffs throughout the nineteenth century, and they were raised still higher in the twentieth century, especially by the Smoot-Hawley tariff bill of 1930, which some scholars regard as partly responsible for the severity of the subsequent depression. Tariffs have since been reduced by repeated international agreements, but they remain high, probably higher than in the nineteenth century, though the vast changes in the kinds of items entering international trade make a precise comparison impossible.

Today, as always, there is much support for tariffs--euphemistically labeled "protection," a good label for a bad cause. Producers of steel and steelworkers' unions press for restrictions on steel imports from Japan. Producers of TV sets and their workers lobby for "voluntary agreements" to limit imports of TV sets or components from Japan, Taiwan, or Hong Kong. Producers of textiles, shoes, cattle, sugar--they and myriad others complain about "unfair" competition from abroad and demand that government do something to "protect" them. Of course, no group makes its claims on the basis of naked self-interest. Every group speaks of the "general interest," of the need to preserve jobs or to promote national security. The need to strengthen the dollar vis-à-vis the deutsche mark or the yen has more recently joined the traditional rationalizations for restrictions on imports.

One voice that is hardly ever raised is the consumer's. That voice is drowned out in the cacophony of the "interested sophistry of merchants and manufacturers" and their employees. The result is a serious distortion of the issue. For example, the supporters of tariffs treat it as self evident that the creation of jobs is a desirable end, in and of itself, regardless of what the persons employed do. That is clearly wrong. If all we want are jobs, we can create any number--for example, have people dig holes and then fill them up again or perform other useless tasks. Work is sometimes its own reward. Mostly, however, it is the price we pay to get the things we want. Our real objective is not just jobs but productive jobs--jobs that will mean more goods and services to consume.

Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports or, equivalently, from exporting as little as possible to pay for its imports.

The misleading terminology we use reflects these erroneous ideas. "Protection" really means exploiting the consumer. A "favorable balance of trade" really means exporting more than we import, sending abroad goods of greater total value than the goods we get from abroad. In your private household, you would surely prefer to pay less for more rather than the other way around, yet that would be termed an "unfavorable balance of payments" in foreign trade.

The argument in favor of tariffs that has the greatest emotional appeal to the public at large is the alleged need to protect the high standard of living of American workers from the "unfair" competition of workers in Japan or Korea or Hong Kong who are willing to work for a much lower wage. What is wrong with this argument? Don't we want to protect the high standard of living of our people?

The fallacy in this argument is the loose use of the terms "high" wage and "low" wage. What do high and low wages mean? American workers are paid in dollars; Japanese workers are paid in yen. How do we compare wages in dollars with wages in yen? How many yen equal a dollar? What determines the exchange rate?

Consider an extreme case. Suppose that, to begin with, 360 yen equal a dollar. At this exchange rate, the actual rate of exchange for many years, suppose that the Japanese can produce and sell everything for fewer dollars than we can in the United States--TV sets, automobiles, steel, and even soybeans, wheat, milk, and ice cream. If we had free international trade, we would try to buy all our goods from Japan. This would seem to be the extreme horror story of the kind depicted by the defenders of tariffs--we would be flooded with Japanese goods and could sell them nothing.

Before throwing up your hands in horror, carry the analysis one step further. How would we pay the Japanese? We would offer them dollar bills. What would they do with the dollar bills? We have assumed that at 360 yen to the dollar everything is cheaper in Japan, so there is nothing in the U.S. market that they would want to buy. If the Japanese exporters were willing to burn or bury the dollar bills, that would be wonderful for us. We would get all kinds of goods for green pieces of paper that we can produce in great abundance and very cheaply. We would have the most marvelous export industry conceivable.

Of course, the Japanese would not in fact sell us useful goods in order to get useless pieces of paper to bury or burn. Like us, they want to get something real in return for their work. If all goods were cheaper in Japan than in the United States at 360 yen to the dollar, the exporters would try to get rid of their dollars, would try to sell them for 360 yen to the dollar in order to buy the cheaper Japanese goods. But who would be willing to buy the dollars? What is true for the Japanese exporter is true for everyone in Japan. No one will be willing to give 360 yen in exchange for one dollar if 360 yen will buy more of everything in Japan than one dollar will buy in the United States. The exporters, on discovering that no one will buy their dollars at 360 yen, will offer to take fewer yen for a dollar. The price of the dollar in terms of the yen will go down--to 300 yen for a dollar or 250 yen or 200 yen. Put the other way around, it will take more and more dollars to buy a given number of Japanese yen. Japanese goods are priced in yen, so their price in dollars will go up. Conversely, U.S. goods are priced in dollars, so the more dollars the Japanese get for a given number of yen, the cheaper U.S. goods become to the Japanese in terms of yen.

The price of the dollar in terms of yen would fall, until, on the average, the dollar value of goods that the Japanese buy from the United States roughly equaled the dollar value of goods that the United States buys from Japan. At that price everybody who wanted to buy yen for dollars would find someone who was willing to sell him yen for dollars.

The actual situation is, of course, more complicated than this hypothetical example. Many nations, and not merely the United States and Japan, are engaged in trade, and the trade often takes roundabout directions. The Japanese may spend some of the dollars they earn in Brazil, the Brazilians in turn may spend those dollars in Germany, the Germans in the United States, and so on in endless complexity. However, the principle is the same. People, in whatever country, want dollars primarily to buy useful items, not to hoard, and there can be no balance of payments problem so long as the price of the dollar in terms of the yen or the deutsche mark or the franc is determined in a free market by voluntary transactions.

