Posted on 04/22/2007 8:31:38 AM PDT by 1rudeboy
U.S. trade policy and the impact of globalization on America are regularly the subjects of contentious debate both on Capitol Hill and in the media, and 2007 promises more of the same. The free trade argument is played out between those that fear the perceived negative effects of freer trade on their own narrow interests and those that embrace the economic and strategic benefits that open market policies will bring to the economy as a whole. Consequently, in today's policy world, free trade legislation passes on the margin, where every vote is critical. The loss of even a few proponents of freer trade policies could result in a costly shift away from the open market policies that have helped to bolster America's economic growth.
With free trade agreements (FTAs) with Peru, Colombia, Panama, and South Korea needing congressional approval; Trade Adjustment Assistance up for renewal; the struggle to advance multilateral trade talks in the World Trade Organization (WTO); and, critically, the need to extend the President's trade promotion authority (TPA) this summer, policymakers have ample opportunity to implement a more protectionist policy stance or to stay the course and continue to allow America to reap the benefits of open market policies.
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The Tangible Benefits of Trade
The gains from freer trade are substantial. Today, the $12 trillion U.S. economy is bolstered by free trade, a pillar of America's vitality. In 2005, U.S. exports to the rest of the world totaled $1.2 trillion and supported one in five U.S. manufacturing jobs. Jobs directly linked to the export of goods pay 13 percent to 18 percent more than other U.S. jobs.[1] Moreover, agricultural exports hit a record high in 2005 and now account for 926,000 jobs.[2]
In Colorado, international trade supports one of every 20 private-sector jobs and more than 16 percent of manufacturing jobs. International trade supports an estimated 6.1 percent of Ohio's total private-sector employment and more than 20 percent of all manufacturing jobs. In South Carolina, trade supports one of every 10 private-sector jobs and more than 23 percent of manufacturing jobs.[3] State by state across America, international trade promotes opportunity.
The service sector accounts for roughly 79 percent of the U.S. economy and 30 percent of the value of American exports.[4] Service industries account for eight out of every 10 jobs in the U.S. and provide more jobs than the rest of the economy combined. Over the past 20 years, service industries have contributed about 40 million new jobs across America.[5]
As today's global economy offers unparalleled opportunities for the U.S., continuing to expand trade by lowering barriers to goods and services is in America's economic interest. Freer trade policies have created a level of competition in today's open market that engenders innovation and leads to better products, higher-paying jobs, new markets, and increased savings and investment. Small business, a critical component of the U.S. economy, creates two out of every three new jobs and accounts for about one-quarter of America's exports.
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U.S. Free Trade Agreements
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As of April 2007, the U.S. has 10 FTAs with 16 countries: Israel; Canada and Mexico (NAFTA); Jordan; Singapore; Chile; Australia; Bahrain; Oman; Morocco; and the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua (DR–CAFTA[12]).
While some countries are still working to implement more recent trade agreement legislation, the U.S. has already seen impressive results. The FTAs account for more than $900 billion in two-way trade, which is about 36 percent of the total of U.S. trade with the world. U.S. exports to FTA partner countries are growing twice as fast as U.S. exports to countries that do not share FTAs with the U.S.[13]
The oft-demonized NAFTA has in fact generated significant gains for the U.S. since its inception. Canada and Mexico are America's first and second largest trade partners, accounting for about 36 percent of all U.S. export growth in 2005.[14] Between 1993 and 2005, U.S. manufacturing and agriculture exports to Canada and Mexico grew by 133 percent and 55 percent, respectively. Each day, NAFTA countries conduct roughly $2.2 billion in trilateral trade.[15] This trade supports U.S. jobs, bolsters productivity, and promotes investment.
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Free Trade Is Fair Trade
An artificial distinction has been drawn between "free trade" and "fair trade." The idea that free trade is fair only if countries share identical labor costs and economic regulations or if domestic producers are compensated for market losses to more competitive foreign producers is false. The economic benefits of free trade derive partly from the fact that trading partners are different, allowing any country embracing world markets a chance to be competitive. Free trade is fair when countries with different advantages are allowed to trade with a minimum of restriction and capitalize on those differences.
