FILE: Mark Penn; Win McNamee/Getty Images

I must admit, I'm puzzled as to why it's supposed to be such a big deal that Hillary Clinton's chief strategist Mark Penn (right) met with Bogotá's ambassador to Washington about the controversial U.S.-Colombia Free Trade Agreement.

The key point to remember about this and other FTAs in Latin America is that they're much more about politics than they are about economics. Ninety percent of U.S. imports from Colombia have already been entering the United States without any tariff, thanks to prior agreements. Peterson Institute analyst Jeffrey J. Schott estimated in 2006 that any welfare gains (GDP boost) from a U.S.-Colombia FTA would be positive, but "relatively small" -- roughly half a percentage point for the Colombians, and a negligible amount for the United States. If anything, the agreement is about lowering Colombia's tariff barriers to U.S. goods, solidifying trade relations, and lowering the risk that President Álvaro Uribe's successor will have a different economic philosophy. So, claims by U.S. labor activists that the FTA would be bad for U.S. manufacturers are little more than dishonest fearmongering.

That said, I'm not on board with U.S. Trade Representative Susan Schwab's hyperbole, either. Can it really be that the dangling FTA, not the drug war, is the root of Latin America's problems today?

Leaders in the hemisphere and Latin America have said that the single most destabilizing factor in Latin America today may be the U.S. Congress's failure to ratify the Colombia Free Trade Agreement. That is more destabilizing today than anything that Colombia's neighbor Venezuela is doing or threatening to do— and that is saying a lot.

Barack Obama and Hillary Clinton may think they have their hands full with NAFTA, but just wait until it's time to renegotiate DSFTA, the Deep Space Free Trade Agreement. In the latest issue of Astropolitics, political scientist John Hickman thinks where no social scientist has thunk before in his new article, "Problems of Interplanetary and Interstellar Trade."

Hickman believes that interplanetary trade could be one of the primary economic drivers for space exploration in the future. The potential problems are by no means minor, however. First of all, the vast distances between solar systems would probably prohibit the transportation of tangible goods. (Though, as Hickman points out, transatlantic trade probably seemed just as fanciful to traders in renaissance Europe.) There may however be potential for trade in non-tangible goods such digital entertainment, or scientific information with newly discovered alien species. But even this is not without dilemmas that would give Austan Goolsbee a migraine.

How will we enforce contracts or copyright laws on a civilization 20 light-years away? How will we set up a banking system or transferable currency without any tangible goods to trade? How will we protect ourselves from strange new ideas and ideologies that may destroy the fabric of our society? Worst of all, how will we trade with a species that may not even have a concept of trade?

Economic exchange itself might be "alien" to the aliens. Members of an alien species may not experience the same intense sense of self that is exhibited in rationally self-interested economic exchange among humans. Instead, a collective identity could be dominant. Money might not exist and without it neither would complex markets or banking. If they do engage in economic exchange it might take a form akin to potlatch, the competitive gift-giving for status solely among members of the same tribe traditional among societies in Melanesia and the Pacific Northwest. Moreover an alien species might not live in separate societies and could thus have no conception of trade between different societies with different cultures.

Can we maintain our free-market values and still trade with these hippie space communists? Hickman proposes establishing a "solar system monetary union" or publicly administered "planetary clearinghouse" under which interplanetary merchants could operate. The good news is, even after discovering alien life, we would still need to decode their language and acquire a basic cultural understanding before we can even think about initiating trade. This should give us enough time to bone up on all 285 Ferengi Rules of Acquisition.

Travis Daub contributed to this post.

UPDATE: Tyler Cowen weighs in --

[R]eciprocal, tit-for-tat exchange would work just fine, provided that a) relativity did not slow down the exchange of information too much, and b) not too many Ohio voters watched that movie where the aliens send us their genetic information, embedded in an apparently innocuous transmission, and trick us into downloading those instructions and then cloning them en masse...  In other words, we probably cannot trade with aliens.