Why then all the furor about the "weakness" of the dollar? Why the repeated foreign exchange crises? The proximate reason is because foreign exchange rates have not been determined in a free market. Government central banks have intervened on a grand scale in order to influence the price of their currencies. In the process they have lost vast sums of their citizens' money (for the United States, close to two billion dollars from 1973 to early 1979). Even more important, they have prevented this important set of prices from performing its proper function. They have not been able to prevent the basic underlying economic forces from ultimately having their effect on exchange rates but have been able to maintain artificial exchange rates for substantial intervals. The effect has been to prevent gradual adjustment to the underlying forces. Small disturbances have accumulated into large ones, and ultimately there has been a major foreign exchange "crisis."

In all the voluminous literature of the past several centuries on free trade and protectionism, only three arguments have ever been advanced in favor of tariffs that even in principle may have some validity.

First is the national security argument--the argument that a thriving domestic steel industry, for example, is needed for defense. Although that argument is more often a rationalization for particular tariffs than a valid reason for them, it cannot be denied that on occasion it might justify the maintenance of otherwise uneconomical productive facilities. To go beyond this statement of possibility and establish in a specific case that a tariff or other trade restriction is justified in order to promote national security, it would be necessary to compare the cost of achieving the specific security objective in alternative ways and establish at least a prima facie case that a tariff is the least costly way. Such cost comparisons are seldom made in practice.

The second is the "infant industry" argument advanced, for example, by Alexander Hamilton in his Report on Manufactures. There is, it is said, a potential industry that, if once established and assisted during its growing pains, could compete on equal terms in the world market. A temporary tariff is said to be justified in order to shelter the potential industry in its infancy and enable it to grow to maturity, when it can stand on its own feet. Even if the industry could compete successfully once established, that does not of itself justify an initial tariff. It is worthwhile for consumers to subsidize the industry initially--which is what they in effect do by levying a tariff--only if they will subsequently get back at least that subsidy in some other way, through prices lower than the world price or through some other advantages of having the industry. But in that case is a subsidy needed? Will it then not pay the original entrants into the industry to suffer initial losses in the expectation of being able to recoup them later? After all, most firms experience losses in their early years, when they are getting established. That is true if they enter a new industry or if they enter an existing one. Perhaps there may be some special reason why the original entrants cannot recoup their initial losses even though it may be worthwhile for the community at large to make the initial investment. But surely the presumption is the other way.

The infant industry argument is a smoke screen. The so-called infants never grow up. Once imposed, tariffs are seldom eliminated. Moreover, the argument is seldom used on behalf of true unborn infants that might conceivably be born and survive if given temporary protection; they have no spokesmen. It is used to justify tariffs for rather aged infants that can mount political pressure.

The third argument for tariffs that cannot be dismissed out of hand is the "beggar-thy-neighbor" argument. A country that is a major producer of a product, or that can join with a small number of other producers that together control a major share of production, may be able to take advantage of its monopoly position by raising the price of the product (the Organization of Petroleum Exporting Countries cartel is the obvious example). Instead of raising the price directly, the country can do so indirectly by imposing an export tax on the product--an export tariff. The benefit to itself will be less than the cost to others, but from the national point of view, there can be a gain. Similarly, a country that is the primary purchaser of a product--in economic jargon, has monopsony power--may be able to benefit by driving a hard bargain with the sellers and imposing an unduly low price on them. One way to do so is to impose a tariff on the import of the product. The net return to the seller is the price less the tariff, which is why this can be equivalent to buying at a lower price. In effect, the tariff is paid by the foreigners (we can think of no actual example). In practice this nationalistic approach is highly likely to promote retaliation by other countries. In addition, as for the infant industry argument, the actual political pressures tend to produce tariff structures that do not in fact take advantage of any monopoly or monopsony positions.

A fourth argument, one that was made by Alexander Hamilton and continues to be repeated down to the present, is that free trade would be fine if all other countries practiced free trade but that, so long as they do not, the United States cannot afford to. This argument has no validity whatsoever, either in principle or in practice. Other countries that impose restrictions on international trade do hurt us. But they also hurt themselves. Aside from the three cases just considered, if we impose restrictions in turn, we simply add to the harm to ourselves and also harm them as well. Competition in masochism and sadism is hardly a prescription for sensible international economic policy! Far from leading to a reduction in restrictions by other countries, this kind of retaliatory action simply leads to further restrictions.

We are a great nation, the leader of the world. It ill behooves us to require Hong Kong and Taiwan to impose export quotas on textiles to "protect" our textile industry at the expense of U.S. consumers and of Chinese workers in Hong Kong and Taiwan. We speak glowingly of the virtues of free trade, while we use our political and economic power to induce Japan to restrict exports of steel and TV sets. We should move unilaterally to free trade, not instantaneously but over a period of, say, five years, at a pace announced in advance.

Few measures that we could take would do more to promote the cause of freedom at home and abroad than complete free trade. Instead of making grants to foreign governments in the name of economic aid--thereby promoting socialism--while at the same time imposing restrictions on the products they produce--thereby hindering free enterprise--we could assume a consistent and principled stance. We could say to the rest of the world: We believe in freedom and intend to practice it. We cannot force you to be free. But we can offer full cooperation on equal terms to all. Our market is open to you without tariffs or other restrictions. Sell here what you can and wish to. Buy whatever you can and wish to. In that way cooperation among individuals can be worldwide and free.

Adapted from "The Tyranny of Controls" in Free to Choose: A Personal Statement , by Milton Friedman and Rose Friedman, published by Harcourt Brace Jovanovich, © 1980. To order, call 800-543-1918. Available from the Hoover Press is The Essence of Friedman , edited by Kurt R. Leube. To order, call 800-935-2882.

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November 1, 1993

The Case for Free Trade

Environmentalists are wrong to fear the effects of free trade. Both causes can be advanced by imaginative solutions

By Jagdish Bhagwati

• | International Freedom and Trade International Freedom and Trade
• | Expert Commentary Expert Commentary
• | January 25, 2015

Making the Case for Free Trade

• Veronique de Rugy

When you free markets, you free people to buy whatever goods and services he or she wishes irrespective of geographical location. And that is a freedom that ultimately benefits everyone.

