A Political pundit friend of mine recently opined that 15 percent of the American population is on the extreme right of issues, 15 percent is on the extreme left and the rest of us are somewhere between. It would appear that similar divisions exist in the trade debate. There are what we might call "academic" free traders (anything goes to establish trade advantage just as long as the consumer gets a cheap price), fair traders (rules-based trade) and true protectionists (close the borders). A small group of fairly vocal "trade philosophy of convenience" folks take both sides, depending on what they have to gain or lose in the trade game.

In the political arena, the center is pretty much left out of the name-calling. Not so in the trade debates. The centrist contingent is often lumped with the "protectionist" side simply because they don't agree with the extreme free-trade group.

THE PLAYING FIELD. What is the difference between the extremes? To address that, let's look at the playing field and the "rules." The advanced economies of the world came to the conclusion that it isn't appropriate for governments to compete with private enterprise (governments always win that contest) and have devised a set of rules to play by for those who sign up. There is a process to settle disputes. Virtually all countries maintain their trade laws to blunt dumping and subsidy.

Sounds great in theory, if it wasn't for gross omissions called "non-market economies." This grand scheme also ignores the mutations that developed from the "game plan" in the form of non-tariff barriers, currency intervention, "allowable" subsidies that address a broad number of issues, etc.

In addition, non-market economy concessions (special and differential considerations) end up in extensive government intervention in the so-called private sector of all-too-many very large countries. The organization that interprets disputed rules appears to have a certain bias and seems actively engaged in "judicial activism" (to borrow a phrase).

To make matters a bit more dysfunctional, many of the players simply violate the rules until a flag is thrown for the violation. As in American football, they can protest the call and it may take "forever" for the appeal to be processed.

Voting "rights" are interesting. The country with the biggest, most open market has the same vote as the country with the smallest, most closed markets. Is it a wonder that votes often go 145 or so to 1?

Add to the mix our seemingly lax trade agreement and trade law enforcement, some fundamentally bad agreements and a flawed negotiating approach and you end up with a $700 billion-plus trade deficit that is only getting worse.

LOSING GROUND. While fair-trade advocates might be called names like "protectionist," perhaps the direction of the name-calling should be reversed and those seemingly out of touch with reality and fairness could be labeled "economic extremists."

The growing trade deficit of the United States is indefensible. In this environment, U.S.-based companies and their employees are losing ground daily. In the unpleasant details of the enormous merchandise trade deficit, we have turned the corner on "high-tech" into the deficit category, have a very small trade surplus in the "services" sector and appear to be headed toward the negative side in agriculture on more than a spot basis. This can only lead to trade disputes down the road.

Let's repeat and review some of the mechanisms used to un-level the field. A partial list includes:

* Currency Manipulation. The Chinese and others peg and/or intervene in global currency markets. The extent varies, but China now sets the standard in intervention. Estimates are that its peg skews the playing field north of 40 percent. The country spends more than 12 percent of its GDP (gross domestic product) on intervention to gain trade advantage.

* Subsidies. In steel, subsidies are rampant. They are significant in other industries, as well, and come in many forms and sizes. Loan guarantees, government ownership, rebates of border-adjustable taxes (for exports only), direct funding or subsidy, discounted government-provided services (energy, transportation) and high structural inbound tariffs/duties to effectively close markets are but a few forms.

The breakdown in subsidy elimination discussions at the OECD (Organization for Economic Cooperation and Development) was based on the insistence of many countries that their various subsidies could not be eliminated. After all, as some stated later, what would we do with all the people that would lose their jobs if we gave up subsidies? The U.S. position, however, was to get rid of all subsidies.

* Trade Disputes. The retaliation allowed by the WTO (World Trade Organization) in some of its "activist-intervention" decisions skews fair (and free) trade. The VAT/FSC-ETI (Value-Added Tax/Foreign Sales Corp.--Extraterritorial Income Exclusion) decision is a good example.