Commentary

Free Trade Empowers Americans to Better Their Lives

By Daniel Griswold
November 6, 1997

The approaching vote in Congress on fast-track trade authority isn’t about an obscure congressional process or the success or failure of our trade agreement with Mexico. It’s about giving Americans more freedom and better lives.

If Congress approves fast-track, the United States will be able to negotiate market-opening trade agreements with other nations. The bill coming up for a vote soon would authorize the president to submit trade agreements to Congress for an up-or-down vote without amendment. If the president is denied that authority, other nations will refuse to negotiate with the United States because any agreement reached with the executive branch could be unraveled line-by-line in Congress. Negotiations would be futile. And without trade agreements, the United States will miss crucial opportunities to eliminate barriers to trade in regions such as East Asia and Latin America and in important sectors such as services and agriculture.

Labor unions and other opponents of fast-track claim that free trade destroys jobs when people substitute imported products for those “Made in the USA.” That claim is fact free.

Between 1980 and 1996, the real value of goods and services imported to the United States tripled from $323.5 billion to $959.8 billion (in 1996 dollars). During that same time, real gross domestic product expanded by 50 percent and total civilian employment rose by 27.4 million.

The new jobs created were not predominantly of the hamburger-flipper type; they were good-paying jobs, many in the service sector. During the last decade, the number of jobs supported by exports rose four times faster than the overall number of private-industry jobs, to more than 12 million. And export jobs, on average, pay about 14 percent more than jobs in non-export industries.

Of course, the dislocation caused by trade does eliminate jobs in less competitive industries, but it also creates at least as many new jobs. The impact of trade is not on the number of jobs but on their quality. By allowing Americans to specialize in what they produce best, free trade raises productivity, wages and living standards for the large majority of workers. Like technology, it leads to new products and new industries while enabling workers to produce more in an hour. Those who oppose free trade in order to “save” jobs are just as mistaken as the Luddites of two centuries ago who smashed weaving machines in northern England for the same reason.


Ultimately, the debate about fast-track and free trade is about human liberty. Should people be allowed by their governments to trade freely for mutual benefit with people in other countries?


Trade with other nations allows American consumers to enjoy a wider range of goods and services at lower cost than if we produced everything for ourselves. We can enjoy abundant supplies of fresh fruit year around, more affordable shoes and clothing for our children and the latest technology in medical equipment and consumer electronics. Remaining U.S. barriers to imported clothing, food, steel, automobiles, footwear and other products cost the average American household between $1,200 and $1,500 a year in higher prices.

Free trade benefits producers as well as consumers. American exporters gain through access to a much larger world market. Increased sales in other countries can lead to lower costs due to economies of scale, which lead to lower prices, yet more sales and further efficiency gains in what economists call a “virtuous cycle.” Free trade can also bring lower-priced inputs — through parts and raw materials imported from abroad — which lead to lower prices for finished goods, expanding exports further. Increased competition from imports spurs innovation among domestic firms while protecting consumers from potential monopolies. For those reasons, nations that pursue free-trade policies today tend to prosper while those that hide behind protectionist barriers stagnate.

The American economy has become increasingly intertwined with the rest of the world. Since 1970, America’s total imports and exports in the broadest measure — goods, services and investment income — have doubled relative to our GDP. Today the United States is both the world’s largest exporter and its largest importer. Slamming the door on future trade agreements would deny American exporters and consumers huge potential gains.

Concerns about labor and environmental standards are no reason to deny ourselves or others the benefits of free trade. In fact, by raising incomes in poorer countries, trade with the United States makes it easier for those countries to afford better working conditions and a cleaner environment. Trade sanctions against countries whose standards do not meet our own would only slow their progress.

Ultimately, the debate about fast-track and free trade is about human liberty. Should people be allowed by their governments to trade freely for mutual benefit with people in other countries? Who should decide what goods we produce and consume and with whom we trade them — individual citizens or Washington politicians?

If Americans want lower prices, more goods, better jobs and less government interference in their lives, our goal should be free trade on the fastest track available.

Daniel T. Griswold is director of trade and immigration studies at the Cato Institute.