The president’s lukewarm embrace of truly unfettered international trade leaves a lot to be desired.

In his State of the Union address , the president told us he wants to craft a trade policy agenda fit for the 21st Century. If only!

A true free trade agenda should be the cornerstone of any “middle class economics” platform. Open international markets lower domestic prices for consumers, increase export opportunities for small and big business alike, and induce formerly-protected manufacturers to improve and compete on a global stage. But we shouldn’t expect Obama to embrace the benefits of free trade just yet.

So far, Obama has only been “pro-trade” when it serves interests defined by business lobbies and other pro-export mercantilists. But when it comes to the pro-trade policies that benefit U.S. consumers by introducing entrenched U.S. exporters to more competition, the president consistently falls back on basic protectionist instincts.

It’s not that Obama opposes all trade liberalization. His announcement that he would work to create a Trade Promotion Authority (TPA) was a high note of Tuesday’s speech. The TPA would empower the executive branch to negotiate trade pacts with our foreign trading partners—thereby fast-tracking foreign open markets upon congressional approval.

But even this proposal is far less than ideal. The TPA could merely become a device to streamline special interest policies. As Cato Institute Director of Trade Policy Studies Dan Ikenson explained to me over email, “While free trade agreements have protectionism baked into them and are thus definitely not free trade, they tend to make us more economically free.” A successful TPA would require strict discipline from Congress and the president to resist the strong pull of protectionist interests.

Flawed though it may be, the president’s TPA proposal is still a clear departure from the last six years of passivity on trade policy issues. After all, strong hostility from his base and the Democratic leadership toward trade makes change quite politically costly.

The President did begrudgingly lend support to completed agreements with South Korea, Colombia, and Panama after the GOP took control of the House in 2011—but, as Ikenson noted , even this was more “out of necessity than conviction.”

That was true on Tuesday, too. His sole lukewarm justification provided for a TPA was that it would benefit American companies to sell their goods and services beyond our borders. “Ninety-five percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities,” said the president. What a snoozer. If the president harbored a true and unimpeded understanding of the true benefits of trade liberalization, he’d make a much sexier pitch.

Increasing exports is only one of the many benefits of expanding trade. Imports are in many ways more beneficial for middle class growth. The more imports, the better, as it leads to greater consumer choices and varieties at lower prices.

As George Mason University economist Donald Boudreaux points out ( PDF ), “Prices are held down by more than two percent for every one-percent share in the market by imports from low-income countries like China.” Fearing cheaper imports from China, as the president does, is not a part of any middle class platform grounded in good economics. We should welcome lower prices!

Consumers aren’t the only beneficiaries of expanded trade. U.S. manufactures within our borders benefit from lower input good prices. At least half of U.S. imports are not consumer goods; they are inputs for US-based producers, according to Boudreaux.

Freeing trade reduces imported-input costs, thus reducing businesses’ production costs and promoting employment possibilities and economic growth. We should welcome U.S. business and employment growth!

Free trade also benefits the U.S. in incredibly effective ways that are harder to see. Opening trade barriers improves efficiency and innovation. It shifts workers and resources to more productive uses and allows more efficient industries to prosper. Over time, Boudreaux explains “higher wages, investment in such things as infrastructure, and a more dynamic economy that continues to create new jobs and opportunities”. Free trade also drives competitiveness which fuels long-term growth, higher quality of good and services—and still lower prices.

President Obama should be singing these praises of free trade from the rooftops, but instead he mumbles of its necessity like he’s feeding us mashed broccoli.

This is not a partisan issue. Economists of all ideological backgrounds agree that the net effect of free trade is positive and endures even if other countries continue in their protectionist ways. It will surprise no one that Milton Friedman was a fervent advocate of tearing down all protectionist policies. But did you know he is rivaled in this by none other than Paul Krugman ? In a seminal Journal of Economic Literature  article in 1997, Krugman wrote “ the case for free-trade is essentially a unilateral case .”

The president doesn’t quite see it. His talk about the need for “fair” trade and for “leveling the playing field” is a strong signal that he intends to tilt the playing field in the home market against consumers and in favor of politically connected producers. Just look at his new and unfortunate support for the protectionist Export-Import Bank .

Politicians reveal their prioritization of entrenched exporters over average consumers and businesses in their irrational hysteria over China and other governments subsidizing their countries’ exports. Supporters of export credit subsidies claim that they are “leveling the playing field” against foreign competition, but basic economics says otherwise.

In fact, countries that receive the artificially cheap imports benefit far more than the protectionist country: recipient countries get more output for less input, and more imports for fewer exports. Let me make that clear: U.S. consumers of subsidized imports benefit by getting cheap goods at the cost of foreign taxpayers. That’s the closest thing to a “free lunch” in economics as you’ll ever find.

Do U.S. companies welcome this competition? For the most part, yes. But not always. Either way, politicians should never give into protectionist instincts to shelter U.S. companies, lest we end up doing more damage to our prosperity in the process.

Obama’s turn toward trade liberalization is both a good start and a missed opportunity. There is no need to give in to the pressures and fears of business lobbyists. The president should take a page out of Bill Clinton’s book and embrace free trade for all that it is. When you free markets, you free people to buy whatever goods and services he or she wishes irrespective of geographical location. And that is a freedom that ultimately benefits everyone.

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• 12 Nov 2019

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Collecting and analyzing microdata on prices and the reaction of importers, retailers, and exporters to US trade policy since 2018, this study finds most of the tariffs’ incidence rests with the US firms.

• 26 Jun 2019

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• 11 Dec 2018

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• 01 Aug 2018

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• 30 May 2018

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• 02 Mar 2018

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• 22 Feb 2016

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International Trade

The teaching cases in this section invite discussion on such topics as economics, security, and policy-making with a particular focus on international relations and diplomacy.

