Free Trade

No issue has more potential to raise the global standard of living, and the health and happiness of the world’s population, than free trade. 
Free trade reduces the costs of goods and services by enabling consumers to find the lowest cost goods, and by enabling producers to find the lowest input cost for their supply chain.  Free trade creates employment and innovation by reducing business production costs, leaving more money to invest in research and development, new projects, and new employees.  Consumers are also left with more money that can be used to save or spend, either of which will drive economic growth and employment.  Free trade raises the economic tide for all nations and helps to productively employ the resources of the planet.

Freedom and human rights are promoted through free trade by creating pressure to disrupt the status quo of socialist or dictatorial regimes.  The attractiveness and allure of global commerce for closed economies is enhanced when trade barriers are low.  Free trade creates a powerful incentive for closed countries with limited freedom to become more open and free.  The ascendancy of China over the past 35 years is a clear example of this.

Arguing that protectionist policies are needed in order to protect domestic employment is not only wrong, but is usually politically motivated and disingenuous.  Trade protectionism usually benefits a specific group at the expense of many groups.  It is politically easy, however, because the benefits to the one group are fairly direct and easy to measure and the costs to the many groups are often indirect and more difficult to measure.  For example, the steel, lumber, or agriculture lobbies will celebrate tariffs on foreign imports of their respective commodities, but the increased costs inflicted on consumers and manufacturers are somewhat less obvious.

It is often stated that protectionist policies are needed to level the playing field, or that trade restrictions are needed because our trading partners impose them.  Nothing could be further from the truth.  Retaliatory trade measures will indeed hurt the country that is retaliated against, but it will also hurt the country imposing restrictions by increasing costs and reducing the overall quantity of goods and services demanded.  To argue that trade protectionism calls for trade retaliation is akin to saying “if you push both of us off of this 10 foot cliff, then I will retaliate by pushing us both off of a 20 foot cliff”.

Technology has done more to promote free trade than any trade summit or trade negotiation ever has.  Technological advances have made financial and human capital very mobile and have made the benefits of free trade more accessible and easier to achieve.  Progress toward free trade will continue to be driven by technology.  The countries that embrace this trend will be more competitive, will grow faster, and will create more wealth and opportunity for their own citizens and for people around the world.  Governments with the courage to stand up to the narrow special interests that lobby for trade restrictions and who actively pursue the elimination or reduction of subsidies, tariffs and import quotas will see these benefits accrue on a far greater scale.