Milton Friedman once said there is nothing as permanent as a temporary government program.
Government programs are frozen in time, and it seems Washington thinks the world is too.
That would explain why policies shaping the lives of millions of Americans and trillions of dollars of global economic activity are unchanged for twenty, even forty, years as entire new industries emerged and transformed the world.
Your iPhone’s operating system is upgraded every few months, but ground rules governing wide swathes of global trade haven’t changed in decades.
Two examples of this insanity stand out: the North American Free Trade Agreement, NAFTA, and the Generalized System of Preferences, GSP.
When NAFTA was enacted in 1994, cars were made in Michigan and you couldn’t drink the water in Mexico. Now, cars are made in Mexico and you can’t drink the water in Flint.
The Trump administration is currently renegotiating NAFTA, and one of its key demands is that the pact must be reviewed and updated every five years going forward.
But NAFTA isn’t the only trade agreement that’s hopelessly out of date.
Twenty years before NAFTA, Congress approved America’s oldest and largest trade preference program, the General System of Preferences (GSP).
The trade-for-aid program, originally hatched in the U.N., was created to lift underdeveloped countries out of poverty by letting them sell goods in the U.S. duty-free. It eliminates tariffs on literally thousands of different products from over 120 countries.
Thanks to the GSP, U.S. is the biggest market for many of India’s industries, including textiles, engineering, gems and chemical products.
India is not only a great beneficiary of GSP, it’s also a great example of why GSP needs a system upgrade.
When Congress enacted GSP in 1974, the Apple personal computer had yet to be invented and the Internet was available only to a small cadre of research scientists.
In the intervening decades, technological advancements enabled India to develop lucrative call center, legal process outsourcing and software industries.
India uses cheap brainpower and technology to replace American service and IT workers the same way China exploits its cheap manpower to replace American factory workers. The strategy has paid off handsomely.
A recent study by two Indian economists finds that half of India’s 1.2 billion people – 600 million people – are now in the middle class.
A large and growing middle class should be reason enough to disqualify India from GSP. But wait – there’s more.
The U.S. Trade Representative says in addition to promoting economic growth, GSP helps member countries “in affording worker rights to their people, in enforcing intellectual property rights, and in supporting the rule of law.”
GSP is up for renewal at the end of the year. Congress must update it – and knock India off the rolls of this globalist welfare program altogether.
Curtis Ellis is the founder and chairman emeritus of the American Jobs Alliance, an economic nationalist trade non-profit. He and his organization were instrumental in building public awareness about the “Trans-Pacific Partnership” that lead to that trade deal’s defeat. He served as senior policy advisor on the Donald J. Trump for President campaign and Presidential Transition Team. You can find his work at http://www.americanjobsalliance.com/.
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