More on free trade…

Yesterday, I was providing a plan for what would be a better way to handle international trade as an alternative to liberalizing it totally or returning to protectionism. In it, I was explaining that variable custom duties could mirror the trade gap between countries. Of course, these duties should be scaled in ways likely to force trading partners to seriously address any unbalance, but not so drastic that they would freeze all exchanges.

For instance, a product made in China should be burden with a U.S. duty proportional to the 375% represented by our trade gap with that country but not equal to it. It should be figured so it makes the item significantly more expensive, but not so much that it would totally prevent its importation. The rate should provide enough incentive for the country that sells more than it buys to import more from its counterpart. Likewise, a country like the USA that has a terrible trade balance with almost everyone should seriously examine what it must do to increase exports.

This may mean more added-value, totally new products or services, more innovative designs, lower production and usage costs, etc. This would go a long way to keep core industries and know-how from leaving a country and instead focus on innovation and quality to a much greater degree. Again, the plan that I propose is self-regulating and might take five years to a decade before it effectively starts working for the benefit of all trading partners, spurring true progress while tying the economic destiny of all stakeholders in more solid and equitable ways than is currently the case.