Leadership and Negotiation: Ending the Western Hemisphere’s Longest Running Border Conflict

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Setting the Standard in Free Trade: The Making of the Transatlantic Trade and Investment Partnership

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Nuclear Power & the Language of Diplomacy: Negotiating a Game-Changing Nuclear Trade Agreement with India (Sequel)

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This sequel accompanies case number 2023.0. This decision-forcing case focuses on a diplomatic challenge faced by US Undersecretary of State for Political Affairs Nicholas Burns and Indian Foreign Secretary Shyam Saran between April and July...

Nuclear Power & the Language of Diplomacy: Negotiating a Game-Changing Nuclear Trade Agreement with India

This decision-forcing case focuses on a diplomatic challenge faced by US Undersecretary of State for Political Affairs Nicholas Burns and Indian Foreign Secretary Shyam Saran between April and July 2005: the writing of a 400-word joint statement...

Target of Opportunity: South Africa's Western Cape Seeks a Role in the African Oil Boom

Publication Date: March 05, 2014

This strategy case describes an initiative in the Western Cape province of South Africa to capitalize on an oil boom off the western coast of Africa by cultivating an industrial cluster of complementary businesses with the capacity to service,...

Shaping the Future of Solar Power: Climate Change, Industrial Policy and Free Trade (B)

Publication Date: December 04, 2013

Shaping the Future of Solar Power: Climate Change, Industrial Policy and Free Trade (Part B), is the second of a two part case but may also be taught on its own. In May 2013, European Union Trade Commissioner, Karel De Gucht faced a...

Sea Change: Re-Writing the Rules for Port Security

Publication Date: February 15, 2012

Consisting of a 30-min. video mini-documentary and an 11-page backgrounder, this case explores the innovative approach used by the Coast Guard to manage the process of developing new regulations that would increase port security in the wake of...

Protecting the WTO Ministerial Conference of 1999 (Epilogue)

Publication Date: February 06, 2009

On one side, a loose network of protesters made arrangements for dramatizing their opposition to the WTO and international trade practices. At the same time, public safety officials from local, state, and federal agencies developed security...

Protecting the WTO Ministerial Conference of 1999

TRIPS Part II: International Trade meets Public Health: TRIPS and Access to Medicines (Abridged)

Publication Date: March 07, 2008

This is an abridged version of case NR15-04-1736.0. The Agreement on Trade-Related Intellectual Property (TRIPS) at the World Trade Organization (WTO) was the most comprehensive and far-reaching international agreement on intellectual property...

The Eagle and the Dragon: The November 1999 US-China Bilateral Agreement and the Battle over PNTR (Abridged)

This is an abridged version of note NR14-04-1771.0. On December 11, 2001, China became a member of the World Trade Organization. Many say the 1999 US-China bilateral trade agreement and the vote in Congress to permanently establish normal trade...

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Economic Scene; A case study in free trade: American incomes converge, but not at the bottom.

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By Virginia Postrel

• Feb. 26, 2004

Correction Appended

SUPPOSE we lived in an economic world with no borders, where goods, capital and people could move anywhere.

We've all heard the dire predictions of what would happen. All the businesses and jobs would rush to the places with the lowest wages. The poor countries would get richer, but only by making rich countries poorer.

Eventually we'd all be roughly equal, but formerly well-to-do Americans would be a lot worse off. Many Americans are afraid that globalization and free trade will have exactly this effect.

We rarely realize that we already live in a version of that theoretical world. The United States is one giant free trade zone. Businesses can move their plants, investors can move their money and workers can move themselves from region to region without government permission.

Over the last century, a lot of that movement has occurred. Rich and poor regions have converged to about the same standard of living. But the results haven't been anything like the ''race to the bottom'' of protectionist imaginations.

Incomes still vary widely across regions. Income per capita in Connecticut, the richest state, was about $42,000 in 2002, compared with $24,000 in New Mexico, the poorest. (These figures aren't adjusted for price variations between regions.)

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2. The Case for Free Trade: Old Theories, New Evidence

From the book free trade under fire.

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Behind the Scenes of America’s Free Trade Agreements

Graphic by Janice Jones Trillions of dollars in international imports flow each year through 328 ports of entry like major arterial networks connecting producer, to importer, to consumer in a constant and cyclical circulation of goods and revenue. It is the lifeblood of the American economy, supporting U.S. industry and businesses to keep America’s economic heartbeat strong and steady. They arrive in every form imaginable – electronics, clothing, pharmaceuticals, furniture, cars and more. Sometimes they arrive ready to sell, and sometimes they represent the raw materials or parts required for further production like metals, timber and textiles.

Thousands of trade specialists and personnel at U.S. Customs and Border Protection work tirelessly to facilitate this cycle so U.S. businesses and stores of every kind have access to merchandise from around the world to stock their shelves and consumers can choose from a variety of wares whether browsing online, at the mall, in supermarket aisles or at the local car dealership. Choosing products based on origin, price point, personal values and quality are all part of the American shopping experience. But how do Canadian blueberries make it into our local grocery, thousands of miles away, at such an affordable cost despite the labor, shipping and duties associated with their migration from one country to another?

Our freedom to pick and choose between our favorite clothing brands, sustainable goods, tropical produce and cars is due in part to 15 U.S. free trade agreements. These agreements create the regulatory and legal frameworks that make it possible for countries around the world to exchange goods with the U.S. in ways that prove mutually beneficial to importers, exporters and consumers. Behind each trade agreement is a team of CBP experts who inspect incoming packages and review scheduled shipments to make sure that American buyers have access to what they want, when they want it, so American industry has access to buyers and sellers in the international market.

“We are a high consumer society,” explained Maya Kamar, director of the Textiles and Trade Agreements Division in CBP’s Office of Trade. “Free trade agreements facilitate access to international markets for both consumers and businesses. This creates greater variety for the consumer, while ensuring greater market access for American businesses who wish to sell their goods outside of the United States,” she said. “Without free trade agreements, which is 25% of all the merchandise that is being imported into the United States, the choices would be more limited.”

