Americans can be forgiven if they’re a little confused about free trade. After all, many of our leaders certainly are.
In the last year, various members of congress have introduced more than 250 specific bills to waive tariffs that harm their constituents. Clearly these leaders understand that lowering tariffs (a key component of free trade) on an industry-by-industry, state-by-state basis will improve the economy.
Yet when given the chance to lower tariffs in a more efficient way -- through comprehensive trade agreements with other nations -- many of these same lawmakers seem to forget what they know about the benefits of freer trade.
It’s a puzzling contradiction. Congress might as well decree that feathers make sense, but birds are dangerous.
You can see all this at play in Massachusetts. A Lowell Sun article recently revealed that the commonwealth’s two senators have introduced no fewer than 17 “suspension of duty” bills that directly lower tariffs paid by some state businesses.
In an effort to “help Massachusetts companies get a fair shake” and help local firms “be as competitive as possible in the national and global marketplace,” Sens. Kerry and Kennedy want to drop tariffs on many things, including leather, rubber and synthetic basketballs and volleyballs.
They rightly note that U.S. trade barriers raise the cost of doing business. Lowering these barriers for Massachusetts will “grow the work-force and save consumers money.” Yet both men opposed CAFTA, the 2005 agreement to expand free trade throughout the Americas.
In fact, lowering tariffs across the board would promote more competition and more efficient use of resources. If lowering tariffs for a golf-club manufacturer in Massachusetts is good, then it follows that lowering tariffs will be good for all U.S. golf-club manufacturers.
For some 50 years, the free-trade movement has largely flourished, and the U.S. and the world have reaped the economic benefits. Indeed, the U.S. government has been a leading advocate of trade liberalization.
In the coming months, Congress will need to ignore the siren song of protectionism and look beyond state borders. Free trade agreements with Oman and Peru, for example, will be on the table and lawmakers should objectively debate and then approve them. They also should continue to support U.S. leadership and negotiations for new bilateral agreements and in the World Trade Organization (WTO) Doha Round.
As former U.S. Trade Representative Rob Portman recently said, “We all must fight the protectionist forces with the facts, which show that benefits from trade are substantial.”
The $12 trillion U.S. economy is bolstered by free trade, a pillar of America’s vitality. American exports support one in five U.S. manufacturing jobs. Jobs directly linked to exports pay 13 to 18 percent more than other U.S. jobs. Moreover, agricultural exports hit a record high in 2005 and now account for 926,000 jobs.
Because today’s global economy offers unparalleled opportunities for the U.S., it is in America’s economic interest to expand trade by lowering barriers. Freer trade policies have created a level of competition in today’s open market that leads to innovation and better products, higher-paying jobs, new markets, and increased savings and investment.
Free trade can lift America’s already high living standards if trade barriers can be broken down further. Gary Clyde Hufbauer of the Institute for International Economics estimates that trade liberalization over the last 50 years has brought an additional $10,000 per year to the typical American household.
If all trade barriers were eliminated and global trade and investment became truly free, Hufbauer estimates American households would gain an additional $5,000 per year.
Freer trade enables more goods and services to reach American consumers at lower prices, giving families more to save or spend on other goods and services. Moreover, the benefits of free trade extend well beyond American households. Free trade helps spread freedom globally, reinforces the rule of law and fosters economic development in poor countries.
Despite more than five decades of evidence demonstrating the benefits of liberalizing trade, the impact of international trade and open markets on the U.S. economy somehow remains a contentious national issue. Fortunately, in past battles, free trade won the day, providing greater economic opportunity to Americans and allowing the U.S. to maintain its role as a leader in the international economic community.
Defending free trade and fighting for new trade agreements are central tasks for Congress this year. Expanding global trade is one of the keys to building a stronger economy at home and promoting better relationships abroad. As that state’s senators know, trade is key to prosperity in Massachusetts. It’s a pity they won’t work to share that prosperity nationwide.
Daniella Markheim is the Jay Van Andel Senior Analyst in Trade Policy at The Heritage Foundation.