Free Trade Discussion Reading Questions

Class discussion on the following readings will be Wednesday September 12. You have been assigned to the following 4 groups. Each group is assigned to answer the reading questions for their assigned readings (each group has two). Please bring to class a hard copy of your answers to class (or email them to me by 12:15 p.m.) on September 12 – I will collect at the end of class. You may edit this document as needed to create space for your answers.

Note, while you are assigned only 2 readings (+ the one you find on your own), I highly encourage you to read them all!

Group 1: Matt Beane, Katie Brombach, John Corazzo, Claire Dufault, Shea Gerrety

Group 2: Jake Grube, Arlette Huerta-Tapia, Sara Huettner, Cameron Johnson, Cullen Jones

Group 3: Katie Kaardal, Morgan Kaardal, Taylor Kamano, Collin Kiley, Joseph Lam

Group 4: Mohamed Mahamud, Mackenzie Melton, Cooper Marrow, Caleb Pavelka, Diana Williams

Group 1

  • Find and read onecurrent news article about free trade.
  1. Article citation:
  2. Bring article to class discussion (on laptop or hardcopy)
  • The Economist (2016) “Trade at what price?” The Economist
  1. As of April 2016, how do Trump, Sanders, Clinton and Obama feel about free trade?
  2. What happened to US trade with Mexico between 1993 and 2013? What were the causes?
  3. What happened in 2001 with China that changed the flow of trade with the U.S?
  4. What do many blame for the source of the U.S. trade imbalance with China? What is the role of savings?
  5. How should we feel about free trade with China? List those who benefit in the U.S. List those who do not.
  6. What does an increase in the skilled-worker wage premium suggest? What is free trade estimated to do to wages of unskilled workers?
  7. What is the estimated impact of trade on jobs in the U.S.? What else, besides trade, plays a role in job loss?
  8. What does Rodrik argue that trade (globalization in general) does to low skill workers?
  9. What is trade-adjustment assistance (TAA)? Does it work well?
  10. In reflecting upon the free trade movements of the 1990s what does the author argue about the cost of trade? What does the author argue about protectionism? What do you think?
  11. The TPP is the Trans-Pacific-Partnership trade agreement and the other trade agreement mentioned is the Transatlantic Trade and Investment Partnership. Neither have been signed. If you don’t know what these are yet – do a quick internet search. What do the authors argue are will be the benefits? Costs?
  12. What is the authors point in this article about the cost of trade? What does he mean when he says it is concentrated? How might that be a challenge from a policy perspective?
  • Irwin, Douglas (2015) Free Trade Under Fire, Chapter 4 Trade, Jobs and Income Distribution. The following sections: Trade and the Manufacturing Sector and The China Shock
  1. P. 124-125 (Fig. 4.3, 4.4) What happened to manufacturing output/jobs between 1970-2000? Contrast this to what happened to manufacturing output/jobs between 200-2014.
  2. P. 126 in the meantime, what has happened to the service sector?
  3. P. 129 (Fig. 4.6) When were the peaks of imports from Japan, Mexico and China. Why did these peaks occur?
  4. P. 130 Why does the author suggest that the gross value of imports from China into the U.S. are overstated?
  5. P. 131-132 What do studies suggest has been the impact of Chinese manufactured imports on U.S. manufacturing workers?
  6. P. 132 What does the author argue is wrong with the Economic Policy Institute study which suggests 3.2 million jobs loss due to the trade deficit with China?

Group 2

  • Find and read onecurrent news article about free trade.
  1. Article citation:
  2. Bring article to class discussion (on laptop or hardcopy)
  • Rodrik, Danni(2016) “Straight talk on trade.”Project Syndicate
  1. In Rodrik’s book Has Globalization Gone Too Far? Rodrik argues “too much globalization would deepen societal cleavages, exacerbate distributional problems, and undermine domestic social bargains”. What do you think of this claim? If you are inclined to agree, provide a specific example of how you think trade may have impacted the above factors.
  2. What do you think is in the “narrow, selfish agenda” of the protectionists?
  3. Rodrik notes the premise that “barbarians” are on one side of the trade debate and “angels” are on the other. How well do you think this characterization fits the public’s view?
  4. What do you think is in the “narrow, selfish agenda” of the trade enthusiasts?
  5. Rodrick writes “it is now clear that the distributional impact of, say, the North American Free Trade Agreement or China’s entry into the World Trade Organization were significant for the most directly affected communities in the United States.” What do you think he means when he refers to “the most directly affected communities in the United States”?
  6. How may trade contribute to income inequality? What other factors contribute to inequality?
  7. What is “dumping” in the context of trade? Look it up, if you don’t know. Does the existence of dumping mean that all trade is “unfair trade”?
  8. What do you think? Have economists’ defense of free trade backfired?
  • Irwin, Douglas (2015) Free Trade Under Fire, Chapter 4 Trade, Jobs and Income Distribution. The following sections: Offshoring and Trade in Services and Trade and Wages
  1. P. 133 What does the author conclude about a weak vs. strong currency at the end of the section?
  2. P. 133 What is offshoring?
  3. P. 134 What does Blinder estimate? What does research suggest about the impact of offshoring on the U.S. labor market?
  4. P. 136 What does the author conclude about offshorable jobs?
  5. P. 137-138 (Fig. 4.8) what is the relationship between labor productivity and real wages between 1960-2000? What happened after the year 2000? Do we know why?
  6. P. 139 What does the author argue about the relationship between imports and high-wage jobs in the U.S.? Do you agree?
  7. P. 140 What does the author conclude to be the overall impact of trade on average U.S. wages? Do you agree?
  8. P. 141-142 What is the conclusion of Stolper and Samuelson?
  9. P 142 What is a wage premium? What population in the U.S. receives a wage premium and what factor does the author suggest is responsible for the rise in the wage premium among this population?
  10. P 145 The author argues that if trade even modestly contributed to wage inequality, those adversely affected are likely to oppose free trade. What does research suggest the impact of switching occupations may be? What may be the community impact?
  11. P. 146 The author notes that less educated workers who have lagged wages are also skeptical of the benefits of free trade. Does the author think we should “deal with their concerns”? Do you think we should deal with their concerns? If so, how?

