What’s wrong with free trade? Seriously, why do so many Americans cringe, yell, or feel like breaking something when the subject of free trade is brought up? It’s an important question and one that many free trade advocates have been trying to crack for years. But what’s obvious is that free trade advocates haven’t had much success answering that question lately. Just look at the three U.S. free trade agreements – Panama, Colombia, and South Korea – that have been awaiting congressional approval for three years now. Are those of us free trade advocates in the back pocket of “Big Business,” or do we support the “exporting of America” as many anti-trade folks would claim us to be? Short answer: absolutely not. In fact, quite the contrary. I love America and I know that she can compete and will succeed against any nation in the world. But we can only do so with the continued help of free trade policies.Let’s take a look at a few quick facts. According to the Office of the U.S. Trade Representative, the United States is the world’s largest trading nation, with exports of goods and services totaling over $1.8 trillion in 2008. Moreover, manufacturing exports support nearly six million jobs, including one in six manufacturing jobs. Trade supports 808,000 agricultural jobs and U.S. workers with jobs supported by trade pay 13 to 18 percent more than the U.S. national average.
With some of these big picture facts, let’s briefly examine one of the pending U.S. free trade agreements awaiting congressional approval, the trade deal with Colombia. Over the past decade, Colombia has become one of our closest allies in Latin America. Colombia is now one of the United States’ largest trading partners in the region and the largest market for U.S. agricultural goods. But this is overwhelmingly a one-sided trade – a fact that most free trade detractors should be railing against (but they’re not). For example, over 90 percent of goods imported from Colombia enter the United States duty free through various trade preference programs already in place. The United States signed the U.S.-Colombia Trade Promotion Agreement – a fancy name for a free trade agreement – some three years ago. So why in the world is this not in force? The Colombian Government has already ratified the agreement, but the United States Congress has failed to follow suit. The question is especially perplexing when considering that there are more than 10,000 U.S. companies that export to Colombia, of which approximately 8,500 are small and medium-sized firms. These companies are facing steep tariffs and oftentimes insurmountable regulatory barriers from entering the Colombian market. So again, why hasn’t our government succeeded in leveling the playing field while providing U.S. exporters the same benefits afforded to our Colombian counterparts?
The United States is just caring, compassionate and generous people, that’s the answer, right? Well, yes, that’s certainly a part of it. But upon further examination, just look at the polls. Free trade is more unpopular than ever before and at the end of the day, certain elected officials want to hold up these trade deals and prevent the negotiation of any future ones for their own political benefit. I have to admit though, we free traders are at least partly to blame as well.
While free trade has become such an emotional issue, proponents have been tone deaf for far too long to the struggles of those Americans negatively impacted by free trade policies. People see manufacturing plants close up shop and relocate to Mexico. People see their neighbors getting laid off because their job has been outsourced to India. People have the feeling that America is losing its identity, that trade is creating a new world order. These are tangible things; people correlate the cause and effect, rightly or not. What’s the response from the trade geeks of the world – the free traders out there? Well, we pull out our charts, our statistics, and our data that all try to convince a skeptical public at how great trade is. And while that we may be right on the merits, that message doesn’t help the 59-year-old that lost his job a year before he could take an early retirement because his manufacturing plant just moved to China. If you were laid off largely because of trade, you don’t want to hear that free trade is for the greater good. You want to support your family – you want your job back!
As a proponent of free trade, I think the first step in overcoming this anti-trade fervor that’s spreading across our country is to step up to the plate and admit that there might be folks negatively impacted by such trade deals. We also must get behind programs that adequately help U.S. workers displaced by trade. Trade Adjustment Assistance (TAA) is one example. TAA is a federally-funded program designed to do just that – retrain displaced workers, provide temporary unemployment insurance, and help these Americans find permanent work again. Don’t get me wrong, TAA is not the end all be all, it has its fair share of criticisms. However, free trade advocates need to finally succumb and whole-heartedly support a workable and efficient system that provides an adequate safety net for workers displaced by international trade. To not do so only shoots ourselves in the foot, it will ensure that we will continue to lose this important battle for America’s economic future.
I also believe that proponents of free trade have failed to educate the American people on the actual benefits of trade. I can just see the eyes glazing over at this point (if you haven’t done so already), but really, we need an all out educational campaign that shows people the everyday benefits of trade. Just a couple more facts from the trade geek. Like it or not, trade is the engine that drives the U.S. economy forward. Over 95 percent of the world’s population lives outside the U.S. borders – that’s a huge and growing market. Trade also facilitates more choices and lower consumer prices; it’s a proven fact. Trade promotes competition and innovation, some of the very principles that this great country was founded upon and why it remains the world’s only superpower. Trade allows for the advancement of new ideas and technologies. And trade increases the market for the development of these ideas and products, which stimulates competition and betters the country in which we live. We all like shopping at Wal-Mart, Target, and Home Depot, right? The reason we like these places is because they are cheap, and don’t try to deny it. You’re money goes further at these places. Why? Largely, because of trade.
For those of you that have been negatively impacted by trade, I genuinely empathize with you. Not only have we most likely set you up for failure because of inadequate retraining programs, we have failed to demonstrate the bigger picture of how and why free trade is important for each one of us and for the future of this great country. It’s kind of a big deal. As free traders we must acknowledge our faults, embrace new ideas, and recalculate our next steps based on our inability to resonate with the American public. If we fail to do so, we not only ensure our own future disappointment, we will more importantly not adequately equip this country that we love with the tools necessary to compete and succeed in this increasingly competitive global marketplace. And that is simply unacceptable.
** Zachary Paulsen is a policy advisor at one of the largest U.S. law and public policy firms in Washington, DC. Previously, he served on the U.S. Senate Committee on Finance, which has jurisdiction over U.S. trade policy matters.
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Sorry that sentence should have read :" shoddy goods China tries to pass off on us".
*pass* as in pass the salt please
Many get upset about free trade because it eventually ends up more one way than the other, and usually it's the US that gets the short end of the stick. Yes, we need to compete in the global marketplace, but I am not going to buy all the shoddy goods China tries to pass off on us. We deserve better, the US has helped many countries through some pretty tough times. And when we see plants closing and our work being shipped out to Mexico or other countries, it does not give us a warm, fuzzy feeling inside, but eats at us. We need to support our families too. I remember my parents talking when the big steel companies left, and that was pretty much the beginning of the end.
Interesting perspective on trade agreements, and how they are connected the future growth of our country. It’s unbelievable that Congress hasnt acted 3 current trade agreements in Panama, Columbia and South Korea. It’s as if they don’t even care about letting private business prosper globally, and would rather sit around talking about job growth than do anything remotely controversial to get the job done. Geesh…..