Low wage costs, access to cheap capital, education levels, and other fundamental variables all play a role in determining the comparative advantages that one country has over another in the global marketplace. To "fairly" equalize those differences— provided those differences are based on a country's economic and demographic reality—only negates or reduces a country's ability to benefit from participating in the global trade system.
Such "fairness" also prevents countries from realizing the tangible gains from freer trade: a more competitive economic environment and better, more efficient domestic resource allocation. These positive effects drive greater long-term economic potential, create economic opportunity, better promote a cleaner environment, and improve living standards at home.
Free trade allows a county to compete in the global market according to its fundamental economic strengths and to reap the productivity and efficiency gains that promote long-run wealth and prosperity. In reality, there is no distinction between free trade and truly fair trade.
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Conclusion
Armed with the facts, Congress should bolster itself against "free trade fatigue" and protectionist sentiment and revitalize the drive to promote economic growth and prosperity by eliminating international trade barriers. Renewing the President's trade promotion authority to facilitate the completion of new bilateral free trade agreements, reforming and reducing the scope of the U.S. farm bill to promote a successful conclusion to the WTO Doha Development Round, and generally guarding against populist, protectionist trade policy changes would go far toward expanding economic opportunity in the U.S. and around the world.
Daniella Markheim is Jay Van Andel Senior Trade Policy Analyst in the Center for International Trade and Economics at The Heritage Foundation.
[1]Office of the U.S. Trade Representative, 2006 Trade Policy Agenda and 2005 Annual Report, March 2006, at (January 24, 2007).
[2]Ibid.
[3]U.S. Department of Commerce, International Trade Administration, "Exports, Jobs, and Foreign Investment," at
(April 1, 2007).
[4]U.S. Department of Commerce, Bureau of Economic Analysis, "International Economic Accounts," at (January 24, 2007).
[5]Office of the U.S. Trade Representative, "Free Trade in Services: Opening Dynamic New Markets, Supporting Good Jobs," May 31, 2005, at (March 30, 2007).
[12]Dominican Republic–Central America Free Trade Agreement.
[13]Office of the U.S. Trade Representative, 2006 Trade Policy Agenda and 2005 Annual Report, p. 3.
[14]U.S. Department of Commerce, "International Economic Accounts."
[15]Office of the U.S. Trade Representative, "NAFTA: A Strong Record of Success," March 2006, at (January 24, 2007).
Except for the fact that I run from females dealing with feelings, your comment is accurate.
Laughing at your anecdotes makes me gullible? If you say so. LOL!
I don't. My wife does wonders with my feelings and I got no problem with it...
I’ve never thought of it that way . . . why should I bother with dealing with my feelings when I can find a woman to do so?
You got that one right.
I deal with reason and reality because I know that's all I can handle. Any time feelings get involved I can tell I'm way out of my league.
Let's face it, women are much more complicated than we are and they can do things that we can't even imagine..
>Free trade forces Americans to get off their butts and be creative. Being dependent upon a corporation for a job is only slightly better than being dependent on the govt for a handout.<
REALLY! Americans were NEVER known to be ANYTHING BUT creative, self starting, and fabulous entrepreneurs in my generation, and up to it. Through that indomitable ambition America was bustling, building, beautiful, and blessed.
Corporations provided jobs. Jobs are not a handout in any body’s book. That is, corporations became successful because of Americans, and they provided jobs for Americans before they went multinational, moving abroad and taking the jobs with them. Our tax system is blamed for this, and it is partially to blame. But greed and globalization is also a large part of the exodus. Globalization is death to America’s sovereignty.
Sometime after the 50’s creeping Socialism became the poison of choice of the people. Children were being dumbed down in public schools. “Entertainment” brought down good family values and morals in general in every livingroom in the country via a television set.
America was strong because of her industrialization. Her farms supplied healthy food for the nation. Opportunity to succeed was there for anyone who wanted to work for it.
