Does it violate the WTO agreement?
The agreement between our trading partners requires elimination of tariffs and quotas on most (if not all) goods and services traded between them. However, this is not the case since U.S. tax payers do pay a tariff, a Reverse Tariff on imported trade deficit goods [2,7]. Therefore, any trade deficit violates free trade WTO policy!
Does it Violate Constitutional Law?
Violation No. 1: We have identified and verified a technicality with a constitutional lawyer [8], a violation on tax of interstate commerce. This constitutional law states (Article 1, Section 9, Clause 5): "No Tax or Duty shall be laid on articles exported from any State." The argument is then, U.S. taxpayers end up paying a "Reverse Tariff" [7] duty on moving imported trade deficit goods from state to state. In other words, U.S. citizens are paying an interstate Reverse Tariff duty. However, legal council has also cautioned [8], when constitutional law is violated that the courts may choose not to rule citing a "Political Question Doctrine," if the court feels "it is prudent not to interfere." The final counter argument is, mathematically we show there is a solution, that of equal trade which does not have these tax consequence. The constitution is here to protect us. Furthermore, a test case would get the attention of legislatures who would then be forced to act.
Violation No. 2: Another interesting possible constitutional violation is related to Article IV, Section IV of the U.S. Constitution, where the federal government has a required duty and obligation to remove foreign invaders from U.S. soil. One might interpret that the trade deficit allows for a foreign financial invasion. Foreigners must reinvest trade deficit profits in the U.S. due to the WTO currency agreement. Such reinvestments have led to excessive foreign ownership of U.S. business. In the last study on this subject we are aware of, a Grant Thornton report [2,3] found "total assets at foreign-owned companies increased 15 percent to $9.2 trillion in 2005 from $8 trillion a year earlier and was more than three times the 1996 total of $3 trillion. Foreign-owned assets totaled just $37 billion in 1971." This ownership has also only led to a deplorable 3.5 percent U.S. job creation [2,3]. Right now foreigners own $7.5 trillion more of us than we do of them made possible mostly by the trade deficit.
One interesting thing observed in our correlation study [1,2] was that if the trade deficit went to zero, the tax consequences (i.e. Reverse Tariff) would also diminish. This indicates that equal (i.e., balanced trade) would in fact be an excellent resolution to the trade deficit tax loss problem and is consistent with WTO policy. Historically, there was a proposal called the Balance of Trade Restoration Act of 2006 originally suggested by Warren Buffet. While this has been ignored by Congress, there is currently some effort to push a modified version of this proposal [9], which we support.
Summary
We feel if equal trade was implemented [9], it would not violate the WTO agreement, create millions of U.S. jobs, help pay off the National Debt, discourage currency manipulation and most other WTO violations, reduce separation of wealth, reduce housing and business failure rates, stop foreigners from buying up the U.S. and help assure America's future.
No country can long sustain large trade deficits without putting its economy at risk. This article is a call for legal action. Such an action is needed to force Congress to adopt strong and just trade reform in order to secure America's future.
References:
1. Trade Deficit's Reverse Tariff Increases the U.S. National Debt an 84% Correlation!, Dr. Alec Feinberg, August 19, 2010. http://economyincrisis.org/content/trade-deficit%E2%80%99s-reverse-tarif...
2. The Truth of the Modern Recession, Root Causes and Reliable Solutions (a not for profit book), by Dr. Alec Feinberg, Published by WE-Economy Press, 2009 (July 2010 update).
3. Biggest Threat to America's Future --The U.S. Free Trade Deficit, Dr. Alec Feinberg, June 14, 2010, http://economyincrisis.org/content/biggest-threat-americas-future-us-free-trade-deficit
4. U.S. Trade Deficits Rip-Off America and Its Workers, Kenneth Davis, July 27, 2010 http://www.economyincrisis.org/content/us-trade-deficits-rip-america-and-its-workers
5. Free Trade Doesn't Work: What Should Replace it and Why, by Ian Fletcher and published by the U.S. Business & Industry Council, 2010.
6. Petition may be found at CitizensForEqualTrade.org
7. Reverse Tariff - Economic Crisis Due to Free Trade's Flaw, Dr. Alec Feinberg, August 2, 2010, http://economyincrisis.org/content/reverse-tariff-economic-crisis-due-free-trades-flaw
8. Private communications with Wesley Oliver, Professor of Constitutional Law, Widener University, March 2010
9. Massive Failure On Jobs By America's Leadership, by Kenneth N. Davis, September 7 2010, click here
10. Good source for such articles is CPA's website www.TradeReform.org
11. Counterfeiting: Many Risks and Many Victims, Daniel Bukszpan13 Jul 2010, http://www.cnbc.com/id/38229835/Counterfeiting_Many_Risks_and_Many_Victims
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