Choice, in this context, doesn’t just mean choosing between one brand or another. It means having transparency into how a good was produced so that consumers can decide whether or not to support specific products based on their priorities and values, such as environmental sustainability or humane labor conditions.

CBP personnel are responsible for ensuring the trillions of dollars of goods that enter the U.S. meet the health, safety, environmental and legal requirements of the U.S. government. There is a CBP employee who worked behind the scenes to get every imported automobile safely into your driveway.

For Kamar and team, this means long hours supporting the U.S. Trade Representative in negotiations with foreign counterparts to iron out details of the implementation of new and existing agreements across multiple time zones.

“We’re meeting with Korea Wednesday,” she said. “The meeting is from 6:30 p.m. to 7:30 p.m. because that works with their time zone. When we meet with Singapore, we take turns. Sometimes it’s early in the morning for us, sometimes it’s late at night. The world doesn’t stop just because it’s closed here.”

Kamar’s team also travels to manufacturing sites around the world to verify origin and production of U.S.-bound goods to ensure they comply with U.S. trade laws. The team collaborates with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations to complete upward of 200 unannounced site visits each year targeting factories based on an evaluation of risk. Kamar’s team coordinated with CBP attachés located in 23 countries during the COVID-19 pandemic to ensure these impromptu visits continued despite pandemic-imposed travel restrictions.  

Implementing the U.S.-Mexico-Canada Agreement

For Queena Fan, Daniel Treadway and Adam Sulewski, members of CBP’s United States-Mexico-Canada Agreement Center, keeping legitimate trade flowing meant conducting outreach sessions for thousands of industry representatives in 2020 to prepare them for the shift from the second oldest trade agreement in U.S. history, the North American Free Trade Agreement, to the newest – a herculean effort that required extensive collaboration and teamwork across U.S., Mexican and Canadian governments. Fan, Treadway, Sulewski and a team of CBP trade specialists raced against time in the midst of a global pandemic and under the bright, sometimes burning, international spotlight to ensure the historic shift to USMCA was as uneventful for the average consumer as possible.

“When I first got here, I was like a deer in headlights because everything moves so fast. I saw the production from the rest of the team and wanted to contribute as they did. The team’s level of effort makes an immediate impact,” said Treadway, an auditor supporting CBP’s USMCA Center. “There are so many people counting on you, and it’s an area that has a huge spotlight on it, and you want to be held accountable.”

CBP’s efforts to prepare the trade community for the transition to USMCA were fast and furious. Personnel from across the agency lent a hand to ensure the various moving parts fell into place by July 1, 2020.

“We still had to make things happen, COVID or not,” said Fan, director of the USMCA Center. “Trade is always going to move.” 

While CBP’s team ramped into high gear as they transitioned the agency and the nation from NAFTA to USMCA, for many Americans USMCA simply became a quiet backdrop of our daily lives, overshadowed by the more dramatic and often chaotic events of 2020 and 2021.

Meanwhile, as consumers browse the internet for the best product for their price point and values, CBP personnel have facilitated more than $400 billion in imports and nearly $600 billion in preferential treatment claims as of September 2021, allowing compliant importers to take advantage of reduced trade tariffs since USMCA’s entry into force.

CBP officers and trade specialists have stood at every port of entry each day of the COVID-19 pandemic to confirm the shipments arriving at the border are safe, legitimate and USMCA-compliant. It is this well-seasoned team of trade experts which guides the American economy through tremendous change and challenges, all while bringing trade and trade laws into the modern era where consumers expect an endless variety of choice and speedy delivery initiated by a single click on their cell phones.

“USMCA took an old trade agreement and modernized it to account for today’s supply chains and how businesses work,” Fan said. “Back in ’93 there were a lot of North American trade flows. Since then, there are other supply chains overseas. There is a really concerted effort to increase North American content of goods.”

This is especially evident in the Agreement’s automotive rules of origin provisions.

Novel Automotive Requirements and Labor Requirements

“Cars are changing. They’re lighter – made of different materials. They are much more integrated with computers, advanced batteries and high-tech technology,” said Sulewski, who helped establish the USMCA Center. “This commodity group has changed significantly from when the original NAFTA was implemented. There’s also a greater interest in the USMCA not only on what the car is made of, but how it was made. “This is almost a completely new trade agreement for the automotive sector, including some new and novel rules of origin that had never been attempted in a trade agreement before like labor value content, which involves assessing wage rates for manufacturing,” said Sulewski.

A CBP officer conducts an outbound inspection of a passenger headed to Canada from the Ambassador Bridge in Detroit. Photo by John Landino

USMCA’s labor value content requires that at least 40% of an imported car and 45% for a light truck be made in facilities where workers engaged in direct production work earn on average at least $16 an hour.

“The USMCA requirements promote more high-wage jobs for the U.S. automobile and auto parts industry in part by requiring that manufacturers produce a significant portion of certain motor vehicles using high-wage labor,” said Whitney Ford, director of the U.S. Department of Labor’s Immigration, Farm Labor and Trade Division. “The Department of Labor’s Wage & Hour Division regulations implement the statutory directive making it unlawful for producers to intimidate, threaten, restrain, coerce, blacklist, discharge or in any other manner discriminate against any person related to a verification of compliance with the labor value content requirements.”

USMCA is the first trade agreement with these automotive provisions that requires close collaboration between two federal agencies.

“The novel nature of the creation of USMCA’s labor value content provisions provides an opportunity to create a new government agency partnership, and an avenue to demonstrate how agencies can work together in support of a common goal for both the public sector and the industry,” said Ford.

CBP trade specialists meet weekly with their Department of Labor counterparts to navigate the new labor provisions. This partnership has resulted in the successful handling of the first round of labor value content certifications associated with USMCA.

