A New Track for U.S. Trade Policy

September 11, 1998 • Trade Policy Analysis No. 4

For over six decades, free traders in this country have pursued trade liberalization through a strategy of diversion and appeasement: diverting attention away from opening the U.S. market by focusing on exports and foreign policy goals, and appeasing protectionists at home with “fair trade” policies in the hope of preventing even worse import barriers. That strategy achieved considerable success: it shifted the basic orientation of U.S. trade policy away from protectionism and toward gradual liberalization.

But the diversion‐​and‐​appeasement strategy is no longer working well. With the end of the Cold War, free traders have lost their foreign policy trump card. Meanwhile, the advance of economic globalization means that trade policy is no longer an insider’s game; international economic issues now arouse popular passions that the old approach was never designed to address. In this new environment, continued reliance on diversion and appeasement has actually become self‐​defeating. By refusing to challenge (and even endorsing) the mercantilist and fair trade fallacies of their opponents, free traders are helping to perpetuate a political culture that is hostile to their own agenda. The rising tide of “globalphobia” in the midst of unrivalled prosperity demonstrates that free traders are doing something wrong.

It is time for a change of strategy. Free traders need to take protectionist misconceptions and special interests head‐​on, and to make an unapologetic case for international free markets. This new approach is not merely rhetorical; it is programmatic as well. Free traders should expand beyond their traditionally exclusive reliance on negotiated liberalization and launch a campaign for the unilateral elimination of specific U.S. trade barriers. At the same time, they should develop a new model for trade negotiations in which commitment to free‐​trade principles replaces the old dogma of reciprocity.

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