Even the liberal media support the Colombia trade deal
Today’s Washington Post and Los Angeles Times both endorse passage of the U.S- Colombia free trade agreement, which many Democratic politicians, pressured by organized labor, have refused to endorse. House Speaker Nancy Pelosi has ducked the issue by refusing to bring it to a vote. President-elect Obama got considerable help in his campaign from labor unions that oppose the deal, but no political debt is worth undertaking such a disastrous course as scuttling this trade deal.
Not only is Colombia the United States’ strongest ally in South America — a fact that would make scuppering the deal a slap in the face for Colombia and a political victory for the increasingly unhinged Hugo Chavez — but the last thing America needs in a time of economic turmoil is a Hawley-Smoot lite in the form of failed trade liberalization.
For all the bailouts and stimulus packages being batted around Washington, what the American economy really needs is greater opportunity to innovate and invest — in other words, less burdensome regulation and more open markets. As the Times‘ editorial argues:
The pact would balance and normalize a trade relationship that is now one-way. Colombia has almost unfettered access to U.S. markets — 91% of its goods enter duty free — but U.S. products face tariffs of up to 35%. Each Caterpillar truck sold in Colombia, for example, is taxed more than $200,000. This is a hindrance to prosperity for both countries. Currently, about 9,000 U.S. businesses export to Colombia, and were this deal passed, that number would skyrocket.
And, as the Post’s editorial says:
The main economic effect of the trade agreement would be to enable U.S. producers — automakers included — to export to Colombia tariff-free. This would simply level the playing field, because 90 percent of Colombian goods already arrive in the United States tariff-free under temporary trade preferences that Congress recently renewed. With U.S. goods exports to Colombia totaling over $8 billion per year, the pact offers a nifty dose of stimulus for U.S. businesses and workers.
Stimulus, indeed! As CEI’s Wayne Crews argues, to stimulate, deregulate. The same is true of liberalizing trade.
For more on the U.S.-Colombia trade deal, see here and here.
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Last-minute push for Colombia trade pact
Major newspapers around the country including the Washington Post, the LA Times, and the Wall Street Journal are urging President-elect Barack Obama to pass the U.S.-Colombia Free Trade Agreement in the lame duck session. The Los Angeles Times said it bluntly, “It’s time to stop playing games with a trade pact whose economic and political benefits are good for both nations.”
Some reports of the meeting between the president-elect and President Bush said that the president had pushed for the trade agreement in exchange for support of the auto loan package, but that was denied.
CEI has strongly supported the passage of this agreement based on its own merits – it provides surety for continued liberalized trade for Colombia, it opens up Colombian markets to U.S. goods without high tariffs, and it helps cement the close relationship with a Latin American ally besieged by leftist neighboring governments.
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Perspective on trade in the Obama Administration
During the presidential primaries and in the campaigns, there was a lot of rhetoric about the need for “fair” trade instead of free trade. Candidates were in a populist mode, catering to critical manufacturing states that have lost jobs and serving up trade as the villain.
Now that Senator Barack Obama is the President-elect, there is renewed speculation on what path his administration will take on international trade. Will he make good on his campaign rhetoric that echoed the Democratic platform’s call for renegotiation of trade agreements to include even more stringent labor and environmental standards? Will he continue to hold up pending trade agreements with close U.S. allies? Will he embrace isolationism and protectionism or adapt to geopolitical realities?
In a new C:\Spin publication, I provide some perspective on the outlook for trade in the Obama Administration. I opine that President Obama will face enormous pressure to make good on some of his campaign promises on trade. But, with his top-notch economic advisers, he may pull back from drastic anti-trade actions that would harm the fragile economy and alienate U.S. allies and trading partners.
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More Trade Means More Peace
If goods do not cross borders, then soldiers will.
It’s an old saying. Maybe even a cliché. But there is some truth to it. What wonderful news, then, that India and Pakistan have re-opened a trade route through the Kashmir region.
Soldiers have been crossing that border for 60 years. Replacing those soldiers with spices, apples, and other, ahem, non-fatal goods will have two positive effects. First, those goods will become cheaper and more abundant in India and Pakistan.
Second, the new trade route will help to strengthen the blossoming but still fragile peace; killing the customer is bad for business. Indians and Pakistani in and around Kashmir are developing a financial incentive to get along.
Expanding international trade is not just good economics. It is good foreign policy. Congress and our next president, whoever he is, would do well to heed that lesson.
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A note from Fred Smith on the battle for free trade
Some thoughts on why our side is losing in its efforts to promote and defend free trade:
- From the time of the GATT onward, the primary approach to trade liberalization has been based on mercantilistic arguments. What will another nation sacrifice to gain the right to benefit our consumers? That approach — always based on real-politics - not intellectual considerations arguably worked in a world where rent-seeking was limited, where the trade negotiation entity (the GATT) was weak, when the focus was on global arrangements rather than regionals or bilaterals, and when trade had not become the tool to advance “social justice” in the world. None of those conditions any longer exist. Isn’t it time to rethink whether it might not be politically possible to advance free trade as unilaterally beneficial to the citizens of each country? That is, is it not conceivable that efforts to strengthen the consumerist forces around the world might not prove an offset to the producer and utopian pressures to see trade as a means of advancing special interest agendas?
- I note that when an attempt was made to appeal directly to the European consumers (”Do you know how much more you’re paying for food?”) by US negotiators some time ago, the EU politicians went berserk, suggesting that they (at least) viewed this strategy as politically possible.
- The willingness of governments around the world to allow trade policy to become the instrument for all social agendas leaves little hope for advancing economic liberalization. If we must wait for agreement by environmentalists, human rights activists, labor groups,. women and religious groups, pro-democracy advocates and so forth, there is little scope for agreement on what is already a very complex process.
- Moreover, the mercantilist bias of trade negotiations has allowed protectionists to seize the moral high ground. We care about economics; they care about justice. “Fair” trade coffee ‘Yes!’ - Free trade coffee, ‘No!’
- That failure reflects, of course, in part the dominance of the NGO movement by coercive utopians but there are also a growing array of economic liberal NGOs around the world and these have not yet been effectively organized or mobilized both to challenge the domestic producer groups, nor to retake the moral high ground in the global debate. Even some of the traditional NGOs are becoming aware of the risks attendant on their fellow NGOs antipathy to trade.
- This suggests the possibility that a group promoting greater trade freedom might play a critical role in seeking to organize a ‘Grand Alliance’ of economic liberal NGOs (especially from the developing world) and pro-trade economic interests from the developing world. The counter-alliance - anti-trade NGOs (the Lori Wallachs of the world) and anti-trade economic interests ( Lou Dobbs and the sugar sector) already exist and provide the model for creating our own Holy Alliance. -Fred
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