The CBP USMCA team also provided implementation instructions and guidance on another novel automotive provision that requires 70% of a vehicle producer’s steel and aluminum originate from North America.

“For the first time ever, CBP is looking at the overall corporate behavior not related to the individual import,” Sulewski said.

The provision outlines steel and aluminum requirements for a producer’s entire operation, as opposed to any individual vehicle, to justify preferential duty treatment.

“The new requirements for steel, aluminum and labor value content require extensive training for CBP personnel as well as education for the trade [community],” said Mark Stepien, director of CBP’s Automotive Center of Excellence and Expertise.

Stepien and his team process over $500 billion of imported merchandise every year, ensuring automotive imports comply with import safety, intellectual property rights, forced labor laws and other U.S. trade requirements. While they review trade compliance after imports arrive at the border, other CBP employees have their eyes on those goods before they arrive on U.S. soil, tracking future shipments through the Automated Commercial Environment, the electronic system CBP uses to track advanced trade data and target certain shipments for closer inspection upon arrival.

A CBP officer working at the Fort Street Cargo Facility in Detroit examines a manifest for tires being imported into the U.S. through Canada. Photo by Youssef Fawaz

Ensuring that each and every package and car entering U.S. commerce is compliant with USMCA and the other 14 existing trade agreements takes a tremendous amount of calculation and collaboration. In the case of USMCA, it required training over 1,000 personnel across the country.

“It's hard to undo something people were used to doing for 25 years,” said Stepien, explaining the unprecedented outreach efforts CBP took to educate accounts, industry groups and trade associations on the new USMCA requirements. Stepien and his team worked late hours and weekends to prepare for USMCA implementation to ensure this landmark transition could take place – laying a powerful blueprint for future trade agreements. This takes on revolutionary meaning when you consider the Agreement’s unprecedented environmental requirements and forced labor provisions.  

USMCA Enforces Environmental Protection

“While USMCA doesn’t give us any new [environmental] authorities, it really does strengthen the commitment of Mexico, Canada, and the United States to support environmental issues and to work together to combat illegal wildlife trafficking, illegal fishing and timber trafficking,” said Judith Webster, branch chief of the Civil Enforcement Division in CBP’s Office of Trade. Webster’s team is responsible for overseeing the implementation of USMCA environmental provisions.

Since USMCA replaced NAFTA last year, Webster and her team joined the Interagency Environment Committee for Monitoring Enforcement, created to support USMCA environmental requirements.

“The Committee brings together 11 different government agencies, allowing us to focus on different environmental issues, and formalizes and standardizes processes,” she explained.

The Committee works to leverage environmental authorities like the Lacey Act, the Convention on International Trade in Endangered Species and the Endangered Species Act to ensure plant and animal products entering the U.S. are produced, harvested and sold sustainably. Few people realize the connection between the goods they purchase, free trade agreements, environmental protection and how all of this ties back to American security and international criminal organizations. USMCA and other free trade agreements create a framework for multiple countries to join forces to uphold shared values, including environmental protection. CBP seized over 1,500 shipments in 2020 for failure to comply with environmental trade laws. Nearly one quarter of those seizures originated in either Mexico or Canada; 53% represented fish and wildlife products while the rest were plant and agricultural goods.

“The United States is a major transit country for wildlife flora and fauna destined for Asian markets,” said Jose Flores, an International Trade Specialist who supports CBP’s environmental trade compliance portfolio. “Traditional Chinese medicine ingredients use many species protected by the Convention on International Trade in Endangered Species and is a major pull factor.”

Criminal syndicates have developed complex smuggling networks to illegally fish and export wildlife and plant products, such as raw timber, seafood and animal parts that are coveted for purported medicinal properties, building materials or other purposes. Illegal fishing and wildlife crimes pose a serious threat to endangered species that become direct or indirect victims of these practices.

Webster and her team analyze intelligence and develop enforcement cases to penalize illegal wildlife and timber trafficking and illegal, unreported and unregulated fishing as outlined in the USMCA.

They understand that environmental trade requirements help protect communities where environmental crimes take place. Such crimes often exploit and deplete local resources that could otherwise fund desperately needed infrastructure projects through legal revenue streams. Instead, international criminal organizations often use their profits to fund drug trafficking, money laundering or smuggling schemes that terrorize local communities. Some environmental crimes are directly linked to the use of forced labor, where employers exploit vulnerable populations through coercion, threats or even physical or sexual violence.  

USMCA Protects Vulnerable Workers Through Unprecedented Forced Labor Provisions

USMCA is the first U.S. trade agreement to include labor provisions that serve to protect vulnerable workers from around the world by prohibiting entry of goods made with forced labor. CBP’s forced labor team, as a global leader in forced labor enforcement, works directly with Mexican and Canadian counterparts to ensure all three countries have the necessary programs, standards and processes in place to prohibit goods made with forced labor from entering the North American supply chain.

“CBP has been actively engaging with counterparts and other government agencies in both Mexico and Canada, to share details and experiences regarding the CBP forced labor program and authorities,” said Ana Hinojosa, executive director of the Trade Remedies and Law Enforcement directorate which oversees CBP’s forced labor investigation and enforcement activity. Hinojosa and her team recently won the Samuel J. Heyman Service to America Medals People’s Choice Awards and are nominated for their work combating forced labor in U.S. supply chains in the upcoming Samuel J. Heyman Service to America Medals in the Safety, Security and International Affairs category.

“We do not want to create loopholes where one of our neighbor countries becomes either a dumping ground for goods produced with forced labor for its market nor that they become a major transshipment point for goods prohibited in other North American markets,” said Hinojosa. “The unfair competition of goods produced with subsidies, in the way of free or significantly reduced costs due to indentured, prison or convict labor, harms all of our markets.”

