Fighting for America's economy with free trade

(This is an interesting article which provides some background information
into the barriers in place that help to prevent free trade between nations.
Many nations let the ruling individual decide on the trade policy and the
reject or approve it without adding provision, many of which cater to
special interest groups and make trading less lucrative and more
inefficient. This author argues for granting such Trade Promotion Authority
to the president. Political boundaries which are more open economically
provide better lives for countries on both sides of the boarders and serve
to reduce cultural boundaries which are often the root of violent conflicts.
- Mike)

Fighting for America's economy with free trade
----------
Heritage Foundation
by Sara J Fitzgerald
According to Fitzgerald, "By signing new trade agreements with
other countries, the United States will show the terrorists that
America, which has many allies and business partners, is
undeterred by their actions." (10/10/01)

http://www.free-market.net/rd/601293469.html

The terrorist attacks on September 11 brought not only death and destruction
to the United States, but also economic hardship. The rumblings of recession
heard before the attacks quickly intensified; the stock market plummeted;
and news of layoffs came almost daily. It became clear to many that without
immediate action from Washington, America's economic situation could worsen.

The U.S. government must fight back by adopting policies that encourage
economic growth and free trade. Signing free trade agreements with other
nations is one such step. The fact that the United States, historically the
world's leading proponent of free trade, trails the world in free trade
agreements is troubling. In this time of economic need, Congress should
waste no time in granting the President trade promotion authority (TPA) to
negotiate more trade agreements. Doing so will help Washington boost the
sagging economy, improve the global marketplace, re-establish America's
leadership on trade, and prove to those behind the terrorist attacks that
the United States remains strong.

Importance of Trade Promotion Authority. Of the 130 existing trade and
investment agreements throughout the world, the United States is party to
only two: the North American Free Trade Agreement (NAFTA) and the Uruguay
Round of the General Agreement on Tariffs and Trade. Many countries would
like to sign a free trade agreement with the United States, but they are
hesitant to enter negotiations on agreements that could be subject to
countless amendments debated at length in Congress. Trade promotion
authority would assure potential trade partners that the agreements they
sign with the Administration will be approved or rejected by Congress
quickly and without debilitating amendments.

Since 1993, Congress has failed to grant the President trade promotion
authority, formerly called "fast track." Yet, with or without TPA, U.S.
Trade Representative Robert Zoellick will be at the negotiating table every
day trying to forge agreements that benefit Americans. Without TPA, he is
limited in what he can accomplish. Zoellick explained this point in a speech
before the Institute for International Economics on September 24:

If I am pressing my counterpart from another country to his or her bottom
line--or even a bit beyond--he or she will balk if the Congress makes it
clear it may reopen the deal. My counterparts will fear negotiating once
with me and then a second time through congressional amendments driven by
special interests.

It is possible to negotiate agreements without TPA, but it is far more
difficult and thus less likely to occur. Countries are more likely to
negotiate with others that possess such authority, which ensures a quick
negotiating process, not a tedious one. Meanwhile, as other countries freely
trade back and forth, the United States continues to fall behind.

As Pascal Lamy, the European Commissioner for Trade, has observed, "If Trade
Promotion Authority is denied by Congress, it would be hard for the U.S.
Administration to establish itself as a credible trading partner." Granting
the President trade promotion authority at a time when the U.S. economy is
struggling to respond to the massive assaults affecting vital industries
would show the world that America will not retreat from its efforts to open
markets to trade and investment.

Keeping Trade Agreements Focused on Trade. Any TPA bill before Congress must
be carefully worded. Its language must be straightforward and focused on
advancing trade with other nations, not bogged down with provisions for
special interests or burdensome oversight. The purpose of TPA legislation is
solely to grant the President authority to negotiate trade agreements with
the least possible red tape. Efforts, for example, to make labor and the
environment central parts of a TPA bill would neither further trade nor
advance labor and environmental standards.

As occurred during the NAFTA negotiations, side agreements should be
implemented to address issues like labor and the environment so that trade
is not held hostage to other disputes in the future. In NAFTA's case, the
side agreements actually gave labor and environmental standards higher
visibility. Such side agreements effectively use fines instead of sanctions
for noncompliance and require that a plan to solve a labor or environmental
problem be submitted by the government at fault. By comparison, trade
sanctions are counterproductive, and most countries will not sign an
agreement that includes such measures.

How Trade Benefits Americans. Trade agreements reduce or eliminate tariffs
(essentially, invisible taxes) and non-tariff barriers such as quotas and
stringent regulations. Such obstacles contribute to higher costs and lower
economic efficiency. In this time of economic uncertainty, maintaining
high-paying jobs is crucial to economic stability. According to Ambassador
Zoellick,

In the seven years since NAFTA's implementation, U.S. exports to Mexico and
Canada now support 2.9 million American jobs--900,000 more than in 1993.
Such jobs pay wages that are 13 to 18 percent higher than the average
American wage.

Government data also reveal that the lower tariffs and higher incomes that
followed the signing of NAFTA and the Uruguay Round resulted in benefits of
$1,300 to $2,000 a year for the average American family of four. According
to a recent University of Michigan study, a new trade round could deliver an
annual benefit of $2,450 for this same family.

Past trade agreements clearly have benefited Americans, but many barriers
still need to be dismantled. Each barrier that is torn down will give way to
new opportunities for American industry and translate into more
opportunities for American workers.

Fighting Back with Trade. The terrorists declared war on America: its
values, beliefs, culture, and products. By signing new trade agreements with
other countries, the United States will show the terrorists that America,
which has many allies and business partners, is undeterred by their actions.
There is no better time for Congress to grant the President trade promotion
authority and add a strong international economic program to the global
fight against terrorism.

--Sara J. Fitzgerald is a Trade Policy Analyst in the Center for
International Trade and Economics at The Heritage Foundation.