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Gonzaga Debate Institute 2008 1Lacy/Symonds/Bowen Trade

Trade

## Trade Deficit Bad ##..................................................................................................................................................3Trade Deficit High..........................................................................................................................................................4Oil Key To The Trade Deficit.........................................................................................................................................5Alternative energy reduces the deficit.............................................................................................................................6

Dollar collapse................................................................................................................................................................7European Economic Collapse.........................................................................................................................................8Foreign Direct Investment..............................................................................................................................................9Hegemony/Soft Power..................................................................................................................................................10Protectionism 1/3...........................................................................................................................................................11Recession/Economic Growth 1/5..................................................................................................................................14WTO..............................................................................................................................................................................19AT Liquidity..............................................................................................................................................................20AT Unemployment 1/5..............................................................................................................................................21## Trade Deficit Good ##..............................................................................................................................................26Trade Deficit Good 1NC (1/2)......................................................................................................................................27Turns Case: Alternative Energy....................................................................................................................................29Foreign Direct Investment............................................................................................................................................30

Foreign Direct Investment Good...................................................................................................................................31Growth 1/2....................................................................................................................................................................32Growth Good.................................................................................................................................................................34Hegemony/Soft Power..................................................................................................................................................35Inflation.........................................................................................................................................................................36Liquidity Crunch...........................................................................................................................................................37Unemployment 1/3........................................................................................................................................................38US Poverty....................................................................................................................................................................41AT Competitiveness...................................................................................................................................................42A2: Trade deficit bad (1/2)............................................................................................................................................43AT Dollar Collapse......................................................................................................................................................45AT: Trade Deficit Reduces Growth 1/3.....................................................................................................................46## WTO ##....................................................................................................................................................................50

WTO INC 1/2................................................................................................................................................................51WTO: Uniqueness 1/2...................................................................................................................................................53WTO: Uniqueness: US Subsidy Cuts 1/4.....................................................................................................................55WTO: Brink 1/2............................................................................................................................................................59WTO: Link: US Key.....................................................................................................................................................61WTO: Link: Subsidies 1/4............................................................................................................................................62WTO: Link: Alternate Fuel Subsidies...........................................................................................................................66WTO: Link: Fuel Standards..........................................................................................................................................67WTO: Link: Tax Changes.............................................................................................................................................68Doha Good Alternative Energy..................................................................................................................................69Doha Good Economy 1/2...........................................................................................................................................70Doha Good Food Shortages 1/2.................................................................................................................................72Doha Good Free Trade 1/2.........................................................................................................................................74Doha Good AT Hezzbola........................................................................................................................................76WTO Good - Poverty....................................................................................................................................................77Doha Good Russian Econ..........................................................................................................................................79WTO Good AT Sovereignty...................................................................................................................................80WTO Good - Globalization...........................................................................................................................................81WTO: Not Unique 1/6...................................................................................................................................................82WTO: Link Turns..........................................................................................................................................................88 No Doha Impact 1/2......................................................................................................................................................89Doha Bad Hezbollah 1/2............................................................................................................................................91WTO Bad: World Peace................................................................................................................................................94WTO Bad: Human Rights 1/2.......................................................................................................................................95WTO Bad: Environment...............................................................................................................................................97


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WTO Bad: Famine........................................................................................................................................................98## Germany ##..............................................................................................................................................................99Germany INC 1/2........................................................................................................................................................100Germany: Uniqueness 1/8...........................................................................................................................................102Germany: Brink...........................................................................................................................................................111Germany: Link 1/4......................................................................................................................................................112Germany: Impact.........................................................................................................................................................116Germany: Impact: Turns Case 1/2...............................................................................................................................117Germany: Not Unique 1/5...........................................................................................................................................119Germany: No Link......................................................................................................................................................124Germany: Link Turn: Oil Prices 1/2...........................................................................................................................125## Free Trade Good ##................................................................................................................................................127Free Trade Good: War 1/3...........................................................................................................................................128Free Trade Good: Environment 1/3............................................................................................................................131Free Trade Good Food Prices 1/2............................................................................................................................134Free trade good- Global growth 1/5............................................................................................................................136Free trade good- Heg/ Democracy..............................................................................................................................141Free trade good- Poverty 1/5.......................................................................................................................................142A2: Trade bad- rich poor gap......................................................................................................................................148Free trade good- Terrorism 1/4....................................................................................................................................149

Free Trade Good: Unemployment...............................................................................................................................153Free Trade Good: Womens Rights.............................................................................................................................154FTAs Bad 1/2..............................................................................................................................................................155FTAs Good..................................................................................................................................................................157## Free Trade Bad ##..................................................................................................................................................158Free Trade Bad: AT Generic Free Trade Good........................................................................................................159Free Trade Bad: Environment 1/4...............................................................................................................................160Free Trade Bad: Extended Deterrence........................................................................................................................164Free Trade Bad: Food Insecurity 1/2...........................................................................................................................165Free Trade Bad: AT: Global growth............................................................................................................................167Free Trade Bad: Poverty 1/2.......................................................................................................................................168Free Trade Bad: Rural Economies 1/2........................................................................................................................170Free Trade Bad: AT Terrorism 1/2...........................................................................................................................172

Free Trade Bad: Unemployment.................................................................................................................................174Free Trade Bad: War 1/3.............................................................................................................................................175Free Trade Bad: Warming 1/2.....................................................................................................................................179Free Trade Bad: Womens Rights 1/2.........................................................................................................................181


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## Trade Deficit Bad ##


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Trade Deficit High

The US trade deficit is at a record high nowCooper and Maddigan, staff writers for Business Week, 04. [James and Kathleen, Could Trade Imbalances Topplethe Greenback? Business Week, Nov 29, 2004. Iss. 3910 pg. 31]

HOW DID THE DEFICIT GET SO BAD? For more than a decade, the global economy has become

increasingly dependent on U.S. growth, while the U.S. has become more dependent on foreign capitalto finance its demand. This cycle snowballed the deficit in the U.S. current account -- the broadest

measure of international trade and financial flows -- to a record 5.7% of gross domestic product, a

level exceeded only by the emerging nations Hungary, Bulgaria, and the Czech Republic.Foreignmoney now finances three-fourths of U.S. net investment (chart).


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Oil Key To The Trade Deficit

Oil imports are the biggest cause of the rising trade deficit- prices make it the highest it has

ever been()Crustsinger, AP Economics Writer 2008,

(Martin, June 10, 2008 http://abcnews.go.com/print?id=5036397)The trade deficit soared to the highest level in more than a year as an improvement in exports wasswamped by record-high levels of imported crude oil. The deficit with China also rose sharply.The gap between what the nation imports and what it sells abroad rose by 7.8 percent in April to $60.9billion, the Commerce Department reported Tuesday. It was the largest imbalance since March 2007.The higher deficit was driven by a $4.3 billion increase in crude oil imports, which jumped to a record

$29.3 billion in April, as the average per-barrel price rose to an all-time high of $96.81.

If the price of crude had instead been at $60 per barrel, about where it was a year ago, the trade deficit

would have been $11 billion lower in April. Analysts cautioned the deficit will widen further in coming

months, given that oil is now trading above $130 per barrel.

Oil imports account for a third of the trade deficit- actions to reduce dependence mean vastlycutting the size of the deficitLuft, staff writer for Energy Publisher, 08. [Gal, Oil: The Weapon of the New World Order, energypublisher.comJune 19, 2008. Accessed 6/19/08 http://www.energypublisher.com/article.asp?id=15526]

As President Bush said in April 2004, U.S. dependence on overseas oil is a foreign tax on the Americanpeople.Indeed, oil imports constitute a third of the U.S. trade deficit and are a major contributor to theloss of jobs and investment opportunities. The transfer of wealth resulting from the cartels greed is reshapingthe world economy.Flushed with petrodollars, oil producers are using their money to buy critical nodes of the Wests economiesincluding equity firms, banks, stock exchanges, media conglomerates, and retail chains. Altogether overseasacquisitions from the Arab world amounted to $68 billion in 2007 and additional tens of billions of dollarsare still awaiting a place to park. Such holdings enable Arab governments to wield unprecedented influenceon the Wests economy and politics.For energy importers the rise in oil pricesmeans slower growth rate, inflation, loss of jobs, andburgeoning trade deficits. The biggest casualties are the developing nations, some of whom still carry debts

which go back to the oil crises of the 1970s. The recent change of the trade patterns of the Arab oilproducers could potentially bring about the decline of the U.S. dollar as the main reserve currency, a

process that may already be on its way.

