David R. Henderson  

A Weak Case for Free Trade

Try This on Your Favorite Curm... Another Perspective on LTCM...

Today's Wall Street Journal published one of the weakest cases for free trade it has ever published. The Journal, which is traditionally quite pro-free trade, published an op/ed by former Democratic congressman James Bacchus. In it, Bacchus talks up the benefits of trade for exporters. A sample paragraph:

Will Democrats approve the pending free-trade agreement with Colombia? American workers and businesses would certainly profit from the proposed tariff cuts in that agreement that would, according to the White House, result in $1 billion annually in new exports. Ninety percent of imported Colombian goods already enter the U.S. duty-free.

In context, Bacchus seems to be saying because most of our imports from Colombia are already duty-free, "we" don't lose much from opening our borders to Colombian imports. Actually, if the U.S. had high tariffs on all Colombian imports, then the gain from free trade would even be greater. Nowhere in the article does Bacchus mention the other source of the benefits of free trade: the gains to consumers. The gains from trade are the producer surplus and the consumer surplus from trade. Bacchus exclusively mentions the former (not using that term, of course), but breathes not a word about the latter.

Comments and Sharing

CATEGORIES: International Trade

COMMENTS (3 to date)
Bill writes:

He, as a seasoned politician, was most likely making the case to the rent seekers who really oppose free trade. The hoi polli who really benefit will only consume the ads the "exporters" will pay for.

Gary Rogers writes:

The point he is making is that Columbian imports are already duty free while our exports to Columbia are currently still taxed. For those with a protectionist bent, it would be a no-brainer to sign an agreement that drops the duty on exports to Columbia while we would lose nothing because imports from Columbia are already free of any duties. I also agree that the argument for free trade is stronger than what is made in the article.

Pietro Poggi-Corradini writes:

I thought that that was the "wrong" way to argue for free-trade, not just weak. Namely, it could be the case that more open trade will benefit some exporters or some US producers in general, but it could also hurt other producers, so that it's hard to argue that "on net" there will be more job creation than job destruction.

In fact, freer trade would mainly bring about a shift in how resources are employed. The claim that this shift results in a gain in efficiency, can only be made by pointing to the lower prices and the wider range of products.

If one wants to emphasize that dealing with more foreigners in more complex ways is a good thing per se, then one can point to the benefits for international relations and peace that a more integrated global economy brings about. However, that's not the same as saying that "American workers and businesses would certainly profit..."

Comments for this entry have been closed
Return to top