The SMA unveils a monetary policy-based approach to expanding world trade

Jan 01, 2010 | 04:07 AM | THOMAS A. DANJCZEK

Some sources claim that the actions of the United States in the global economy risk a return to a destructive Smoot-Hawley trade policy. These sources aren't credible. If, indeed, a few fringe observers are advocating policies that will trigger a trade war, they will receive little serious policy attention.

Unsubstantiated alarms of this kind should be ignored in favor of a rational discussion of how policy can be shaped to secure U.S. national interest, integrating it into a global policy that will expand, rather than contract, world trade.

The United States has a huge stake in the adoption of trade policies that expand world trade—but trade that is based on internationally accepted rules designed to support natural comparative advantage rather than trade conducted through mercantilist policies that produce predatory trade surpluses and unsustainable trade deficits.

China is maintaining its currency at a low level against the dollar, consistently ignoring pressure from the International Monetary Fund (IMF) and key Asian nations to allow its currency to appreciate through market forces against other currencies. Artificial suppression of the value of China's currency and government subsidies for exports are a form of protectionism on a scale not previously experienced in world commerce.....