The cost of oil imports dwarf exports, keeping the trade deficit growingBBC News, 08. [Oil imports increase US trade gap, BBC News, June 10, 2008. Accessed 7/2/08http://news.bbc.co.uk/2/hi/business/7446524.stm]

The rising cost of importing foreign oil caused the US trade deficit to widen in April to $60.9bn, the

biggest for 13 months. Despite healthy export growth, the difference between US imports and exports

jumped 7.8% in April.

Crude oil imports alone increased $4.3bn to $29.3bn over the month, reflecting higher prices for fuel

on world markets. The increase wiped out the gains from strong US exports, which grew 3.3%.Analysts warned that the cost of oil imports could rise further in coming months if crude oil continued

to climb. "This is the most important hurdle on our road to recovery," Gilles Moec, an analyst at Bank ofAmerica, told the BBC.


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Alternative energy reduces the deficit

Alternative energies reduce oil imports which account for over 34 billion dollars of the tradedeficit- their implementation drastically cuts the size of the overall deficitMorici, professor at the University of Maryland School of Business and former chief economist at the USInternational Trade Commission, 08. [Peter, Bernanke aggrevates trade deficit risks, Asia Times Online, June 12,2008. Accessed 7/2/08 http://www.atimes.com/atimes/Global_Economy/JF12Dj02.html]

Petroleum products accounted for $34.5 billion of the monthly trade gap, on a seasonally adjusted basis,up from $30.2 billion in March. Since December 2001, net petroleum imports have increased $30.0billion, as the average price of a barrel of imported oil has risen from $15.46 to $96.81, and monthly

imports have increased from 353 million to 388 million barrels.

Retuning conventional gasoline engines and transmissions, hybrid systems, lighter weight vehicles, nuclearpower, and otheralternative energy sources could substantially reduce US dependence on foreign oil.These solutions require national leadership, but both Republican and Democratic Party leaders have failed tochampion policies that would reduce dependence on Middle East oil.


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European Economic Collapse

U.S. trade deficit will cause a European economic collapse

Feldstein, chair Council of Economic Advisers, 2006(Mark, 8-2-06, Europe has to face the threat of America's trade deficit, The Financial Times,http://www.nber.org/feldstein/ft080206.html , July 13, 2008)

The inevitable decline of the US trade deficit will pose a big challenge for the economies of Europe.Shrinking America's $800bn annual trade imbalance requires a decline of US imports and a rise in its

exports. When US imports decline, European exports will fall; and when a lower dollar makes Americanexports more competitive, US shipments to Europe will rise and American products will replace European goodsin global markets.This fall in the demand for European products will cause a slowdown in Europe's already weak growth.With lower demand, European companies will invest less and hire fewer workers. The resulting slowdown inincomes will hurt consumer spending and have second-round effects on business investment. This cumulativeprocess could be enough to send some European economies into recession.


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Foreign Direct Investment

Trade deficit bad- lower FDI, decreases economic growthMandel, Staff writer for Business Week, 03. [Michael, Why a Falling Dollar Won't Help It'll scare off foreigninvestors -- and do zilch to boost inefficient industries, Business Week, Oct 6, 2003. , Iss. 3852; pg. 126. Accessed

7/7/08 from Proquest]But a falling dollar could have serious negative consequences without actually fixing the problems thatare causing the trade deficit to widen. For starters, a weaker currency could scare off foreign investors,depressing the stock market and sending interest rates soaring. In the short run, it will also force

consumers to pay more for imports and drain off money they could have used for something else, thusdampening growth. What's more, currency manipulations will do nothing to fix the fundamental problem:Much of U.S. manufacturing has simply not been innovating and boosting productivity fast enough tocompete effectively in the global marketplace.Consider first the impact of a falling dollar on foreign investors. The U.S. depends on an enormous

flow of capital into the country to fund everything from business investment to home construction to thegovernment budget gap. Over the last year, for example, the U.S. has absorbed roughly $800 billion inforeign capital, with most of that going into corporate bonds, Treasury debt, and mortgage-backed securities.Anydrop in the dollar big enough to cut the trade deficit significantly -- say, 15% -- would also greatly

reduce or eliminate the returns for European or Asian investors who put their money into U.S. securities.Moreover, the prospect of further declines in the dollar would encourage foreign investors to start

pulling out their funds from the U.S. stock and bond markets. The outcome could be a spike in interestrates, much greater difficulty in raising money, and a squeeze on domestic growth.

FDI is the single greatest way to prevent conflictRosecrance and Thompson, professors of political science at UCLA, 03. [Richard and Peter, TRADE,FOREIGN INVESTMENT, AND SECURITY, UCLA Annual Review of Political Science, March 6, 2003.P.37798.]

Trade interdependence does not always reduce hostility between states. It depends on whether the

trade represents vulnerability or sensitivity interdependence. Portfolio investment also does not representa tie that binds politically. Even more important, foreign direct investment (FDI) represents a link that iscostly (and timeconsuming) to break. Thus, FDIlinks between countries are more likely to reduce conflict

than trading links. Evidence shows that symmetrical FDI is the most stable guarantor of low conflictbetween countries. One factor generating conflict may be that scarce factors of production are in politicalcommand. Abundant factors, now more generally in power among developed states, may be partlyresponsible for the diminishment of conflict among these states in recent years.


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Hegemony/Soft Power

It destroys hegemony: It overstretches military funding and undermines US industry-

China proves

Hawkins, 2003 (William R. Hawkins, Senior Fellow for National Security Studies at the U.S. Business andIndustry Council, Trade Deficit Provides China With More Than Economic Advantages, July 18,http://www.americaneconomicalert.org/view_art.asp?Prod_ID=864, accessed 7-15-08)

China is able to use the profits from its successful trade policy to maintain its advantage. Its tradesurplus gives it the dollar reserves its needs for financial intervention. Between 1997 and March, 2003, itsdollar reserves grew from $140 billion to $316 billion. It can invest these funds in U.S. Treasury debt, whichis being issued at a brisk pace due to the expanding Federal budget deficit. The budget deficit is largely theresult of the American recession, which in turn is perpetuated by the trade deficit with China andelsewhere. Thus the "twin deficits" (trade and budget) work together for Beijing's benefit. And whenChina is involved, the dangers are not just commercial. Beijing's strategy to undermine Americanindustry while building up its own manufacturing base also works to shift the balance of power in Asia.

So does undermining U.S. finances with the "twin deficits" and beating down neighboring states in

trade battles. In the seminal Chinese treatise on modern strategy Unrestricted War by People's LiberationArmy Colonels Qiao Liang and Wang Xiangsui published in 1999, the ongoing financial crisis is compared

to military conflict: "Economic prosperity that once excited the constant admiration of the Western worldchanged to a depression, like the leaves of a tree that are blown away in a single night by the autumn wind.After just one round of fighting, the economies of a number of countries had fallen back ten years. What ismore, such a defeat on the economic front precipitates a near collapse of the social and political order. Thecasualties resulting from the constant chaos are no less than those resulting from a regional war." It is alsoargued in Unrestricted War that to attack another country's economy, the aggressor "must adjust its ownfinancial strategy, use currency revaluation or devaluation as primary, and combine means such as getting theupper hand in public opinion and changing the rules sufficiently to make financial turbulence and economiccrisis appear in the targeted country or area, weakening its overall power, including its military strength." Asthe weak American economy contributes to rising budget deficits, it becomes more difficult to provide thefunds to modernize or expand the overstretched U.S. military, or to pay for overseas combat

operations, or to finance national building in places like Iraq and Afghanistan.