Group 3

  • Find and read onecurrent news article about free trade.
  1. Article citation:
  2. Bring article to class discussion (on laptop or hardcopy)
  • Rodrik, Danni (2016) “A progressive logic of trade” Project Syndicate
  1. If you don’t know what the North American Free Trade Agreement (NAFTA) or Trans-Pacific Partnership (TPP) is yet, do a quick internet search.
  2. Which U.S. political candidates have opposed trade agreements?
  3. What are four grievances regarding free trade?
  4. Why do job losses from trade feel more unfair than job losses due to technological change?
  5. Rodrick raises the point that renegotiating free trade deals to better reflect the interests of America’s working class may run into opposition for those that support the world’s poorest. Why? Who does free trade benefit outside of the U.S.?
  6. What types of policies to less developed countries need to benefit from free trade (as with China and Vietnam)?
  7. Do developed countries need to have complete free trade with less developed countries (no tariffs) for the less developed countries to benefit?
  8. What does Rodrik argue need to be done regarding trade? Continue to encourage countries to reduce barriers in an exchange fashion? Or what instead? How?
  • Irwin, Douglas (2015) Free Trade Under Fire, Chapter 4 Trade, Jobs and Income Distribution. The following section: How Does Trade Affect Employment?
  1. P. 115. While trade does eliminate jobs, what else also works to decrease jobs in the U.S.?
  2. P. 115. Why does the author argue that quantifying the impact of trade on jobs is futile (pointless)?
  3. P. 116 What does the data suggest is the relationship between unemployment rates and imports?
  4. P. 117-118 (and Table 4.1) What factors contribute to changing labor market? What is the role of import competition? From these data, can we say anything about employment in import sensitive industries or specific industries in specific areas of the country?
  5. P. 119 In the author’s discussion about how we can be assured that the number of jobs lost to trade will be matched by the number of jobs created equal, is his response based on theory or facts? Do you believe him?
  6. P. 120. What was the impact of NAFTA in on jobs lost by 1998, four years after the agreement went into effect?
  7. P. 121 What was the impact of NAFTA on job gain?
  8. P. 121 What caused a surge of imports from Mexico to the U.S. in 1994? Briefly explain why.
  9. P. 122 What is argued to be the cause of a rise of U.S. unemployment between January 2008 and January 2010?
  10. P. 123-124 In the author’s discussion of the Trans-Pacific Partnership (TPP), what will the debate over jobs and trade be? Does the author believe it makes sense to talk about trade and total jobs?

Group 4

  • Find and read onecurrent news article about free trade.
  1. Article citation:
  2. Bring article to class discussion (on laptop or hardcopy)
  • Rodrik, Danni (2017) “Too Lake to Compensate Free Trade’s Losers” Project Syndicate
  1. What is the new consensus among the business and policy elites about how to address anti-globalization?
  2. What have economists long known about trade liberalization?
  3. What is meant by a welfare state?
  4. What does Rodrik suggest is a reason why opposition to trade has not been strong in Europe?
  5. As the US opened to trade with Mexico and China (among many other countries) in the1980s, did they also strengthen its welfare state? What happened to the Trade Adjustment Assistance (TAA) program in 1981? Did anything change in subsequent administrations?
  6. What is the time inconsistency problem with compensation for free trade losers?
  7. Rodrick argues it is too late to compensate losers. Do you agree? How would changing the rules of globalization make a difference?
  • Irwin, Douglas (2015) Free Trade Under Fire, Chapter 4 Trade, Jobs and Income Distribution. The following sections: Displaced Workers and Trade Adjustment Assistance
  1. P. 146-147 What are characteristics of displaced workers?
  2. P. 148- 149 Why do displaced workers from industries with increasing import competition have lower earning losses than other displaced workers? Why will displaced workers from import completion not be likely to find jobs in export-oriented industries? Why will they also not move geographically to search for a job? What does this mean for policy?
  3. P 149 The author raises the question of whether unemployed workers, due to trade, should receive more benefits that those who lose their job for other reasons. What do you think?
  4. P. 150-151 What is the TAA program? Briefly explain.
  5. P. 152-153 Why is TAA program not perfect?
  6. P. 153 What is wage insurance?