Bitter About Trade?

This spring's Presidential campaign has been a winter of discontent for free trade.  The Columbian Free Trade Agreement is seemingly dead in the House thanks to a scuttling of the rules by Speaker Nancy Pelosi, stabbing an ally in the back while strengthening socialist dictator Hugo Chavez.  Both Democratic Presidential nominees have chosen to ignore the economic benefits of the North American Free Trade Agreement, pledging to renegotiate the deal and impose a moratorium on future agreements.  Increases in employment, exports, manufacturing, and overall economic growth are instead portrayed as job losses and economic misery in Orwellian rhetorical gymnastics.

Increasing the government intrusion in the marketplace raises prices for consumers, decreases the size of the market (thus reducing economies of scale and specialization efficiencies), and distorts the market.  By contrast, reducing government taxation on trade opens new markets for American exports, lowers prices, increases innovation, promotes competition, and provides more choices for consumers.  Individuals choose what's best for themselves and their families, rather than the government deciding for everyone.  The benefits are well-documented, at least for those who prefer facts to polls, anecdotes, and demagoguery.

The Columbian Free Trade Agreement opposition is particularly difficult to understand — Columbian products already enter the United States tariff-free!  The effect of the Columbia FTA would be to lower Columbian tariffs on American products, opening new markets to goods and services produced in America.  The benefit to Columbia?  Of course, there's the usual benefits mentioned above:  lower prices and more choices for consumers.  But there's also another carrot:  the current trade benefits accorded under the Andean Trade Promotion Agreement must be re-qualified periodically; the Columbian FTA would make the agreement permanent.

Democrats often accuse Republicans in general, and President Bush in particular, of a "go-it-alone" philosophy when dealing with foreign affairs.  Yet free trade agreements are the ultimate partnership between nations, as each nation becomes truly invested in the success of the other while at the same time promoting its own prosperity.  Often, labor and environmental laws are used as an excuse for thwarting trade deals, yet these are typically quite easily negotiated into the deal.  On a more fundamental level, they are almost inherent in a free trade agreement with the United States, as countries become more mindful of worker and ecological protections as they become more prosperous, and workers become more empowered to seek better working conditions when there is more competition for their services.  Citizens become more mindful of environmental issues when they become property owners and when property rights are respected and promoted.  Trade and commerce promote all of these things in a free society.

So in the face of economic evidence that shows free trade to be a benefit to American consumers, from whence comes the anti-trade sentiment?  Perhaps Senator Obama put his finger on it in his now-famous speech at a San Francisco fundraiser, when he said that when Americans "get bitter, they cling to ... anti-trade sentiment as a way to explain their frustrations.”  Let us hope that Sens. Obama and Clinton get over their bitterness, or whatever is fueling the anti-trade fervor,  and return to sound principles of free market capitalism.

 

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  • 4/17/2008 11:03 AM Nelson wrote:
    I sure wish we could poke Speaker "Lugosi" in the eye, like she continues to do to our allies. Good write-up, Dave, and shame on Nancy "Miss America" Pelosi!!
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