Well... This is probably an answer you're not going to like, but I'm going to share it anyway...
The imposition of tariffs is a very bad idea for several reasons:
1. Tariffs stifle innovation. Starting in the 1920s, Britain began imposing tarrifs on imported coal to protect the mining industry. One effect of this was to take away any incentive for the coal companies to invest in newer technologies that were being introduced by competing nations, and as a result the industry went into a tailspin from which it never recovered. The fact is, the marketplaces of today are far more interconnected then they were in the 19th century (which is why your analogy of the American steel industry is irrelevant). And in the global marketplace, tarrifs artificially reward market inefficiencies that always come back to bite the offending nation in the butt.
A perfect example of this in the 20th century is the economy of India. After achieving independence, the Indian government swiftly moved to slap tariffs on a variety of imported goods. Probably the most important of these was textiles. As a result, the Indian textile industry stagnated, as its antiquated production methods quickly fell behind those of other nations which did not employ a protectionist policy (Hong Kong, Singapore, etc.). Invariably, protection leads to another problem...
2. Subsidization. As industrial output declines because of the non-competitive rewards of tariffs, the need to protect jobs becomes a paramount concern for governments. This leads to government bail-outs for failing industries. It exacerbates the already dangerous trend toward business inefficiency, and constitutes a useless drag on public finances that could be spent to much greater effect in any number of other worthwhile areas.
3. With tariffs, you also get higher prices for consumer goods. In 2004 (to pander to the steelworker's vote) the Bush administration imposed tariffs on imported steel. He knew this was a direct violation of the US's obligations under the WTO, but did it because he knew the WTO would force him to rescind only after the elections. In the interim, however, the tariffs cost the automobile and construction industries billions of dollars, which were all passed on to consumers.
Bottom line, it isn't fair to punish the many for the sins of the few.
4. When nations impose tariffs, other nations retaliate. As stated, the international marketplace is totally interconnected, and it isn't rational to assume that a nation will allow its nation's economy to be harmed with impunity. As prices rise, economies experience downturns, and the tit-for-tat trade wars that erupt by tariffs result in the decline of productivity on a global scale.
You ask if "free trade means free labor." Of course not. But what you need to consider is that economies evolve. Like the song says, "One man's half-way up is another man's half-way down." You have to look at economic development in the same way. All too often, well intentioned people decry the seeming exploitation of workers in developing countries. They denounce the "Sweat Shops," and urge an end to this. But you need to understand the evolving nature of things.
The economic condition of the vast majority of these people is profoundly superior to the conditions of their parents and grandparents. You can't fairly compare conditions in Tanzania with those in Boston. You must look at where the Tanzanian people were, where they are now, and where they are clearly headed.
Please understand, the conditions that are present in many developing countries today are identical to those in the US at the turn of the 20th century. The American economy evolved beyond this -- and if given sufficient time so will the others. This is why, last year, the Tanzanian Minister for Trade and Industry went to Harvard to address students and faculty who were protesting working conditions in developing countries (and trying to get the university to divest from any industries with ties to these companies).
Her statement was bold. She said that countries like Tanzania need MORE of these companies (not fewer) because they provide a quantum increase in the standard of living for the people. And she was right. Economies are organic things; and like all living things, they start out small and get bigger -- they start out simple and become more complicated. Of course wages are substantially lower there -- they should be -- the standard of living is a tiny fraction of that in the US. But give them time -- they're growing.
Can the US compete? No. Not in the manufacturing world of unskilled labor. That ship has sailed (which is why it would be foolish and counter-productive to try and get it back through tariffs -- it's retrograde motion).
We call nations like Tanzania "Developing Nations," but that's a terrible misnomer. Every nation is a "developing nation" -- the US included. One NEVER reaches the point (I need to re-emphasize this with a vengeance -- ONE NEVER REACHES THE POINT OF BEING DEVELOPED -- period). To live is to change. And that which changes not, ceases to live. The United States, as a developing nation has to move beyond it's worn out notions of being the manufacturing base of the world, and reorient itself to the changes of a post-industrial society. America is doing this, and needs to continue. And that's another reason why tariffs are bad. They try to safeguard the past, when we will live the rest of our lives in the future. The idea behind protectionism is that we as a nation are now developed, and NOW what we have to do is protect and hold on to what we've got. Bad logic. Never works -- never will. As Bob Dylan so aptly put it, "he not busy being born is busy dying." We must all "renew."
You mentioned the DVD "The Corporation" in your question; and it saddens me. I give you my word, this is not sound economic theory. The producers of this film are not attempting to make a balanced, fair, and empirically valid argument -- their agenda is purely ideological. I don't know if you've ever seen it, but if you're interested in an extremely well done treatment of the issues you raise, I would strongly urge you to read the Pulitzer Prize winning book by Daniel Yergin and Joseph Stanislaw, entitled, "The Commanding Heights: The Battle for the World Economy." It has also been turned into a PBS series, and is available on DVD.
Hope this answer helps. Cheers, mate.
Answered By: Jack - 11/30/2006