Free Trade Nationalism

This article originally appeared in the Weekly Standard.

Free trade is losing its grip on the conservative movement. In recent years a growing minority of conservatives, led by Patrick Buchanan, has swung to the opposite end of the spectrum and embraced outright protectionism. Less noticeably, others on the right who remain opposed to raising new trade barriers have grown disenchanted with trying to remove existing ones.

The September 25 House vote on “fast track” trade negotiating authority tells the story. The GOP leadership pushed for a vote before the midterm elections, claiming that Republicans would carry the measure even in the face of overwhelming Democratic opposition. They didn’t even come close: the bill went down 243-180, with roughly a third of the Republican caucus voting against the party line.

What’s happening here? Why are conservatives running away from a cause that promotes tax cuts and deregulation? One explanation is that conservatives are being asked to choose between their nationalism and their free-market economics. It’s a false dilemma: The conflict arises not from the nature of free trade, but from the way it has been packaged and pursued.

For over six decades, trade liberalization has served as the handmaiden of an internationalist foreign policy. This association goes back to the New Deal, when, in the aftermath of the disastrous Smoot-Hawley tariff, FDR’s secretary of state Cordell Hull masterminded and pushed through the Reciprocal Trade Agreements Act of 1934. Previously, setting tariff levels had been a matter of domestic economic policy; now it became the subject of international negotiations. Hull and the other New Dealers who pulled off this transformation did so not out of love for free markets generally; their aims were primarily diplomatic. In the international arena, they saw open markets as a way of promoting peaceful relations in an increasingly hostile world.

After World War II, free trade was integrated into the larger strategy of containing Soviet communism. By increasing our commercial ties with Europe and Japan, trade agreements fortified the solidarity of the Western alliance. And by opening our markets to Third World countries, we hoped to prevent defections to the Soviet camp.

The Cold War is over, but U.S. support for trade liberalization continues to be sold as an obligation of American “international leadership.” Fast track in particular tends to get lumped together with calls for additional IMF funding and paying back UN dues, mixed in with grousing about know-nothing members of Congress who don’t even have passports.

Protectionist countries have changed their policies in order to catch up economically with more open countries. It follows that the most important thing the United States can do to foster liberalization elsewhere is to set a good example.

It’s not just that free traders have sold their cause on foreign policy grounds. Through linking trade liberalization exclusively with international negotiations, they have actually conveyed the impression that free trade requires the subordination of the U.S. national economic interest to broader concerns. After all, in trade talks countries agree to reduce their trade barriers only on the condition that other countries do likewise. Thus, trade barriers are treated like nuclear missiles in arms control talks — prized strategic assets that are given up only in exchange for foreign assets of equivalent value. (Indeed, in the parlance of the General Agreement on Tariffs and Trade, a commitment to reduce tariffs is a “concession.”)

With the issue so framed, the military metaphors proliferate. Trade “hawks” argue that relatively open markets amount to “unilateral disarmament,” and urge that we close off access to U.S. markets unless foreign countries let in more American goods. Free traders, by resisting such calls, get cast as “doves.”

Of course, the equation of trade with war is economic nonsense. Trade, unlike war, is not a zero sum game: one country doesn’t “win” at another’s expense. In particular, openness to foreign competition is not a vulnerability. On the contrary, it allows a country’s citizens to enjoy the best goods and services the world has to offer, and to specialize in those pursuits at which they are relatively more productive. And the benefits of open markets accrue regardless of whether other countries maintain similarly liberal policies.

Nevertheless, free traders have seldom challenged the protectionist misconceptions that trade talks encourage. By and large they accept the notion that the United States is somehow at a disadvantage because most of our trading partners maintain higher trade barriers than we do. Their position is that America is strong enough to “win” at international trade even with the deck stacked against us; and anyway, they argue, broader geopolitical interests — countering Soviet power, and now maintaining some kind of nebulous “influence” — outweigh narrow commercial concerns. Thus, by the twisted logic of trade negotiations, free traders appear to be asking the United States to play by less favorable rules than apply to other countries.

