Beyond Exports: A Better Case for Free Trade

Free trade is about much more than increasing opportunities to export. But most people wouldn’t know that from listening to President Obama or other “pro-trade” politicians or media or business community advocates. The most common message purveyed by those advocating particular trade agreements or even free trade generally is that more trade equals more exports equals more economic growth equals more jobs. Sure, that may be a salient point—particularly in an environment where policymakers are looking to grow the economy and create jobs. But it is only one argument in the comprehensive case for free trade—an argument, by the way, that renders free trade advocacy more difficult when made in the absence of the other arguments.

In a Cato Free Trade Bulletin released this morning, Scott Lincicome and I update and reinforce the comprehensive case for free trade that we have been making at the Center for Trade Policy Studies since 1998. And we recommend that “to win the hearts and minds of a skeptical American public, trade advocates need to broaden their arguments to include more than just happy talk about potential export growth.”

Here is the introduction:

The 112th Congress begins its term amid renewed optimism about prospects for U.S. trade liberalization. Big labor’s stranglehold over the congressional trade agenda was broken with the election in November. The U.S. government finally appears willing to end its disgraceful ban on Mexican trucks. And in his State of the Union address, President Obama implored Congress to pass the trade agreement with South Korea as soon as possible, and articulated his commitment to bringing the other two pending bilateral agreements, as well as the Transpacific Partnership negotiations and the Doha Round, to successful conclusions.

After four years of stasis on the trade front, the new environment is a welcome change. Removing barriers to trade — in both directions — is essential to sustained economic recovery and long-term growth.

But how long will this window of opportunity remain ajar? Despite trade’s benefits, American sentiment toward it is lukewarm in the best of times, and always vulnerable to manipulation by politicians and media charlatans looking to blame foreigners for domestic shortcomings. Before the end of this year, the 2012 presidential election campaigns will be in high gear — and trade has been a particularly dirty word in stump speeches and political debates in the past. Indeed, one of the reasons for the energetic trade policy push in 2011 is that the political environment next year is expected to be less hospitable to trade initiatives.

The fact that public opinion about trade is so malleable and arguments for restricting it so resonant at times speaks to a failure of free trade’s proponents to make their compelling message stick. It is sad but true that so many Americans need to be reminded of the benefits of being free to choose how and with whom to conduct commerce. But in an atmosphere where demagogues peddle myths to mislead the public into believing that it is preferable for government to limit their choices and direct their resources to chosen ends, it is crucial that the case for free trade be made more clearly, comprehensively, and consistently than it has been in the past.

Thus, in addition to securing the immediate goal of concluding and passing trade liberalizing agreements in 2011, advocates of trade in Congress, the administration, the business community, think tanks, academia, and among the general public should update their arguments and invest in the process of winning the trade debate once and for all. Some of the most compelling arguments for free trade have been only modestly summoned or absent from the discussion for too long.

The full paper, “Beyond Exports: A Better Case for Free Trade” is here.