Trade deficit devours US soft & economic powerSetser et al, 2005 (Brad, How Scary Is the Deficit? Council on Foreign Affairs (WTO Special Edition),December, http://www.foreignaffairs.org/20051201faresponse84710/brad-setser/how-scary-is-the-deficit.html, 7-15-08)

There is little doubt that U.S. external debt and the current account deficit are eroding the appeal of

the U.S. approach to economic policy, an important element of U.S. "soft power."Asian policymakers,in particular, view U.S. economic policy not as a model but as a problem: the United States' "exorbitantprivilege" -- Charles de Gaulle's term for Washington's ability to finance deficits by printing dollars -- comesat their expense. The United States has a particularly delicate relationship with China, which iscurrently the single biggest buyer of U.S. debt. To date, disagreements on other issues have not

prompted China to slow its accumulation of dollar reserves, but that is not to say that it could not

happen in the future. The ability to send a "sell" order that roils markets may not give China a veto overU.S. foreign policy, but it surely does increase the cost of any U.S. policy that China opposes. Even if China

never plays its financial card, the unbalanced economic relationship between the United States andChina could add to the political tensions likely to accompany China's rise.Economic power usuallyflows to creditors, not debtors. While the United States roams the world looking to sweep up any sparesavings to finance its huge deficits, China roams the world looking for new places to invest its surplussavings -- including in oil and gas resources and in states that Washington has judged pariahs. This is a farcry from the early days of the Cold War, when the United States used its surplus savings to finance thereconstruction of its allies, cementing political alliances with strong economic ties.
http://www.americaneconomicalert.org/view_art.asp?Prod_ID=864http://www.foreignaffairs.org/2005/7.htmlhttp://www.foreignaffairs.org/20051201faresponse84710/brad-setser/how-scary-is-the-deficit.htmlhttp://www.americaneconomicalert.org/view_art.asp?Prod_ID=864http://www.foreignaffairs.org/2005/7.htmlhttp://www.foreignaffairs.org/20051201faresponse84710/brad-setser/how-scary-is-the-deficit.html


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Protectionism 2/3

Trade deficit risks American protectionism & financial crisis

QuinlanandChandler, 2001 (Joseph P. Quinlanand Marc Chandler, The U.S. Trade Deficit: A DangerousObsession Council on Foreign Affairs, May/June,http://www.foreignaffairs.org/20010501faessay4770/joseph-quinlan-marc-chandler/the-u-s-trade-deficit-a-dangerous-obsession.html, accessed online 7-15-08)

Every U.S. president over the past quarter-century has confronted an annual trade deficit. But the cavernoustrade gap inherited by President George W. Bush dwarfs those faced by his predecessors. America's current-account deficit (which measures the cross-border exchange of goods, services, and investment income) averagedmore than $1 billion a day last year, reaching a record 4.4 percent of GDP. Many economists worry that thehuge trade deficit, which must be financed by foreign investors, could lead to a full-blown financial crisis

if and when those investors become unwilling to fund the imbalance.Something as benign as strongereconomic growth in another country, for instance, could attract a larger share of the world's savings,

leading to higher U.S. interest rates, a weaker dollar, and a grimmer economic outlook for the United

States and the world. Economists offer various explanations for the persistent U.S. trade deficit. Some arguethat America buys more from the world than it sells because its companies are growing less competitive. Othersblame the "unfair" trade restrictions and labor policies of other countries. Still others point to the underlyingstrength of the dollar, which makes American goods and services more expensive for foreign buyers. Whatever

the proper explanation, a simple and important fact is absent from the debate: the trade balance is no longer avalid scorecard for America's global sales and competitiveness. Given a choice, U.S. firms prefer to sell goodsand services abroad through their foreign affiliates instead of exporting them from the United States. In 1998,U.S. foreign-affiliate sales topped a staggering $2.4 trillion, while U.S. exports -- the common but spuriousyardstick of U.S. global sales -- totaled just $933 billion, or less than 40 percent of affiliate sales. How U.S.firms compete in world markets, in other words, goes well beyond trade. Still, trade erroneously remains thestandard benchmark of global competitiveness. More worrisome, it is the most important factor shaping U.S.international economic policy. Overblown concern about the swollen trade deficit, combined with a slowingeconomy and the expectation of rising unemployment, could ignite a new round of trade protectionism inWashington, which could spark similar responses around the globe. The greatest danger on America's

trade front, therefore, is not the size of the deficit but the nation's obsession with it.

High trade deficits cause an upswing in protectionism

The Economist, 03. [The world economy needs both, The Economist, Vol. 368, 9/20/2003. Accessed 7/3/08http://proxy.foley.gonzaga.edu:2048/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=10888974&site=ehost-live]

There are challenges facing the global economy and the longer that the U.S. current-account deficit--

and hence its reliance on foreign capital--continues to grow, the greater the risk that a shock to

America's financial markets will send the dollar crashing. But a dollar crash and global recession are

not the only gloomy possibilities. Equally worrying, and much more likely, is a surge in protectionism,

especially if America's current-account deficit continues to rise rapidly. A slide into protectionismwould have grave consequences. Intellectual consensus in favour of free trade, particularly in poor

countries, could wither in the face of American protectionism. The best outcome the world economy canhope for in the next few years is a fairly sluggish performance by America's economy, combined with fastergrowth elsewhere. A few more years of below-average growth but no serious recession would help Americato work off its excessive debt and increase its savings rate. The trend remains towards ever bigger American

imbalances and continued reliance abroad on American economic growth. Reversing that trend will takepolitical leadership as well as a large dollop of luck. The country's dramatic shift into budget deficits mayhave underwritten the American, and thus the global, economy in the short term, but it risks making themedium-term problem much worse. The policy recipe that is best for world economy is determined structuralreforms coupled with a sensible (read looser) macroeconomic policy.
http://www.foreignaffairs.org/author/joseph-p-quinlan/index.htmlhttp://www.foreignaffairs.org/author/marc-chandler/index.htmlhttp://www.foreignaffairs.org/author/marc-chandler/index.htmlhttp://www.foreignaffairs.org/author/joseph-p-quinlan/index.htmlhttp://www.foreignaffairs.org/author/joseph-p-quinlan/index.htmlhttp://www.foreignaffairs.org/author/marc-chandler/index.htmlhttp://www.foreignaffairs.org/20010501faessay4770/joseph-quinlan-marc-chandler/the-u-s-trade-deficit-a-dangerous-obsession.htmlhttp://www.foreignaffairs.org/20010501faessay4770/joseph-quinlan-marc-chandler/the-u-s-trade-deficit-a-dangerous-obsession.htmlhttp://www.foreignaffairs.org/20010501faessay4770/joseph-quinlan-marc-chandler/the-u-s-trade-deficit-a-dangerous-obsession.htmlhttp://www.foreignaffairs.org/author/joseph-p-quinlan/index.htmlhttp://www.foreignaffairs.org/author/marc-chandler/index.htmlhttp://www.foreignaffairs.org/author/joseph-p-quinlan/index.htmlhttp://www.foreignaffairs.org/author/marc-chandler/index.htmlhttp://www.foreignaffairs.org/20010501faessay4770/joseph-quinlan-marc-chandler/the-u-s-trade-deficit-a-dangerous-obsession.htmlhttp://www.foreignaffairs.org/20010501faessay4770/joseph-quinlan-marc-chandler/the-u-s-trade-deficit-a-dangerous-obsession.html


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Protectionism 3/3

Causes new attacks on free tradeGriswald, associate director of the Cato Institute's Center for Trade Policy Studies, 98 (Daniel T., America'sMaligned and Misunderstood Trade Deficit, 4-20-1998, http://www.freetrade.org/pubs/pas/tpa-002.html)

The trade deficit has continued to haunt U.S. trade policy in the 1990s. In the debate in the fall of 1997

over renewal of fast-track trade authority, opponents of the measure cited the continuing overall U.S.trade deficit as evidence that trade harms the U.S. economy and destroys jobs. To discredit the North

