How Shipping Regs Hamper International Free Trade

Image: Grolltech

Image: Grolltech

Recently an acquaintance of mine described to me his job. From what I can tell, his job is to help people fill out bureaucratic paperwork for shipping goods to and from Canada (and I thinkĀ other nations). I was shocked by this: Don’t we have free trade with Canada?

Practically speaking, we don’t have free trade with any other nation; we have heavily regulated trade. Recently a friend of mine, Robert Anthony Peters, came to Denver to attend a freight conference; he helps run a shipping company in Arizona. He posted some remarks to Facebook about what he learned (republished here with permission; note that I have not independently verified his claims):

Main take away from the Freight Workshop: the US federal government has an even longer reach than most people realize. Export law verges on insanity. Its reach is further geographically and temporally than most would think. Did you know that if you send an email through your company server that is based in another country, it falls under export law? Did you know that if you sent an email to a foreign national in the US, it falls under export law? Did you know that if you shipped something outside the US, you are liable for its end use? That means, if you sent shoes to someone in Poland and for whatever reason, they were transmitted to Iran, you can be held liable for that. On top of this, every freight shipment that leaves the US must be intricately documented for every item for both US census purposes and foreign customs (yes, foreign governments are by and large even worse!) For example, you would have to record something like, adult male t shirt cotton polyester blend made in Mexico valued at $10. Imagine moving your house to another country and doing this for EVERY item! Of course, some may share my feelings that this is none of anyone’s business what you and another party may exchange. But there is a far greater, far more global issue at play.

Every regulation serves to reduce the amount of exchange that occurs. All compliance comes at a cost of time and money. The amount of paperwork that is generated and the number of people that are used in the process to identify, process, assess, and clear is myriad. All of this serves to create more difficulty and greater expense and will reduce the amount of trade that goes on. Even for Keynesians, there are implications, as less money will circulate. If free market economics is right about anything at all, it is that trade and exchange make all parties better off. We need more exchange, not less. That is why these regulations and the tariffs that accompany them are making us all poorer then we could be, yet another man-made tragedy from which the world suffers.