If that spirit is not stirred to back life in this country soon, what will she become?
Here’s some Sunday reading for you. Be sure to finish it all.
Gosh thanks. Never heard that before. /s
You didn’t read it. Well, I tried. Please return to your regularly-scheduled demagoguery.
Here’s what happens when you drive-by me.
“Because we’re wealthy, and we buy lots of stuff (including imported oil, as lewislynn points out)? What do I win?”
http://www.freerepublic.com/focus/f-bloggers/1855651/posts
[watch video]
I think Hunter partially explains it. Tax inequalities, too high corporate taxes, and currency issues.
Then it’s a matter of savings or more particular our lack of efficient savings (ie entitlements).
You do see, below the graph and in text, where the data came from, don't you? Still want to claim that this GDP data is not adjusted for inflation?
A) What is the average wage in 1929 in 1929 dollars?
B) You ignore the logarithmic improvements science has brought to industry. Traitor economists don’t improve the GDP, business and technological advancements do.
C) You start in 1929 to manipulate the statistics like a Global Warmist. This is exactly what the Communist Global Warmists do to their graphs. They cherry pick the coldest year and start the graph from the coldest year to make the slope look bigger. How about you get a graph that goes back to 1790. OH THATS RIGHT! YOU don’t have the graph that goes back to 1790.
D) Free-traders are liars.
To ask that question in one thread is bad enough. To ask it twice is an invitation to be name-called. You do realize that you bumped this thread again, increasing the chances that your foolish question will be seen by even more FReepers.
B) You ignore the logarithmic improvements science has brought to industry. Traitor economists don’t improve the GDP, business and technological advancements do.
My FRiend, it is you who keeps ignoring innovative improvements. You, as you should recall, keep telling us just how much worse things are now than they ever have been. That argument -- that things are getting worse -- is bankrupt of reality. The fact that you wrote what you did here shows just how conflicted you are at your core.
C) You start in 1929 to manipulate the statistics like a Global Warmist. This is exactly what the Communist Global Warmists do to their graphs. They cherry pick the coldest year and start the graph from the coldest year to make the slope look bigger. How about you get a graph that goes back to 1790. OH THATS RIGHT! YOU don’t have the graph that goes back to 1790.
Fine, pick any starting point you want. As long as you give me ten years and an ending date with recent data. Go for it.
D) Free-traders are liars.
Ohh, now that was convincing. It was so profound a statement that I am sure someone's views will be changed by it.
A) What is the average wage in 1929 in 1929 dollars?
To ask that question in one thread is bad enough. To ask it twice is an invitation to be name-called. You do realize that you bumped this thread again, increasing the chances that your foolish question will be seen by even more FReepers.
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Its the exact same graph used in the other thread. What is the average wage in 1929 in 1929 dollars?
B) You ignore the logarithmic improvements science has brought to industry. Traitor economists don’t improve the GDP, business and technological advancements do.
My FRiend, it is you who keeps ignoring innovative improvements. You, as you should recall, keep telling us just how much worse things are now than they ever have been. That argument — that things are getting worse — is bankrupt of reality. The fact that you wrote what you did here shows just how conflicted you are at your core.
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Going outside the country for cheap Communist labor is not an innovation, its devolution towards slavery.
C) You start in 1929 to manipulate the statistics like a Global Warmist. This is exactly what the Communist Global Warmists do to their graphs. They cherry pick the coldest year and start the graph from the coldest year to make the slope look bigger. How about you get a graph that goes back to 1790. OH THATS RIGHT! YOU don’t have the graph that goes back to 1790.
Fine, pick any starting point you want. As long as you give me ten years and an ending date with recent data. Go for it.
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Fine you got me, I’m too lazy to do the plotting and research myself. I’ve been looking everywhere for one, believe you me.
You pick a starting year.
You don’t have any original research yourself, I haven’t seen a graph made by you, you look outside, you cherry pick graphs just like those who made the graphs cherry pick data.
Everyone’s got an agenda, you pretend you don’t have an agenda. Hardy har.
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