American Free Trade Agreement, and by association all free-trade agreements, opponents of fast-track

authority hammered away at the bilateral trade deficits the United States runs with both of its NAFTApartners, Mexico and Canada.The deficit with Mexico drew the most fire because America's bilateral balance with Mexico had been insurplus before 1995. In September 1997 Steve Beckman, an economist for the United Auto Workers laborunion, testified before the Subcommittee on Trade of the House Ways and Means Committee that bilateraltrade deficits with Canada and Mexico had created a "trade debacle" costing the U.S. economy more than400,000 jobs.(9)Bilateral trade deficits continue to complicate America's commercial relations with a number of major tradingpartners, chief among them Japan and China. In 1997 the United States recorded a $55.7 billion bilateraltrade deficit with Japan and a $49.7 billion deficit with China, by far our two largest bilateral imbalances.(10)

The deficit with China appears even more threatening to some trade critics because it has grown so rapidly inrecent years, more than quadrupling from $11.5 billion in 1990.(11)Our bilateral deficit with China has beenused to argue against renewal of China's Most Favored Nation status and against admitting it to the WorldTrade Organization. America's bilateral trade deficit with Japan has probably been the single biggest sourceof trade friction between the two countries.(12)If the overall U.S. trade deficit rises in 1998 as predicted, it could spur a whole new round of attacks on freetrade, prompting government intervention to curb imports and spur exports.
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Recession/Economic Growth 1/5

Trade deficit wrecks global economic growthBergsten, director of the Institute for International Economics, 04. [Fred, The risks ahead for the world economy,The Economist, 9/11/2004, Vol. 372, Issue 8392 pg online. Accessed 7/9/08 from Ebscohost]

FIVE major risks threaten the world economy. Three centre on the United States: renewed sharpincreases in the current-account deficit leading to a crash of the dollar; a budget profile that is out of

control; and an outbreak of trade protectionism. A fourth relates to China, which faces a possible hardlanding from its recent overheating. The fifth is that oil prices could rise to $60-70 per barrel even without amajor political or terrorist disruption, and much higher with one.Most of these risks reinforce each other. A furtheroil shock, a dollar collapse and a soaring Americanbudget deficit would all generate much higher inflation and interest rates. A sharp dollar decline wouldincrease the likelihood of further oil price rises. Larger budget deficits will produce larger American

trade deficits, and thus more protectionism and dollar vulnerability. Realisation of any one of the five

risks could substantially reduce world growth. If two or three, let alone all five, were to occur incombination then they would radically reverse the global outlook.

There is still time to head off each of these risks. Decisions made in America immediately after this year'selections will be pivotal. China, the new growth locomotive, is key to resolving the global trade imbalances

and must play a central role in future. Action by a number of other countries will be essential to maintainglobal growth and to avoid deeper oil shocks and new trade restrictions.The most alarming new prospect is another sharp deterioration in America's current-account deficit. Ithas already reached an annual rate of $600 billion, well above 5% of the economy. New projections by mycolleague Catherine Mann (see chart 1) suggest it will now be rising again by a full percentage point of GDPper year, as actually occurred in 1997-2000. On such a trajectory, the deficit would exceed $1 trillion peryear by 2010.

High deficits result in a decline in the value of the dollar, causing a hard landing and

global recessionTrumbull, staff writer for the Christian Science Monitor, 06. [Mark, Climbing debt casts doubt on dollar's future,Christian Science Monitor, July 6, 2006, USA; pg. 1]

Many economists believe the dollar will decline in value - and needs to decline - rela- tive to other

currencies. The reason: The record US trade deficit shows no signs of shrinking on its own accord. Thelarger it grows, the greater the risk of a "hard landing" for America if other nations become worried

about America's ability to repay foreign creditors, who are now lending some $1.6 million per minute

to finance overall US spending.

The hard landing scenario, which could spark a global recession, remains a possibility rather than aconsensus forecast. But policymakers worldwide, from finance ministers to the International MonetaryFund (IMF), take the threat seriously."The thing that's driving the international focus is the concern that the adjustment [in the dollar]

could easily be disorderly and really painful," says Charles McMillion, president of MBG InformationServices, an economic consulting firm in Washington. "This imbalance will dominate Paulson's and [FederalReserve Chairman Ben] Bernanke's efforts, for the rest of their terms."


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The trade deficit is a ticking time bomb that could inflict massive global pain if detonated-

this detonation would occur if the deficit swells further stillCooper and Maddigan, staff writers for Business Week, 04. [James and Kathleen, Could Trade Imbalances Topplethe Greenback? Business Week, Nov 29, 2004. Iss. 3910 pg. 31]

The ever-growing deficit in America's international trade is a bomb waiting to explode, but one with a

very long fuse. That's why for years economists and policymakers put the deficit low on their list ofworries. The lack of urgency stemmed from the glacial pace of the gap -- it has been widening for 13

years with no problems -- and from the fact that the U.S. remains the most attractive destination for

foreign funds.

Recently,however, the fuse seems to be burning a lot more quickly. Currency markets, increasinglyedgy about the deficit, are pushing down the dollar. Overseas officials and international trade

organizations have called on the U.S. to deal with the problem before it inflicts global pain. Andpolicymakers at the Federal Reserve took time at their Sept. 21 policy meeting to discuss the "worrisomefurther widening of the U.S. trade and current-account balances." At the same time, growing economictensions, especially in Europe, and contradictory statements from the White House about the dollar suggestthat correcting the current-account deficit will be risky.

Trade deficits reduce the GDP by $250 billion a year- crushing economic growthMorici, professor at the University of Maryland School of Business and former chief economist at the USInternational Trade Commission, 08. [Peter, Bernanke aggrevates trade deficit risks, Asia Times Online, June 12,2008. Accessed 7/2/08 http://www.atimes.com/atimes/Global_Economy/JF12Dj02.html]

High and rising trade deficits tax economic growth. Each dollar spent on imports, not matched by a

dollar of exports, shifts workers into activities in non-trade competing industries such as departmentstores and restaurants. Manufacturers are particularly hard hit by this subsidized competition. Throughrecession and recovery, the manufacturing sector has lost 3.7 million jobs since 2000. Following the patternof past economic recoveries, the manufacturing sector should have regained more than 2 million of thosejobs, especially given the very strong productivity growth accomplished in technology-intensive durablegoods industries. Productivity is at least 50% higher in industries that export and compete with

imports. By reducing the demand for high-skill and technology-intensive products, and US-made goodsand services, the deficit reduces GDP by at least $250 billion a year, or about $1,750 for each worker.

Longer-term, persistent US trade deficits are a substantial drag on growth. US import-competing andexport industries spend at least three times the national average on industrial research and development, andencourage more investments in skills and education than other sectors of the economy. By shiftingemployment away from trade-competing industries, the trade deficit reduces US investments

in new methods and products, and skilled labor.


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Trade deficit causes confidence crisesMorici, professor, University of Maryland School of Business, 07. [Peter, US Stock Prices and the Trade Deficit,Nov 9, 2007 finfacts.com. Accessed 7/2/08 from

http://www.finfacts.com/irelandbusinessnews/publish/printer_1000article_1011753.shtml]Wall Street and American capitalism are suffering a crisis of confidence. Stock markets are in turmoil,

because US banks are taking record losses from foolish bets on subprime mortgages, the dollar is

tanking against the euro and some other currencies, and oil prices are rocketing. The US trade deficit

is at the center of this mess. Since December 2001, the trade deficit has more than doubled, and for thelast 38 months, it has remained above $50 billion. This gap must be covered by foreigners investing in USbusinesses or foreigners buying US bonds, collateralized debt obligations, or other paper assets. The

foreign appetite to invest in controlling interest of US enterprises is no more than $10 billion a month,

especially when the US economy is growing at less than 4 percent and China and India are cracking alongaround 10 percent. Hence, Americans have been borrowing more than $40 billion a month, and haveamassed a $6 trillion foreign debt to finance these trade deficits.Foreign central banks, led by China, Japan, India, South Korea, and Brazil have been major takers of USpaper, because private foreign lenders simply are not willing to soak up all this debt. The recent failings of

mortgage bankers, investment and commercial banks, bond rating agencies, and even private equity--Cerberus owns the biggest loser in the subprime debacle, General Motors Acceptance Corporation--arecausing private investors, and some central banks, to sell off American paper and send the dollar and stockprices south. The sinking dollar against the euro and the pound does help boost US exports, becauseAmerican and European businesses, from Airbus and Boeing to French and Wisconsin cheese, compete forglobal markets. However, the monthly trade deficit remains close to $58 billion a month, becausepetroleum, consumer goods from China and automotive products account for about 98 percent of thetrade deficit.

