Wednesday, June 17, 2015

Democrats Wrong in Opposing Trade Agreement

David Brooks has written an op-ed in the New York Times on 16 June 2015 about the bad judgment Democrats are exercising in voting to impair the President’s ability to coordinate international trade around the Pacific rim. He makes several cogent arguments:

1.  A trade agreement will raise the standard of living of the world’s poor. The economic effect on Mexico, for instance, was much improved by NAFTA; and that was done without much effect on the U.S. economy. The improved situation among Mexican workers has lessened their desire to immigrate to the United States illegally. I would add to Mr. Brooks’ comments that a rising standard of living among the poor of the Pacific Rim countries would allow them to buy more United States imports, and that would, therefore, translate into more income for us.

2.  The trade deal will not hurt the American economy. Eighty-three percent of the nation’s leading economists believe that a trade deal with the Pacific Rim will help our economy. The global poor will benefit the most, but most people in rich countries will benefit, too. Since World War II, reductions in U.S. tariffs have contributed 7.3% to American incomes.

3.  A trade deal will not stifle future innovation. Although some American jobs have been lost by past trade deals, most manufacturing job losses have been caused by technological improvements. Those manufacturing jobs aren’t coming back. The best way forward is to increase the number of high-quality jobs in the service sector. The Pacific trade deal would help. The treaty is not mostly about reducing tariffs on goods. That work has mostly been done. It’s about establishing rules for a postindustrial global economy, rules having to do with intellectual property, investment, antitrust and environmental protection. Service-sector industries like these are where America is strongest, where the opportunities for innovation are the most exciting and where wages are already 20 percent higher than in manufacturing.

4.  The trade deal will not imperil world peace. The Pacific region will either be organized by American rules or Chinese rules. By voting against the trade deal, Democrats went a long way toward guaranteeing that Chinese rules will dominate.

Rejecting the Trans-Pacific Partnership will hurt economies from the U.S. to Japan to Vietnam. It will send yet another signal that America can no longer be counted on as the world’s leading nation.
The best defense of free trade I have read is a book by William Easterly, The White Man’s Burden. Check it out.


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