“We help to bring about changes that improve the lives of people trapped in forced labor conditions,” said Therese Randazzo, director of CBP’s Forced Labor Division. “To be working together and to be a part of that solution really is what public service is.” 

The inclusion of forced labor and North American labor requirements within USMCA will likely lay the groundwork for updating existing free trade agreements or the creation of future agreements, which could have a resounding impact on improving labor conditions worldwide for some of the world’s most vulnerable workers.

In a globalized world, one click of the mouse has resounding impacts on labor rights, the environment and the economy at large. Free trade agreements create a collaborative framework for multiple countries to ensure that industry and consumers get what they need. They can also support the environment and foster economic growth through labor protections. Behind every free trade agreement there are thousands of CBP trade specialists contributing a unique perspective and area of expertise. Woven together, these individuals and teams create the foundational fabric of the American economy, creating an abundance of opportunity and choice while upholding the values our nation holds dear.

FTA Project Case Studies

Cite this chapter.

• Christopher M. Dent  

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This chapter presents eight case study analyses on some of most important free trade agreement (FTA) projects to have emerged within the Asia-Pacific in recent years. They have been selected as a representative sample of FTAs that have thus far emerged across the region as a whole. The FTA projects chosen are as follows:

Australia-US FTA (AUSFTA)

ASEAN-China FTA (ACFTA)

China’s Closer Economic Partnership Agreements (CEPAs) with Hong Kong and Macao (HKCCEPA, MCCEPA)

Thailand-Australia FTA (TAFTA)

Japan-Mexico FTA (JMFTA)

South Korea-Chile FTA (KCFTA)

US-Singapore FTA (USSFTA)

Trans-Pacific Strategic Economic Partnership Agreement (TPSEPA)

These individual FTA case study analyses offer their own special perspectives on the political economic interactions between different sets of Asia-Pacific countries, and thereby insights into the heterogeneous nature of FTAs in the region.

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Dent, C.M. (2006). FTA Project Case Studies. In: New Free Trade Agreements in the Asia-Pacific. Palgrave Macmillan, London. https://doi.org/10.1057/9780230627918_3

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Summer School 5: 250 years of trade history in three chapters

Robert Smith

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Episodes each Wednesday through labor day. Find all the episodes from this season here . And past seasons here . And follow along on TikTok here for video Summer School .

Trade has come up in all of the episodes of Summer School so far. An early use of money was to make trade easier. Trade was responsible for the birth of companies and the stock market. And trade was the lifeblood of the early United States.

Today's episode covers 250 years of trade history in three chapters. We start with one of the founding texts of economics, Wealth of Nations, in which Adam Smith argues a country's true value is not measured in gold and silver, but by its people's ability to buy things that enhance their standard of living. Then we'll watch American politicians completely ignore that argument in favor of protecting domestic industries – until one congressman makes a passionate case for free trade as the means to world peace. And finally we'll follow the trade debate up to the modern day, where the tides of American politics have turned toward regulation.

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This series is hosted by Robert Smith and produced by Audrey Dilling. Our project manager is Devin Mellor. This episode was edited by Planet Money Executive Producer Alex Goldmark and fact-checked by Sofia Shchukina.

Subscribe to Planet Money+ for sponsor-free episode listening in Apple Podcasts or at plus.npr.org/planetmoney .

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Illegal organ trafficking is big business, and vulnerable people are at risk. Could an ethical organ trade solve this?

In the 1990s, there was a terrifying urban myth about a person going to a party, being drugged and waking up to find their kidneys have been snatched and traded.

At the time, organ donor programs were horrified about the false story. 

But in recent years, international organisations have become increasingly concerned about the "hidden" crime of the commercial trade in human organs. Many experts believe this is big business in some countries.

Vulnerable people, mostly in developing nations, sell their kidneys to patients, many of whom travel from more affluent countries such as Australia.

Reliable figures on the illegal trade are hard to track down but, in 2008, the World Health Organization (WHO) estimated 5 per cent of all transplants performed worldwide were illegal . And living kidneys — the organ most commonly in demand — are the most highly reported traded organ.

While it's commonly believed the illegal organ trade is underground, experts argue the opposite is actually happening.

"The trade is quite deeply embedded within the medical sector and other legal industries," Frederike Ambagtsheer, an organ trafficking researcher, criminologist and assistant professor at the Erasmus University Medical Centre in Rotterdam (one of the largest kidney transplant centres in Europe), tells ABC RN's Law Report .

"One cannot perform an illegal transplant without the involvement of highly specialised medical staff, infrastructure and equipment," Professor Ambagtsheer says.

Illegal trafficking rings

In March 2023, Nigerian senator Ike Ekweremadu and his wife were convicted in a high-profile case of organ trafficking when they attempted to purchase a kidney for their daughter.

"[Their daughter] was on dialysis in the UK, she was living there, she needed a kidney and they tried to traffic a prospective young kidney seller to the UK in order to harvest his kidney and have that be donated to their daughter," Professor Ambagtsheer explains. 

The case came to light when a Nigerian man from Lagos went to police saying he had been trafficked to the UK in order for his kidney to be harvested.

Senator Ekweremadu was sentenced under Britain's modern slavery act to more than nine years in jail. The senator's wife and doctor were also jailed.

While this case demonstrates the illegality of the organ trade, Dominique Martin, professor of health ethics and professionalism at Deakin University, says the majority of the trade is embedded within legitimate transplant programs.

"Each case is supposedly reviewed by a transplant ethics committee and approved as being legitimate and free of commerce," Professor Martin explains.

However, she explains, in most cases it's only when the individual selling the kidney goes to police that "it's revealed that there's been a trafficking ring taking place".

In recent years, Professor Martin says there have been several organ trafficking rings busted throughout India and the Philippines.

She says it's only occasionally that there are reports of more underground operations.