Undermines the economy many ways

Kusumi, 2003(John, 3-23-03, Globalization: Now identified as 'boomernomics', Association for Asian Research,http://www.asianresearch.org/articles/1253.html, 7-13-08)

A myth circulates in the establishment, that trade deficits can be safely ignored. Trade deficits wereshrugged off by the architects of Boomernomics. This was a mistake. Upon closer analysis, trade deficitshurt the economy, dollar-for-dollar. The economic damage of these deficits was not evident at that time.Boomernomics encouraged larger trade deficits, which followed suit by growing. In the 1980s, our deficitswith China were under $4 billion. They have grown to $86 billion, and total trade deficits have grown to$350 billion. They do hurt. They are a problem. Several other economic measures are hurt by tradedeficits, including employment, wages, cost of living, value of the dollar, and prospective inflation. Theeffect is seen in our troubled economy, right now. The economy is now saying "TILT," and one reason isBoomernomics, with its built-in encouragement of trade deficits. Trade deficits have never received as muchattention as we used to heap on federal budget deficits. They have been shrouded in the myth, as above. Forthe management of a sound economy, the myth is a dangerous misunderstanding. It is time to wake up, growup, and face up to trade deficits. For a short definition, a trade deficit is when "we are getting poorer, andsomebody else is getting richer." There is a $350 billion hole in our economy. Even more economic activity

is curtailed, because there is a multiplier effect as money recirculates. Spent in a trade deficit, moneyrecirculates and multiplies in somebody else's economy, not ours. In sound economics, we should bestriving for balanced trade, bringing trade deficits down to $0. Trade deficits are truly a bogeyman toour economy.
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WTO

Trade deficit causes WTO collapseThe Economist, 03. [The world economy needs both, The Economist, Vol. 368, 9/20/2003. Accessed 7/3/08http://proxy.foley.gonzaga.edu:2048/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=10888974&site=ehost-live]

But a dollar crash and global recession are not the only gloomy possibilities. Equally worrying, andmuch more likely, is a surge in protectionism, especially if America's current-account deficit continues

to rise rapidly. In 1985, Congress seriously considered an import surcharge of the sort described in theimaginary scenario above. Many American politicians are already ambivalent towards the WTO. If thegovernment loses a few more big trade cases, that ambivalence could turn to antipathy.

A slide into protectionism would have grave consequences. Since the end of the second world war,America has championed the multilateral approach to freeing global trade, though with varyingenthusiasm. If it were to give up this leadership role, even temporarily, the global trading system wouldbe in deep trouble. The WTO is a fragile organisation, less than ten years old. It would not survive a

lengthy period of American disengagement.

The intellectual consensus in favour of free trade, particularly in poor countries, could also wither in theface of American protectionism. Poor countries would ask why, if it was fine for America to raise

barriers against the Chinese threat, they should hold back from doing the same. Given that trade

integration plays a crucial role in economic development, the world's poorest would find it that muchharder to escape from poverty.


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AT Liquidity

Turn- Liquidity creates instability and dangerous asset bubbles in the global economyLi and Zhu, professor of political science, York University and Marxism research institute, Tsinghua University, 05.[Minqi and Andong, Neoliberalism, Global Imbalances, and Stages of Capitalist Development, Political Economy

Research Institute Working Paper Series, August 2005. Accessed 7/9/08 fromhttp://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_101-150/WP110.pdf]

The lower real interest rates in recent years have flooded the world with liquidity.2 But the rapidexpansion of global liquidity has not led to sustainable expansion of effective demand supported by the

increase in the real incomes of the great majority of the world population. Instead, it has led to a series

of asset bubbles, especially housing bubbles, throughout the world, with dangerous implications for theglobal economy (The Economist, March 3, 2005, Global Housing Prices: Still Want to Buy?).


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The rapid increase in the trade deficit has resulted in the loss of 3 million Americanmanufacturing jobsEvans, chief economist for American Economics Group, 05. [Michael, Jobs And The Twin Deficits, IndustryWeek, April 2005, p.76. Accessed 7/9/08 from EBSCOhost]

THE U.S. TRADE DEFICIT FOR GOODS ROSE TO $666 billion last year, up from $547 billion in

2003 and $483 billion in 2002. The goods trade deficit increased to an annual rate of $737 billion in the finalquarter of 2004 and is headed for $800 billion by the end of this year. Should we worry? Someconsequences are obvious enough, for example, the loss of 3 million manufacturing jobs, many of themrelatively high-paying jobs. So why are virtually all economists in favor of more free trade? A cynic wouldsay thats because we economists dont really have to work for a living. But there has to be more to it thanthat. Indeed, if there really were no tangible benefits to these enormous trade deficits, steps would have beentaken to reduce them long ago.

Trade deficit leads to loss of jobs and inflation of the dollar

Weller, Senior Fellow at American Progress and an Associate Professor of Public Policy at the University of

Massachusetts Boston. 2006(Christian E., February 10, Public Citizen, http://www.americanprogress.org/experts/WellerChristian.html)On February 10th, theU.S. Census Bureau released datashowing that the U.S.trade deficit reached a record-high$726 billion, or 5.8 percent of total U.S. gross domestic product (GDP), in 2005. This is an 18 percent increaseover the U.S. trade deficit in 2004.This ballooning trade deficit is worrying for many reasons, especially coming on the heels of continuing

news reports about plummeting U.S. manufacturing jobs. A rising trade deficit leads to the loss of jobs in

traded sectors particularly good jobs in the manufacturing sector. A decade of rising trade deficits has

contributed to the loss of over 3.2 million U.S. manufacturing jobs between 1998 and 2005. Trade

agreements like NAFTA and the recently passed CAFTA exacerbate the situation, speeding up the rate at

which U.S. jobs can be shipped overseas.

Regarding the big-picture economic situation for the United States, the Center for American ProgressSenior Economist Christian Weller says:

Large trade deficits are troublesome since they can jeopardize an economys long-term health. Tradedeficits in excess of 4 to 5 percent of GDP raise worries about economic instabilities that can lead to rapid

inflation, a sharp drop in the dollar, higher interest rates and falling standards of living The U.S.

government is a particularly large borrower on world markets. It has turned from a creditor to a debtor

over just a few years. From March 2001 to September 2005, foreign lenders financed 81 percent of new

treasury issues. The fear is that eventually investors will bring their money elsewhere, thus forcing higher

interest rates and potentially causing a sharp decline in the dollar, higher inflation, and declining

economic growth.

Weller also notes several important issues with the recently released figures, including: Even if the petroleum related deficit had stayed the same, the overall deficit would have reached recordlevels. So, dont blame oil for this problem.