Chip Somodevilla/Getty Images

Barack Obama's campaign has been fighting reports that one of its economic advisors, University of Chicago Professor Austan Goolsbee (above), told Canadian officials what we all know anyway -- that Obama's rhetoric on NAFTA won't amount to much if the candidate wins in November. Goolsbee says a memo about his conversation with the Canadians mischaracterized what he said, but he agrees he told them this:

On NAFTA, Goolsbee suggested that Obama is less about fundamentally changing the agreement and more in favour of strengthening/clarifying language on labour mobility and environment and trying to establish these as more 'core' principles of the agreement."

So, is the Obama campaign now claiming that this "strengthening/clarifying language" is going to bring manufacturing jobs back to Ohio? Give me a break.

The Politico's Ben Smith blogs about the above anti-Obama mailer that's making the rounds and makes a good point:

The odd thing here is that both Clinton and Obama come from the pro-trade wing of the party. Both have, in less heated moments, defended free trade in theory, and neither wants to repeal Nafta.

But when in Ohio, you argue about who hates trade more.

Politicians pandering to voters? Shocking.

Toys. Pet food. Dumplings. None of these potentially dangerous products with Chinese components has really scared me thus far. But this LA Times story sent a chill down my spine:

The Food and Drug Administration is investigating whether an ingredient from China may be the source of problems with a blood thinner linked to hundreds of reports of severe allergic reactions and possibly several deaths. [...]

As with food ingredients, China in recent years has become a major exporter of active pharmaceutical ingredients. Medicine Economic News, citing China's customs statistics, reported that the nation's exports of heparin and its components totaled $57.8 million in the first half of 2007, a 13.7% increase from the same period a year earlier. The Guangzhou-based publication said 49 companies exported heparin and its ingredients.

Baxter announced Monday that it was suspending manufacture of multiple-dose vials of heparin. The injectable drug, which is derived from pig intestines, is used to prevent dangerous blood clots from forming during certain types of surgery, including heart bypass. Baxter accounts for about half the U.S. market for the drug.

Assuming the FDA's suspicions are confirmed, how many other commonly used drugs have ingredients made in China? We know there have been problems with fake anti-malaria pills and fake glycerin used in cough syrup. Anything else out there?

Delivering his victory speech last night, Barack Obama gave his usual spiel about the "Washington game," and then took aim at U.S. trade policies:

It's a game where trade deals like NAFTA ship jobs overseas and force parents to compete with their teenagers to work for minimum wage at Wal-Mart.

This is the highest-profile attack Obama has launched on this issue, and it comes ahead of primaries in Wisconsin and Ohio, two states where the Democratic base is very angry about trade. Obama's remarks are a preview of the critique he'll be launching against Hillary Clinton, whose husband pushed hard for NAFTA's passage over the objections of many in his own party. (Hillary has called for taking a second look at the treaty, and voted against a number of free-trade agreements in recent years.)

Ronaldo Schemidt/AFP/Getty Images

So, what about the factual claim? Has NAFTA shipped U.S. jobs overseas? Well, it doesn't make a lot of sense, since Mexico and Canada share land borders with the United States. But in the United States, there was never the "giant sucking sound" of jobs heading south that Ross Perot railed against. Most economists will tell you in general that technology has a lot more to do with lost manufacturing jobs than trade does.

As for NAFTA, it was intended primarily to help Mexico, and on that score it has been a mixed bag. The Mexican business community loves it; small farmers hate it (see the above photo). Berkeley economist Brad DeLong, a big NAFTA booster in the Clinton Treasury Department, discusses some of went wrong in this YouTube video from October 2006:

Mexico is now further behind the United States in relative terms than it was in 1992, and the distribution of income within Mexico has become much more unequal.... Perhaps we would have been better off advising Mexico in the 1990s to focus its attention on fixing its education system and cleaning up its public-sector corruption than in going for free trade with America. I'm still a believer in NAFTA, yes, but my belief is relatively shaky now.

Tyler Cowen, who strongly supports NAFTA, adds:

The more globalized parts of Mexico -- most of all the north -- have done extremely well since NAFTA passed. The biggest problems remain in the least globalized parts, most of all the south and big chunks of the interior.

