Trade Agreements and the Free Market

This sounds familiar:

Later this year, the Obama administration and Congress will seek bipartisan votes to pass free trade agreements with South Korea, Colombia and Panama. With 87% of global economic growth over the next 5 years taking place outside of the United States, trade supporters believe these agreements will create jobs and prosperity by helping American companies tap into fast-growing export markets.

Opponents disagree. They argue that “NAFTA-style” trade agreements hurt rather than help the U.S. economy — and polls show that much of the public agrees.

But is this conventional wisdom correct? Or do trade deals work? As Washington gears up for hard-edged debates about trade, it’s worth exploring some common misconceptions about free trade agreements.

This line of argumentation reminds me of Milton Friedman’s attempt at defending central banks. Friedman took the approach that the free market was the bees’ knees at everything, except money. Likewise, trade proponents take the approach that the market is good, but then somehow manages to conclude that we need the government to step in and a) create an artificial legal entity (the corporation) and b) enter into trade treaties with foreign nations.
Somehow, all this government interference is defended in the name of the free market, and those who don’t accept this new gospel are branded as ignorant or worse. There is good reason to be wary of governmental interference, seeing as how virtually all interference is destructive, inefficient, or counterproductive.
If trade proponents are truly concerned about free trade, they would first oppose the massive tax and regulatory burdens placed on domestic production and trade. Then maybe their message of increased foreign trade would seem more sincere.

1 comment to Trade Agreements and the Free Market

  • Sample Agreements

    Trade agreements can strengthen the business climate by including commitments on issues of concern along with the reduction and elimination of tariffs

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