Furthermore, the direction of trade negotiations in recent years suggests a connection between free trade and the progressive diminution of U.S. national sovereignty. The scope of trade agreements has broadened far beyond simple tariff-cutting to encompass sweeping forays into traditional domestic policy areas. In particular, efforts to “harmonize” national policies on labor and the environment are working their way onto negotiating agendas at both the regional and multilateral levels. And to enforce these increasingly ambitious agreements, new and more powerful international institutions — most notably, the World Trade Organization — have been created and empowered to pronounce judgment on national laws’ fidelity to international obligations.

During the twilight struggle with communism, conservatives suppressed their normal nationalist sensibilities in deference to the greater cause. Now that the Cold War has ended, though, it’s not surprising that a growing number of conservatives are ready to throw the free-trade baby out with the internationalist bath water. If trade liberalization is part of a package deal that seemingly sacrifices America’s national economic interest and erodes its sovereignty in favor of some incipient world government, then thanks but no thanks. Even many conservatives who know enough economics to reject Pat Buchanan’s full-throated protectionism are finding it ever harder to maintain allegiance to the free-trade agenda as currently constituted.

If free trade is to remain a viable conservative cause, it must be disentangled from its associations with internationalist altruism. Globalization must be distinguished from globalism. To that end, conservative free traders should urge the elimination of U.S. trade barriers as a matter of domestic economic policy — outside the context of any international negotiations and regardless of what other countries choose to do. The case for free trade should be mounted squarely on grounds of the U.S. national economic interest.

Although six decades of contrary practice have muddled the issue, free trade is not fundamentally about international agreements or international institutions. And it certainly has nothing to do with IMF bailouts or UN mission-creep. Rather, free trade is about freedom — freedom to trade, freedom to choose, freedom from import taxes and government regulation, freedom from subsidizing special interests. Modern conservatism has stood generally for the principle that America’s national economic interest lies in greater freedom. A campaign for unilateral trade liberalization would allow conservatives to restore that principle’s proper application to trade policy.

Such a campaign would have no shortage of inviting targets: high tariffs and restrictive quotas on food and clothing, the anti-competitive antidumping law, the Jones Act ban on foreign shipping between U.S. ports, and foreign ownership limits on airlines and broadcasting, to name a few. These trade barriers punish American businesses and consumers; they restrict choices and drive up prices; they blunt the forces of competition that promote improved productivity and rising standards of living. They are a tax on American economic health for the benefit of narrow interests that cannot possibly justify their special immunity from market discipline. The fact that other countries have similar policies or worse is no reason for us to cling to our own folly.

We don’t need fast track or the WTO to pursue free trade here at home. We don’t need to make excuses for imperfect trade agreements. We don’t need to play down obnoxious practices in the countries with which we sign deals. We don’t need to answer charges about the loss of sovereignty to faceless international bureaucrats. All we need is to sound the traditional conservative themes of lower taxes and less government.

What about encouraging freer trade in other countries? Don’t we need trade negotiations to pry open foreign markets? Actually, most of the countries that have engaged in really sweeping free-trade reforms in recent years — countries like Chile and Argentina, Australia and New Zealand — have done so unilaterally. Interestingly, Mexico belongs on the list as well: its unilateral market-opening moves in the late 1980s were far bolder than anything Mexico promised under NAFTA. The driving force for reform in all these countries wasn’t tough bargaining or the prospect of a quid pro quo but rather the realization that protectionism was causing economic stagnation.

In other words, protectionist countries have changed their policies in order to catch up economically with more open countries. It follows that the most important thing the United States can do to foster liberalization elsewhere is to set a good example. Indeed, more than anything else, a consistent and principled commitment to open markets on the part of the world’s largest and most prosperous economy would enhance the prospects of free trade around the world.

Is there any room left for international negotiations and institutions? I believe there is. Trade agreements can strengthen the political case for freer trade at home by adding the gains from freer trade abroad to the calculus. Also, even when markets are opened unilaterally, converting those reforms into international obligations can serve as a safeguard against backsliding. But to secure these advantages, free traders should first make their case at the national level. The polestar of sound trade policy ought always to be the American interest in free markets at home.

Many conservative free traders are doubtless reluctant to abandon tried and true approaches for something as novel as unilateral free trade. But the fact is that what may have worked during the Cold War is no longer working. Free trade and conservatism are increasingly at odds, and it’s a conflict that threatens both causes. Free-trade nationalism, as strange as it may sound, provides the way out.

Brink Lindsey is a senior fellow at the Cato Institute and the director of its Center for Trade Policy Studies.