PETER PARKS/AFP/Getty Images

Remember all the fuss earlier this year about contaminated food products coming from China? Well fear no more. At least, that's the word from the U.S. government. Earlier this week, U.S. and Chinese officials signed an agreement on food safety that will allow U.S. regulators to inspect Chinese food processing facilities and, they hope, keep unsafe products from reaching U.S. shores.

It sounds deliciously promising. That is, until you look at the plan's details.

As reported, the inspection regime does not cover all food products. The new inspection rules cover preserved foods, pet food, and fish. Increased inspections of meats or other fresh foods is apparently not in the cards. The U.S. Food and Drug Administration doesn't have the budget to keep up with such a demanding inspection regime. Currently, only 1 percent of imported food is inspected. Nor is the FDA's budget set to rise drastically: The agency is getting about $100 million next year above its current budget level of $1.5 billion. That increase barely keeps up with rising operational costs and is not nearly enough to cover all the new overseas inspections that need to be performed.

U.S. officials are quick to point out that the inspections are targeted at those products that pose the greatest risk, and the agreement leaves room for expansion in the types of products tested. Well, I feel better already. Now it seems like all I have to worry about is practically everything else labeled "Made in China."

Photo: ETIENNE ANSOTTE/AFP/Getty Images;
modified by FP

Relations between the United States and members of the European Union, by all accounts, have improved in recent years. French President Nicolas Sarkozy, in his recent speech to Congress, professed his outright "love" for America. Following Sarko's speech, President Bush and German Chancellor Angela Merkel had what was by most accounts an amicable meeting in Crawford. And relations with British PM Gordon Brown, while not as warm as those Bush had with former PM Tony Blair, are progressing.

Most attribute the improvement in U.S./Euro relations to Bush's departure from his "with us or against us" attitude surrounding the Iraq war. It also doesn't hurt that Gerhard Schröder and Jacques Chirac—no fans of the U.S. president—are no longer around.

But other, deeper factors might be at work. A new survey from the German Marshall Fund of the United States, released Wednesday morning, finds that majorities in America and Europe share many of the same economic worries—immigration, currency fluctuations, fear of the Chinese economy, and job losses due to globalization—and would "support a new initiative aimed at deepening transatlantic trade and investment." Interestingly, (non-British) Europeans feel even more threatened by China's rise than Americans do.

While we should always be wary of polls that support an organization's raison d'être, I do wonder what such an "initiative" would look like. Most likely, it would mean an expansion of existing trade and investment relationships—probably nothing as grandiose as Mitt Romney's proposal for a "Reagan Zone of Economic Freedom." But doesn't this also, on some level, sound like those polled favor a transatlantic partnership similar to the European Union? A U.S./EU trading block, perhaps?

I know this sounds far-fetched, and admittedly it is. But the European Union evolved into a trading block for many of same reasons cited by those polled: immigration, currency, competitiveness, and weak individual economies. Decades from now, when China has the most powerful economy in the world, will a similar union between the United States and Europe be the only way to stay competitive? Like I said, far-fetched. But 60 years ago, so was the European Union.

Millions of Westerners fear their jobs may be offshored as the Internet and cheap telephony make it easier for countries with abundant supplies of labor, such as India and China, to compete with Western service firms. The world is flattening, you might say, and it makes many people nervous.

So, should we be afraid that our jobs are all going to be sent to India? On the contrary, I see yet another opportunity for trade to give us what we want, whether it's extra leisure time or getting things done more efficiently. Thousands of ordinary Americans, for instance, are embracing the use of affordable "virtual personal assistants" (VPAs) in India via sites like GetFriday.com for such tasks as booking dinner reservations, helping the kids with their homework, or even playing "World of Warcraft."

And they love it. Take Michael Levy, a U.S. lawyer who employs a VPA in India. He relishes his new-found freedom: "You become lazy... It's just wonderful." And Web sites such as IwantaPA.com offer "empowerment" not only for independent professionals, but also for small to medium enterprises and large enterprises, 24/7, and without the burden of office space or paying out benefits. All for a third the price of regular PAs.

