Trade Myths

from Free Market Fantasies

...Here there's another scam that you should keep your eyes on. What's called 'trade' in economics is a very odd notion. So, for example, if Ford Motor Company moves parts from Indiana to Illinois for assembly and then moves them back to Indiana, that's not called trade. But if Ford Motor Company takes parts made in Indiana and moves them across the border to Mexico--where you can get much cheaper labor and you don't have to worry about pollution and so on--and they get reassembled in Mexico, and then get sent back to Illinois for valuation, that's called 'exports and imports.' It never had anything to do with the Mexican economy, or in fact any economy; it was all internal to the Ford Motor Company, but it's 'exports and imports.' So how big an element is all that? Well, about 50% of US trade. So about 50% of what's called 'US trade' is internal to individual corporations...

If agreements like GATT increase what's called 'trade,' what it actually does is increases investor rights. That is, it increases the power of transnational corporations. You have to look pretty closely to figure out what the effect is on trade in any meaningful sense. For example, it may increase cross-border operations, but decrease trade in a meaningful sense of trade--meaning something that's not under the control of a kind of corporate mercantilism.