Commentary

Trade Authority Promotes America’s Economy and Security

By Daniel Griswold
November 29, 2001
On Dec. 6, the U.S. House will have the opportunity to boost the economy, strengthen our ties with allies in the war on terrorism, and fight poverty and low standards in the Third World. The opportunity is not some multibillion-dollar “stimulus” or foreign aid package, but trade promotion authority.

TPA, also known as “fast track,” would give President Bush the authority to negotiate new market-opening trade agreements with other nations. TPA would allow the president to submit trade agreements to Congress for an up or down vote without amendments, so that foreign governments would not have to negotiate twice, first with the administration and then with Congress. Every president since 1974 has been able to pursue trade agreements under those basic rules. Here are three compelling reasons why President Bush should be granted that same authority:

One, trade expansion promotes American prosperity. Economic growth in the past decade was the most robust during those years when trade—both imports and exports—was growing the most rapidly. Trade stimulates competition, innovation, and efficiency, making U.S. workers more productive and raising real family incomes. Imports keep prices down at the store, especially for low-income families. During the recent downturn, trade flows have fallen sharply along with employment and manufacturing output. Promoting trade would help to stimulate the economy.

TPA would open the door for regional and global trade agreements that would open markets for America’s most competitive exports. At their just-completed meeting in Qatar, the 142 members of the World Trade Organization agreed to pursue a new round of negotiations to lower barriers to agricultural, industrial, and service exports, including a cut in Europe’s huge farm export subsidies. A recent study by the University of Michigan estimates that even a one-third cut in tariffs on agriculture, industrial, and service trade would boost annual global production by $613 billion, including $177 billion in the United States—or about $1,700 per U.S. household.

Two, trade expansion promotes U.S. security. Nations that trade with one another tend to get along better than nations that shun trade. America’s historic post-war shift away from Depression-era trade wars and toward open trade was driven as much by foreign policy and security concerns as by economic self-interest. Trade with Europe, Japan and developing countries cemented the Western alliance against communism. Free trade within the European Community, an American condition of Marshall Plan aid, has made another major European war virtually unthinkable today.

Nations open to trade are far more likely to enjoy full civil and political liberties than those closed to trade. Trade tills the soil for democracy by introducing new ideas, encouraging tolerance of other cultures, and creating hope for a better life through individual effort. America’s commercial ties with the rest of the world have encouraged diplomatic and military cooperation from other nations in the war against terrorism. In contrast, none of the nations most closely linked to terrorism—Afghanistan, Iran, Iraq, Syria, Libya, Sudan, and North Korea—belong to the WTO.

Three, trade expansion promotes higher standards and lower poverty in poor countries. A recent World Bank study found that those poor nations that embrace globalization grow the fastest and reduce poverty the furthest, while those that are closed stagnate.

Faster growth, in turn, blesses poor nations with the resources to raise their labor and environmental standards. In fact, without the growth and wealth that trade expansion creates, it is virtually impossible for poor nations to raise standards. Making higher environmental and labor standards a pre-condition for trade with the West, as some members of Congress and trade critics demand, would deny poor countries the export opportunities they need to raise those very standards and lift themselves out of poverty. Trade sanctions would perversely punish poor countries for being poor.

The Democratic Party of Franklin D. Roosevelt and John F. Kennedy championed trade expansion for most of the 20th century for all of those reasons. Democratic and union leaders at one time understood that trade benefits working families by curbing the monopoly power of big business and delivering lower prices at the store.

But today, under pressure from misguided environmentalists and self-serving unions, Democratic leaders in the House want to load TPA with environmental and labor restrictions that poor countries rightly suspect would be used to keep Western markets closed to their exports. Sadly, only a handful of “new Democrats” in the House, such as Cal Dooley of California, support open trade. Has the pro-trade party of FDR and JFK finally embraced the protectionism of Pat Buchanan and Herbert Hoover?

For the sake of our national security and economic interest, Democrats and Republicans alike should give President Bush the authority he needs to break down the remaining barriers to peaceful trade and cooperation among civilized nations.

Daniel Griswold is the associate director of the Cato Institute’s Center for Trade Policy Studies. He is the author of the recent Cato study, “Trade, Labor, and the Environment: How Blue and Green Sanctions Threaten Higher Standards.