That said, having a VPA is not all gumdrops and lollipops. Two years ago, A. J. Jacobs of Esquire wrote a humorous account of his experience outsourcing his life to a number of VPAs in India, including a woman named Honey. Jacobs writes:

I THINK I'M in love with Honey. How can I not be? She makes my mother look unsupportive. Every day I get showered with compliments, many involving capital letters: "awesome Editor" and "Family Man." When I confess I'm a bit tired, she tells me, "You need rest. . . . Do not to overexert yourself." It's constant positive feedback, like phone sex without the moaning.

Sometimes the relentless admiration makes me feel a little awkward, perhaps like a viceroy in the British East India company. Another cucumber sandwich, Honey! And a Pimm's cup while you're at it! But then she calls me "brilliant" and I forget my guilt.

Sounds great, right? But Jacobs's story raises some interesting questions: Is employing a VPA in India to respond to your every whim a neo-imperial, exploitative phenomenon? (Jacobs did experience other pangs of guilt as he found himself making stranger demands simply because he could.) Or is it a genuine win-win transaction, where clients in the West make the most of their purchasing power while entrepreneurs in the East expand their markets?

The Wall Street Journal passes along a frightening statistic:

The latest Wall Street Journal/NBC News poll conducted earlier this month found that 60% of voters nationwide agreed with the statement that "foreign trade has been bad for the U.S. economy."

It's no surprise, then, that many politicians, especially Democratic presidential contenders, are starting to sound like old-school protectionists. Economists can cite chapter and verse as to why this astonishingly large majority of Americans is deeply, deeply wrong about trade. The basic argument is familiar: The benefits from trade (e.g. cheaper, better, and more varied products at Wal-Mart) are dispersed and hidden, while the losses (e.g. layoffs in textile mills in South Carolina) are far more concentrated and easier for people to see. But perhaps a little philosophy is in order. What is the real purpose of trade? As Russell Roberts put it in a recent Web exclusive for FP, we trade in order to buy things we want:

We don't export to create jobs. We export so we can have money to buy the stuff that's hard for us to make—or at least hard for us to make as cheaply. We export because that's the only way to get imports. If people would just give us stuff, then we wouldn't have to export. But the world doesn't work that way.

Read the whole thing, especially if you're on the fence about trade.

But what about how Chinese and Indian workers are pushing down wages, you might ask? In the same WSJ article mentioned above, another FP contributor, former Secretary of Labor Robert Reich, has an answer:

The truth is that trade is good for the U.S. but that some people are burdened by it far more than others. We've got to make them all winners, but you don't make them winners by attacking trade," he says.

Right on. 

DAVID MCNEW/Getty Images News

I see that Democratic presidential candidate John Edwards is now taking potshots at the U.S.-Peru trade agreement that is now going through Congress and due to hit the Senate in November. Speaking on Saturday in Newton, Iowa, Edwards summed up his reasons for opposing the deal:

In short, this agreement does not meet my standard of putting American workers and communities first, ahead of the interests of the big multinational corporations, which for too long have rigged our trade policies for themselves."

This is his big strategy for victory in Iowa? As FP documented in June, bilateral trade between Peru and the United States is small potatoes: barely $2.5 billion in 2005. And most of that trade, $2 billion, was exports from the United States to Peru.

In fact, the dirty secret about the new agreement is that it would benefit U.S. exporters the most, as this summary of the deal (pdf) from the U.S. Trade Representative's office makes clear:

Eighty percent of U.S. exports of consumer and industrial products to Peru will become duty-free immediately, with remaining tariffs phased out over 10 years. Key U.S. exports will gain immediate duty-free access to Peru. Peru has agreed to allow trade in remanufactured goods, and will join the WTO Information Technology Agreement. 

Peru already enjoys good access to the U.S. market thanks to previous trade agreements, so it's not as if the United States is suddenly going to be flooded with cheap chicha, alpaca wool, and mahogany. Edwards may think that spreading this silliness is going to help him win the Democratic nomination, or at least earn him points in protectionist Iowa. My guess is that Edwards knows better. That's probably why he chose Peru rather than, say, the South Korea deal, which is on a different scale altogether.

