Commentary

Is A Global Free-Trade Deal Best Way To Keep U.S. Safe?

As the administration prepares to go to war, it also must stay focused on restoring prosperity to America and the world. The Bush administration links trade to security.

So new trade initiatives, now being pushed by U.S. Trade Representative Robert Zoellick, also advance President Bush’s goal of extending the peace.

Zoellick first proposed abolishing tariffs on all manufactured goods, to be phased in over a period of years.

Now he has proposed admitting 65% of all consumer and industrial imports from Latin America duty-free upon implementation of a hemispheric free-trade agreement.

The Bush administration is committed to signing such an agreement before the end of 2004.

Catching the free-trade wind in its sails, the World Trade Organization has proposed ending all export subsidies to farmers over a nine-year period.

Coupled with that proposal, the WTO called for a reduction of tariffs on all agricultural products.

Consumers of the world would benefit from these actions. And efficient farmers, many of them Americans, would prosper.

New Trade Deals

U.S. trade officials finally completed trade agreements with Chile and Singapore. Negotiations with both countries had dragged on since the end of the Clinton administration, with disagreements arising not over the trade deal itself but over language governing environmental, labor and investment issues.

Resolution of those contentious issues was dependent on the November 2002 election outcome, which explains why the U.S. side had recently appeared to be going slow. Empowered by the Republican senatorial victory, Zoellick’s office concluded both deals.

Zoellick has advanced on all fronts: multilaterally through the WTO, regionally with Central America and Southern Africa, and bilaterally with partners like Australia.

Now he can pursue an even bolder agenda, one with a coalition of willing trade partners, countries already open to trade and investment.

Such a grouping would enable negotiations to start from a higher threshold, and would permit the Bush administration to “raise the bar” on other trade negotiations, including within the WTO.

Countries with open economies, united in a global grouping, could set a new, aggressive trade agenda, with U.S. leadership providing the catalyst.

Such a grouping surely would include Chile and Singapore — two very open economies — as well as Australia.

Other likely candidates include New Zealand, one of the most open economies in the world, and Hong Kong (which would bring interesting geopolitical benefits atop the obvious economic ones).

There are several indices that can be used to measure trade openness. Despite the Common Agricultural Policy, EU countries such as Denmark, Finland, Iceland, Ireland, Luxembourg and the United Kingdom score well on these indices, suggesting, finally, hope for an EU-U.S. agreement.

That agreement would surely set the standard for the WTO.

This coalition of the willing would be based not on geographical proximity, but on similarity of policy. It would be truly global, reaching to all continents.

At least one sub-Saharan African country meets the criteria of openness: Botswana. The grouping of countries would be a veritable Global Free Trade Association.

Global free trade is an idea whose time has come. The GFTA could set the standard by, among other measures, taking up Zoellick’s challenge to abolish tariffs on all traded goods, liberalizing agricultural trade and aggressively opening markets to trade in services.

There would be no reason for anti-dumping measures within the association because by mutual recognition the countries are acknowledging the openness of each other.

And barriers to foreign investment in all areas, including aviation and telecommunications, would not exist within the association, as countries that permit them would be ineligible for membership.

Peer Pressure

Other countries could join by first liberalizing to the threshold already established by the association.

The GFTA would thus have a “demonstration effect,” providing peer pressure on other countries. We would move from destructive “tit for tat” retaliation in trade disputes to competitive liberalization.

In short, the elections handed the Bush administration an historic opportunity to re-establish U.S. leadership on trade. Advancing trade will also help secure the peace. In the words of an earlier U.S. president: “If not us, who? If not now, when?”

Gerald P. O’Driscoll Jr. is senior fellow at the Cato Institute.