Another part of the story is the loss of U.S. competitiveness. The biggest indicator is the sharp increasein the trade deficit in advanced technology products. It grew by 20.4 percent, somewhat faster than the

overall trade deficit, which increased by 17.5 percent. The biggest challenges are in information and

communications technology and electronicsareas especially prone to the recent high-tech off-shoring crisis.Despite the out-of-control trade deficit, the Bush administration keeps pushing with NAFTA-style deals that willonly make matters worse. While negotiations continue this week to potentially add on the labor rights-freecountries of Colombia and Ecuador to make an Andean Free Trade Agreement (AFTA), there is a very goodchance that Congress could vote this Spring a bilateral U.S.-Peru deal.The Peru pact is the exact same failed NAFTA and CAFTA model guaranteed to cost more jobs in middle-classAmerica and give corporations more rights. After the painful 1-vote margin on the CAFTA vote, if we speak uploudly now, we can assure that this agreement is tanked.Call Congress today to help beat back further NAFTAexpansion.
http://www.census.gov/indicator/www/ustrade.htmlhttp://www.census.gov/indicator/www/ustrade.htmlhttp://www.census.gov/indicator/www/ustrade.htmlhttp://action.citizen.org/campaign.jsp?campaign_KEY=2535http://action.citizen.org/campaign.jsp?campaign_KEY=2535http://action.citizen.org/campaign.jsp?campaign_KEY=2535http://www.census.gov/indicator/www/ustrade.htmlhttp://action.citizen.org/campaign.jsp?campaign_KEY=2535http://action.citizen.org/campaign.jsp?campaign_KEY=2535


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No internal link- A trade deficit is a symptom, not a cause, of growth and high employment

ratesGriswold, Associate Director, 01. [Daniel T., AMERICA'S RECORD TRADE DEFICIT: A Reflection ofEconomic Strength, USA Today, May 2001. Accessed 7/2/08 fromhttp://findarticles.com/p/articles/mi_m1272/is_2672_129/ai_74572239/pg_4?tag=artBody;col1]

GDP growth. During years of rising deficits, the growth of real GDP averaged 3.5% per year, comparedto 2.6% during years of shrinking deficits. In other words, the economy typically grows more than one-

third faster in years in which the trade deficit expands than in those in which it shrinks. The causation,

of course, flows from growth to the trade deficit. In a more rapidly growing economy, demand for

investment capital and imports increase. Rising incomes stoke demand for imports, and an inflow offoreign capital provides the means to help pay for them.Employment. The story of jobs is much the same. During years of "worsening" trade deficits, theunemployment rate has, on average, fallen by 0.4%. During years of "improving" deficits, it has, on average,risen by the same amount. This is not to say that a rising trade deficit causes unemployment to fall.Causation works in the other direction: Expanding payrolls boost total domestic income, which, in

turn, raises demand for imports. Once again, the protectionists have it wrong --imports do not destroy

jobs; job creation fuels demand for imports.


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Trade deficit steals high-wage jobs and depress the manufacturing sector

Scott, Ph.D. Economics, 1999 (Robert E., The U.S. Trade Deficit; Are We Trading Away Our Future?,Economic Policy Institution,http://www.epi.org/content.cfm/webfeatures_viewpoints_tradetestimony, accessedonline 7-13-08)

Since the 1970s the U.S. moved from a trade surplus to a deficit position, as Europe and Japan began tocompete effectively with the U.S. in a range of industries. There are many ways in which trade hasinjured U.S. workers since then. First, deterioration in the trade balance (the difference betweenexports, which create jobs, and imports, which eliminate domestic employment) has reduced employment,especially in manufacturing and other industries producing traded goods The trade surplus of the 1960s wastransformed into a deficit that reached 2.9% of GDP in 1998, as shown in Figure 1. This deficit will growrapidly in the future as a result of the continuing global financial crisis. Although financial markets arebeginning to recover throughout the world, the real economies of many developing countries and Japanremain mired in recessions. For example, reliable private sector reports show that unemployment in SaoPaulo, Brazil currently exceeds 20%. The growth in the trade deficit over the past two decades hasdestroyed millions of high-wage, high skilled manufacturing jobs in the U.S., and pushed workers into

other sectors where wages are lower, such as restaurants and health service industries. When I appeared

before this committee last spring, I summarized EPI forecasts that the Asia Crisis would lead to theelimination of one million jobs in the U.S., with most of the losses concentrated in the manufacturing sectorsof the economy (Scott and Rothstein 1998). These job losses have begun to materialize, despite thecontinuing boom in the rest of the economy. The U.S. has lost nearly 500,000 manufacturing jobs sinceMarch of 1998, due to the impact of the rising trade deficit. [2] The IMF recently forecast that the U.S.current account deficit (the broadest measure of the trade balance) would reach nearly $300 billion in 1999,exceeding 3.5 percent of GDP for the first time in the post-war era (IMF 1999). The U.S. can expect to loseanother 400,000 to 500,000 manufacturing jobs as a result, even if the economy continues to expand at itscurrent pace in 1999. Trade deficits also have a direct impact on wages, especially for non-collegeeducated workers, who make up three-quarters of the U.S. labor force. The other line in Figure 1 showsthat the average real wage for U.S. production workers peaked in 1978, declining more or less steadilythrough 1996. Real wages have begun to increase in the past 3 years. However, the small upturn increasedreal wages by only 4.5%, not nearly enough to offset a decline of more than 11% since the 1978, nor to return

workers to the path of steadily rising wages they experienced from 1950 through 1973. What is responsiblefor the decline in U.S. wages? Trade is certainly one of the most significant causes, because it hurts workersin several ways. First, the steady growth in our trade deficits over the past two decades has eliminatedmillions of U.S. manufacturing jobs. As we showed in another recent EPI report, trade eliminated 2.4million jobs in the U.S between 1979 and 1994 (Scott, Lee and Schmitt 1997). Growing trade deficitseliminate good jobs and reduce average wages in the economy. Since then, many more jobs have beenlost to NAFTA and other sources of our trade problems, including China, and recently, Europe. Thesecond way in which trade depresses wages is through the growth in imports from low wage countries. Ifthe prices of these products fall, it puts downward pressure on prices in the U.S. Domestic firms are forced tocut wages or otherwise reduce their own labor costs in response. A third way in which globalizationdepresses wages is through foreign direct investment. When U.S. firms move plants to low wage countries,as they have done at an increasing rate in recent years, it has a chilling affect on the labor market. The merethreat of plant closure is often sufficient to extract wage cuts from workers. This tactic has also been used

with increasing frequency in the 1990s and is effective even when plants don't move. Most economists nowacknowledge that trade is responsible for 20 to 25 percent of the increase in income inequality which hasoccurred in the U.S. over the past two decades. However, existing research can only explain about half of thechange in income inequality. Therefore, trade is responsible for about 40% of the explainable share ofincreased income inequality. The rest is due to forces such as declining unionization, and inflation-inducederosion in the value of the minimum wage.
http://www.epi.org/content.cfm/economist#scotthttp://www.epi.org/content.cfm/webfeatures_viewpoints_tradetestimonyhttp://www.epi.org/content.cfm/webfeatures_viewpoints_tradetestimonyhttp://www.epi.org/content.cfm/economist#scotthttp://www.epi.org/content.cfm/webfeatures_viewpoints_tradetestimony


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AT Unemployment 4/5

Trade deficit creates lower wages and unemploymentCrutsinger, 2008 (Martin, 4-11-08, Increase in Trade Deficit Raises Concern, The Washington Post,http://money.netscape.cnn.com/pf/story.jsp?floc=FF-APO-

1311&idq=/ff/story/0001%2F20080411%2F0026934589.htm&sc=1311, 7-13-08)The Commerce Department reported Thursday that the deficit between what the U.S. imports and what itsells abroad rose 5.7 percent to $62.3 billion in February, the highest level since November.Imports of goods and services shot up 3.1 percent to an all-time high of $213.7 billion, reflecting a big surgein imports of foreign cars. Exports also set a record, rising by 2 percent to $151.4 billion, reflecting stronggains in the sale of American-made heavy machinery, computers and farm goods.Critics claimed that the sharp rise in the trade deficit showed the continued failure of President Bush'spolicies emphasizing negotiating free trade agreements as a way to promote U.S. jobs by boosting

exports.With businesses cutting 80,000 jobs last month, the most in five years, and the country likely in a

recession, the debate over trade is expected to intensify in this election year. Republicans contend Bush'spolicies reflect the reality of the new global economy, while Democrats argue that the president hascontributed to the loss of more than 3 million manufacturing jobs since he took office.