YURI CORTEZ/AFP/Getty Images

Back in June, just as President Bush's fast-track trade authority was about to expire and Congress started to flex it's protectionist muscles, FP predicted that securing approval for pending U.S. bilateral trade deals with Peru and Panama would be a cinch. That is, at least compared to similar, but more complicated deals with Colombia and South Korea.

But we may have spoken too soon. Recently elected as head of Panama's National Assembly, Pedro Miguel González holds a less esteemed title here in the U.S.—he is a wanted man for the murder of an American soldier. González was indicted for the 1992 death of U.S. Army Sgt. Zak Hernandez in the Canal Zone, but acquitted by a Panamanian court in 1997. He still faces an outstanding warrant for his arrest in the United States, however.

González, who enjoys the support of President Martin Torrijos and is described by colleagues as a "great patriot," has some harsh words for los yanquis' meddling in Panamanian affairs:

The era in which the U.S. has the last word in determining who governed our nation and how they did so is over. 

But for all his brave talk, The Guardian reports, González is leaving the possibility open of stepping down from his position if it threatens the trade agreement. And all this comes right as Panama has struck ground on a $5.25 billion expansion of the Canal. You don't have to look hard to see that the U.S. footprint is still there: Two thirds of all cargo that passes through the Canal is coming from or headed to the United States. Even González can't ignore that.

As Hurricane Dean rips through the Caribbean and now Mexico, commodity traders who made contrarian bets on sugar--futures contracts for the commodity are down some 20 percent this year--are licking their lips:

While there's a projected surplus of 11 million metric tons of the sweetener, bad weather may cause the global stockpile to shrink, said Greg Smith, founder of Global Commodities Ltd. in Adelaide, Australia, manager of a $210 million commodities fund.

"The risk is now mostly in the upside as wild weather season approaches,'" said Smith, who said storm damage may send sugar prices doubling to 20 cents a pound, from 9.4 cents a pound as of Aug. 17 on the Nybot. "We consume a lot of sugar both for food and now energy, while unfortunately the weather patterns are becoming more extreme.''

The storm has wrecked sugar crops in places like Belize and Martinique, and may cause damage in Mexico. Still, there's reason to be skeptical of Smith's optimism. The economies of sugar-producing countries in the Caribbean depend heavily on sugar, but they're still only a small piece of the global trade. Brazil, Thailand, and India, some of the world's largest producers, are expecting bumper crops this year. And with India looking to dump excess sugar on world markets next year, the contrarians may be in for a bitter financial harvest in 2008. So far, the futures markets look unshaken by Hurricane Dean. Prices for Caribbean rum, however, could well skyrocket. Bad news for Jimmy Buffet.

CANCUN CHU/Getty Images

FP contributor Andrei Lankov reports from the China-North Korea border, which is more porous than you might think. And like in many a U.S. prison, cigarettes are often the coin of the realm:

Corruption in North Korea is shocking even to Chinese visitors, who are not exactly used to a clean government.

A Korean-Chinese who occasionally goes to visit his relatives described his usual experience: "They are so greedy. Officials take bribes in China, too. But perhaps nowhere in the world are the officials so hungry for bribes as they are in North Korea. At customs, they slowly go through the luggage and sometimes put aside a few things they like, and then they say that those things are not allowed into North Korea. This is the hint, and I have no choice but to tell them to take those things, some clothing or small items. And it is a tradition that everybody who checks you should be given some foreign cigarettes. Last time I took five cartons of cigarettes with me, and only one carton reached my relatives. All others I had to give away to the officials."

Lankov's real point, though, is that information about China, which looks to North Koreans "like a perfect paradise," is seeping back across the border. And those North Koreans lucky enough to make it to the promised land—be it as refugees or businessmen known as chogyo—soon learn that South Korea isn't the hell on Earth they've been taught to hate, but is even richer than China. This can't be a sustainable situation.