"There was a horrific report in Pakistan where there was a surgeon who was operating in private hotel rooms and houses, the person administering the quasi-anaesthetic to the patients was in fact a mechanic … but that kind of real backwoods stuff is the exception," she says.

What is being done to curb the trade?

Commercial trade in human organs is currently illegal in all countries except Iran .

However, there are no restrictions on Australians travelling overseas to receive an organ transplant.

"We don't currently have what they call extra-territorial jurisdiction covering the laws that in Australia prohibit trade in organs," Professor Martin explains.

For example, if an Australian was to illegally purchase an organ in the Philippines, they could be prosecuted there but not under Australian law.

Last year, a private members' bill focusing on Australians who travel abroad to buy organs was put before federal parliament .

"So the essence of the bill is that there would be a declaration that passengers coming into Australia would be required to make, attesting to whether they had received an organ transplant while they were overseas … in the past five years," Professor Martin says. 

The rationale behind this is that individuals would disclose if they had received a transplant overseas, which would prompt further investigation.

Professor Martin is sceptical of this approach.

"The first stumbling block [is] what would be the motivation for someone to disclose that information and how confident could we be that the majority were disclosing?" she asks.

An all-party parliamentary committee recommended the bill not be passed, instead calling on the federal government to deliver more public awareness campaigns.

Professor Martin believes a more effective approach would be to create a mandatory reporting system for doctors, which would focus on collecting data rather than information that identifies patients. 

This is an approach supported by both the WHO and the United Nations.

A 2019 study, led by the University of Adelaide, surveyed transplant professionals working in Australia. It asked them specifically about providing care to patients who had received transplants overseas.

More than half of the doctors surveyed had treated patients who had returned from overseas after having had a transplant.

Professor Martin points out the majority of patients who travel for transplants have done so legitimately. For example, they could be returning to their home country to receive a transplant and be cared for by family.

"Not all cases of travel for transplant actually involve organ trafficking," she says.

An ethical organ trade

Professor Ambagtsheer is focused on researching the most effective incentives to increase both deceased and living organ donations, specifically kidney donations.

"It might help to reduce the black market abuses within the organ trade but also help us increase the supply, so that there is less incentive on the black market for people to trade and sell," she says.

Professor Ambagtsheer also advocates for the exploration of an ethical organ trade. The main stipulation would be that "you never allow patients to pay".

She says the model would require anonymous donation and full government oversight.

"The government would be the institution that gives an incentive to kidney donors, so there is no transaction between donors and recipients …. I think that would be an ethical way of incentivising organ donations," Professor Ambagtsheer says.

She says the incentive would not necessarily be cash, but could instead be something like free health insurance.

However, Professor Martin is fundamentally opposed to the suggestion "on both ethical grounds and also practical grounds".

She says countries like Spain, a world leader in donation and transplantation rates, can provide better solutions.

"They've done that, not by relaxing the ethics or taking ethical shortcuts or exploiting people; [instead] they've had a government that's really invested in the donation program," Professor Martin says.

"They've had a really concerted effort to engage the community and they're doing a lot of interesting things in terms of optimising the recovery of organs from as many potential donors as they can."

Both Professors Martin and Ambagtsheer remain concerned for the welfare of those who sell their kidneys or other organs.

"They don't receive appropriate after care, they're very often cheated in terms of the money that they were promised and they experience all kinds of financial, physical and psychological distress because of the deception that we see inside these black markets," Professor Ambagtsheer says.

She says a criminal justice approach to reducing the illegal organ trade often results in the prosecution of the kidney seller as there is a reluctance to prosecute "the medical elite".

"I don't think that the system that we have in place is really serving those we are aiming to protect," she says.

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Modelling ecological hazards and causal factors in the yellow river basin’s key tributaries: a case study of the kuye river basin and its future outlook.

1. Introduction

2. materials and methods, 2.1. overview of study area, 2.2. data sources, 2.3. research methodology, 2.3.1. research framework, 2.3.2. land use structure, 2.3.3. landscape patterns and landscape ecological risk, 2.3.4. geographical detectors, 2.3.5. plus model, 3.1. spatiotemporal distribution of land use, 3.2. land use dynamic structure, 3.3. landscape ecological risk assessment results, 3.3.1. landscape pattern index, 3.3.2. spatiotemporal dynamics of landscape ecological risk, 3.4. driving factors of landscape ecological risk, 3.4.1. power of determinant, 3.4.2. interactive detection, 3.4.3. landscape ecological risk zone detection and analysis, 3.5. scenario simulation prediction of future development of land use and landscape ecological risk, 3.5.1. land use prediction results, 3.5.2. landscape ecological risk prediction results, 4. discussion, 4.1. analysis of land use and landscape ecological risks, 4.2. analysing natural and social economic factors, 4.3. optimisation suggestions for future regulatory measures and policy formulation, 5. conclusions, author contributions, institutional review board statement, informed consent statement, data availability statement, conflicts of interest.

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Wu, Y.; Qin, F.; Dong, X.; Li, L. Modelling Ecological Hazards and Causal Factors in the Yellow River Basin’s Key Tributaries: A Case Study of the Kuye River Basin and Its Future Outlook. Sustainability 2024 , 16 , 6977. https://doi.org/10.3390/su16166977

Wu Y, Qin F, Dong X, Li L. Modelling Ecological Hazards and Causal Factors in the Yellow River Basin’s Key Tributaries: A Case Study of the Kuye River Basin and Its Future Outlook. Sustainability . 2024; 16(16):6977. https://doi.org/10.3390/su16166977

Wu, Yihan, Fucang Qin, Xiaoyu Dong, and Long Li. 2024. "Modelling Ecological Hazards and Causal Factors in the Yellow River Basin’s Key Tributaries: A Case Study of the Kuye River Basin and Its Future Outlook" Sustainability 16, no. 16: 6977. https://doi.org/10.3390/su16166977

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