``Wages are falling and the middle class is shrinking because of trade deficits,'' James Hoffa, president ofthe International Brotherhood of Teamsters, said Thursday at the end of a three-day convoy acrossPennsylvania aimed at highlighting the failings of Bush's trade policies.
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Deficit leads to out sourcing

Sanders,U.S. Senator, 2007(Bernie, May 17,BuzzFlash, http://www.buzzflash.com/articles/alerts/244, accessed 7-5-08)WASHINGTON, May 17 - Senator Bernie Sanders voiced concern about the course of international tradenegotiations between some in Congress and the White House. He joined a key block of senators at a pressconference on Capitol Hill, where Sanders said:"Any football team with a losing record year after year, will fire its head coach and develop a new strategy forsuccess. But, when it comes to our trade policy, when we keep losing more manufacturing and informationtechnology jobs and when our trade deficits continue to break records, nothing changes. The more our tradedeficit expands; the more companies that ship our jobs abroad; the more bad trade deals we get."Year after year after year, we have seen the results of unfettered free trade. And, year after year afteryear we keep losing. Our overall trade deficit last year was over $763 billion, including a $232 billion trade

deficit with China. In fact, we have had over 30 consecutive years of trade deficits since Congress first

granted Fast Track authority to the Executive Branch in 1975."Over the past six years, we have lost over three million manufacturing jobs. According to the Economic PolicyInstitute, our trade deficit with China since the passage of PNTR in 2000 led to the loss of 1.8 million U.S.

jobs; and our trade deficits with Mexico and Canada since the passage of NAFTA in 1994 led to the loss ofover one million U.S. jobs.

"Not only is manufacturing in a state of collapse, we have also lost 644,000 well-paying information sector jobsfrom January of 2001 to January of 2006 -- representing 17.4 percent of the workforce in that sector."Despite huge increases in worker productivity, the average American worker is only making a nickel more perhour today than was the case in 1973; and real income for the bottom 90 percent of American workers hasactually gone down over the past 30 years."As long as American companies can hire workers in China for 50-cents an hour; or 89-cents an hour in Panama;or 91-cents an hour in Peru, wages in the United States will continue to go down, and good-paying jobs willcontinue to be outsourced. That is an issue that Congress must address."As someone who was around for NAFTA and PNTR with China, I can tell you that these policies have beenpushed by multi-national corporations with one goal in mind: increase profits by lowering the living standards ofAmerican workers. Millions of American workers are suffering as a result.

"The attitude of corporate America toward the working class as they move to China, Mexico, India and othercheap labor markets is a national disgrace. Many of the corporations who have been made great by Americanworkers, consumers and from the corporate welfare they are receiving from the federal government are showingtheir thanks by shipping American jobs abroad and reducing the salaries, benefits and pensions of millions ofothers."Let me quote from John Chambers, the CEO of Cisco, who said a few years ago: 'China will become the ITcenter of the world, and we can have a healthy discussion about whether that's in 2020 or 2040,' as he is trying to'outline an entire strategy of becoming a Chinese company.'"Jeffrey Immelt, the CEO of General Electric, has said, When I am talking to GE managers, I talk China, China,China, China, China. You need to be there. You need to change the way people talk about it and how they getthere. I am a nut on China. Outsourcing from China is going to grow to $5 billion.'"Michael Marks, the CEO of Flextronics, the largest electronics manufacturer in the world making products forHewlett-Packard, Dell, Motorola and Xerox, has said that, 'Outsourcing is good for America,' while telling

BusinessWeek that 'all electronics hardware manufacturing [at his company] is going to China.'"And, Steven Anthony Ballmer, the CEO of Microsoft has said: 'Lower the pay of U.S. professionals to $50,000,and it won't make sense for employers to put up with the hassle of doing business in developing countries.'"If we don't reverse our unfettered free trade policy, our children and grandchildren will have a lower standard ofliving than we do."We cannot allow that to happen. Now is the time to reverse this policy and tell American corporations loud andclear: if they want to continue receiving all of the benefits of being an American company, they better startinvesting in America and creating jobs in this country instead of moving to China and exporting our jobs

abroad."
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## Trade Deficit Good ##


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Trade Deficit Good 1NC (1/2)

A. Oil imports are the biggest cause of the rising trade deficit- prices make it the highest it

has ever been()Crustsinger, AP Economics Writer 2008,

(Martin, June 10, 2008 http://abcnews.go.com/print?id=5036397)The trade deficit soared to the highest level in more than a year as an improvement in exports wasswamped by record-high levels of imported crude oil. The deficit with China also rose sharply.The gap between what the nation imports and what it sells abroad rose by 7.8 percent in April to $60.9billion, the Commerce Department reported Tuesday. It was the largest imbalance since March 2007.The higher deficit was driven by a $4.3 billion increase in crude oil imports, which jumped to a record

$29.3 billion in April, as the average per-barrel price rose to an all-time high of $96.81.

If the price of crude had instead been at $60 per barrel, about where it was a year ago, the trade deficit

would have been $11 billion lower in April. Analysts cautioned the deficit will widen further in coming

months, given that oil is now trading above $130 per barrel.

B. Plan lowers oil prices- a move away from oil dependence leads to a flood of cheap oil

Maugeri PhD in international political economy. ENI SPA's group senior vice-president (director) of corporatestrategies and international relations '03Leonardo, Oil and Gas Journal"Time to debunk mythical links between oil and politics" December 15 2003.Proquest.com Accessed 7/2/08

Western countries have been historically unable to sustain a long-term foreign policy designed aroundenergy objectives, which vanish once prices drop and often conflict with broader diplomatic goals.Moreover, history has proven -- even without taking ethics into account -- that it is impossible to exert long-lasting control over Middle Eastern oil countries because of the unmanageable chain reactions set in motionby exerting foreign influence in such a sensitive environment.Yet history has also shown major oil-producing countries that they are vulnerable to future price dropsif alternative energy sources are developed in response to fears of rising energy prices. Given the full

range of contrasting forces at play in any oil scenario, the wisest approach is simply to allow it to find

its own equilibrium.

C. The high US trade deficit is the engine powering the global economyChandrasekhar & Ghosh, International Development Economics Associates, 08.[CP and Jayati, Oil Pricesand the US Dollar, networkidea.org, March 14, 2008. Accessed 7/2/08http://www.networkideas.org/news/mar2008/news14_Oil_Prices.htm]

There is a problem in all this, however the problem of finding an alternative engine for the global

economy, and source of demand for world exports, if the US economy stops playing this role. Theproblem may not be so severe for oil-exporting countries, since they are likely to face increasing worlddemand and rising prices for some time in future.But for other countries, especially oil-importing developing countries, this combination of high oil

prices and slowing US demand may well be economically devastating. This may explain why there has

been only a marginal shift out of holding US dollar reserves. Between the first quarter of 2004 and the lastquarter of 2007, the share of dollars in global foreign exchange reserves fell slightly from 67.5 per cent to63.7 per cent, and this is probably substantially due to the effect of the dollar devaluation itself.


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Trade deficit Good 1NC (2/2)

D. Global economic collapse causes extinctionBearden, Fellow Emeritus, Alpha Foundation's Institute for Advanced Study (AIAS), 00. [T.E., The UnnecessaryEnergy Crisis: How to Solve It Quickly, zpower.com, June 12, 2000. Accessed 7/3/08http://www.zpower.com/ge/documents/ZPEPaper_TheUnnecessaryEnergyCrisisHowToSolveItQuickly.pdf]

History bears out that desperate nations take desperate actions. Prior to the final economic collapse, thestress on nations will have increased the intensity and number of their conflicts, to the point where thearsenals ofweapons of mass destruction (WMD) now possessed by some 25 nations, are almost certain tobe released. As an example, suppose a starving North Korea {2} launches nuclear weapons upon Japan andSouth Korea, including U.S. forces there, in a spasmodic suicidal response. Or suppose a desperate China whose long range nuclear missiles can reach the United States attacks Taiwan. In addition to immediateresponses, the mutual treaties involved in such scenarios will quickly draw other nations into the conflict,escalating it significantly. Strategic nuclear studies have shown for decades that, under such extreme stressconditions, once a few nukes are launched, adversaries and potential adversaries are then compelled to launchon perception of preparations by one's adversary. The real legacy of the MAD concept is this side of theMAD coin that is almost never discussed. Without effective defense, the only chance a nation has to surviveat all, is to launch immediate full-bore pre-emptive strikes and try to take out its perceived foes as rapidly andmassively as possible. As the studies showed, rapid escalation to full WMD exchange occurs, with a great

percent of the WMD arsenals being unleashed. The resulting great Armageddon will destroy civilizationas we know it, and perhaps most ofthe biosphere, at least for many decades.


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Turns Case: Alternative Energy

A. Turn- A high trade deficit is necessary for investment in new technologies- reducing the

deficit prevents long-term solvencyGriswold, Associate Director, Center for Trade Policy Studies at Cato, 99. [Daniel T., The U.S. Trade Deficit: ASign of Good Times, testimony before the Trade Deficit Review Commission, August 19, 1999. Accessed 7/2/08from http://www.cato.org/testimony/ct-dg081999.html]

Without a trade deficit, Americans could not import the capital we need to finance our rising level of

investment in plants and new equipment, including the latest computertechnology. The sameappreciating dollar that expands the trade deficit helps keep a lid on inflation while lower import

prices raise the real wages of the vast majority of American workers.When the underlying causes of the trade deficit are understood, it should become clear that the biggestthreat to our economy is not the deficit itself, but what politicians might do in a misguided mission to

shrink it.

B. Turn- Liquidity caused by high oil prices allows developing nations to transition to non-fossilfuel-based economiesMcKillop, Internationall Associationn of Energy Economists, 04. [Andrew, CHEAP OIL MYTHS AND ENERGYTRANSITION, policypete.com, 2004. http://policypete.com/Misc/temp%20-%20CHEAP%20OIL%20MYTH%20AND%20EN%20TRANS.htm]

Greater liquidity in the world economy, aided by higher oil, gas, gold and other real resource prices, withrelatively low interest rates can enable poorer countries to break free from their indebtedness to the

Norths financial institutions, have real freedom of economic policy choices, and avoid development

strategies entraining total dependence on fossil fuel-based economic structures and systems. Theirexperience of the Neoliberal 1980s should give them reason to consider more autonomous orautarchicdomestic development as a better choice than pursuing the impossible strategy of Globalization. Victims ofthis, like Argentina and a string of African countries, are there to provide concrete examples of what thisillusory policy does to the economy, the environment and to the finances of weaker countries, as well as togeneral human wellbeing in those countries.
http://policypete.com/Misc/temp%20-%20CHEAP%20OIL%20MYTH%20AND%20EN%20TRANS.htmhttp://policypete.com/Misc/temp%20-%20CHEAP%20OIL%20MYTH%20AND%20EN%20TRANS.htmhttp://policypete.com/Misc/temp%20-%20CHEAP%20OIL%20MYTH%20AND%20EN%20TRANS.htmhttp://policypete.com/Misc/temp%20-%20CHEAP%20OIL%20MYTH%20AND%20EN%20TRANS.htm


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Foreign Direct Investment

A. High oil prices result in more FDI in two ways- more US dollars for oil consumers andexporters, both of which are funneled into the USChandrasekhar & Ghosh, International Development Economics Associates, 08.[CP and Jayati, Oil Prices and theUS Dollar, networkidea.org, March 14, 2008. Accessed 7/2/08http://www.networkideas.org/news/mar2008/news14_Oil_Prices.htm]

Most of the world oil trade has operated and continues to operate in dollars, even when the US is not

the trade partner. Oil prices are defined in dollars for most oil exporters. As a result, oil importing

countries also pay in dollars. The oil-exporting countries accumulate dollar reserves, which have been

preferentially invested back in the US because of the zero currency risk involved in this. Indeed, thisrecycling of petrodollars has been very significant as a source of finance for US trade deficits in severalperiods, including in recent times. Other countries also hold dollars for the purpose of future oil purchase.The dramatic increase in the price of oil in the past few years could be argued to have accentuated this

tendency. As Chart 1 indicates, oil prices have increased dramatically in dollar terms especially from 2003,going up by nearly 2.5 times between 2003 and 2007. This has obviously contributed very significantly tothe wealth of oil exporters, and allowed them to generate balance of payments surpluses and build

foreign exchange reserves, which have then been invested dominantly in dollar assets in US markets.

B. FDI is the single greatest way to prevent conflictRosecrance and Thompson, professors of political science at UCLA, 03. [Richard and Peter, TRADE,FOREIGN INVESTMENT, AND SECURITY, UCLA Annual Review of Political Science, March 6, 2003.P.37798.]

Trade interdependence does not always reduce hostility between states. It depends on whether the

trade represents vulnerability or sensitivity interdependence. Portfolio investment also does not representa tie that binds politically. Even more important, foreign direct investment (FDI) represents a link that iscostly (and timeconsuming) to break. Thus, FDIlinks between countries are more likely to reduce conflictthan trading links. Evidence shows that symmetrical FDI is the most stable guarantor of low conflict

between countries. One factor generating conflict may be that scarce factors of production are in politicalcommand. Abundant factors, now more generally in power among developed states, may be partlyresponsible for the diminishment of conflict among these states in recent years.


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Foreign Direct Investment Good

FDI good- employment and growthPryce, US representative from Ohio, 06. [Deborah, CFIUS AND THE ROLE OF FOREIGN DIRECTINVESTMENT IN THE UNITED STATES, Hearing before the subcommittee on domestic and internationalmonetary policy, trade, and technology, Apr 12, 2006. Accessed 7/3/08 http://frwebgate.access.gpo.gov/cgi-

bin/getdoc.cgi?dbname=109_house_hearings&docid=f:30540.pdf]At a time when the rest of the world is moving forward, some here in Congress are talking of taking a

step back. Congress has no greater obligation than to protect our homeland. Our national security isparamount above all else, but we cannot let our national security concerns morph into economicprotectionism that views foreign investment as inherently bad. Im concerned that Congresss quick

and politically heated reaction to a disappointing misstep by our Administration will lead to a decrease

in international trade and foreign investment. In Ohio, we have seen the benefits of welcoming

companies like Siemens, Sodexho, Honda, Lexus, Nexus, and many otherglobal companies. Honda ofAmerican Manufacturing, a U.S. subsidiary of the Japanese-based Honda Motor Corporation, has become thelargest auto producer in Ohio. Honda began United States production in 1979, initially investing $35 millionin Marysville, Ohio. Honda announced a new $123 million paint facility in Marysville, and to date, hasinvested $6.3 billion in my State.

Hondas North American plants purchased more than $6.5 billion in parts from 150 Ohio suppliers in 2005

alone. In 2004, Honda produced nearly 645,000 Accords, Civics, Elements, and Acuras in its Ohio facilities.Itemploys 8,500 people in my district alone. That is one good example of foreign investment in thiscountry.

When a foreign company looks to invest in the United States, they are looking to grow their business,

and that equals growing jobs in this country. A Wall Street Journal report on April 21st said that in anannual report on its survey of multinational corporations, the U.S. Department of Commerce said foreignfirms other than banks doing business in the United States employed nearly 5.1 million employees in2004, slightly less than 1 of every 20 workers in our private sector.

FDI good- US leadershipPryce, US representative from Ohio, 06. [Deborah, CFIUS AND THE ROLE OF FOREIGN DIRECTINVESTMENT IN THE UNITED STATES, Hearing before the subcommittee on domestic and internationalmonetary policy, trade, and technology, Apr 12, 2006. Accessed 7/3/08 http://frwebgate.access.gpo.gov/cgi-

bin/getdoc.cgi?dbname=109_house_hearings&docid=f:30540.pdf]First, the vast majority of foreign acquisitions have no bearing on U.S. national security.Rather, they playa positive role and make significant and increasing contributions to our economy by creating millions

of jobs by American workers and for American workers and enhancing our competitive position in the

global marketplace.Second, successive Administrations of both political parties have fordecades worked aggressively to establish a global rules-based system founded upon theprinciples of open investment and free trade. This continuity in policy has enabled America toprosper, assert a leadership role in the global economy, and to advance our broader foreign policy and

strategic interests.


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Growth 1/2

Deficit Good for economic growthGriswold, Associate Director, Center for Trade Policy Studies, 05(Daniel T., CATO Institute, January 11, http://www.freetrade.org/node/108 Accessed 7-2-08)

Worries persist that the record U.S. trade deficit is weighing down the nation'

trade - symonds

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