What a delight to hear at least three speeches advocate more free trade at the Wednesday session of the Republican National Convention. The Bush...
What a delight to hear at least three speeches advocate more free trade at the Wednesday session of the Republican National Convention. The Bush Institute’s 4% Growth Project advocates policies that will help America achieve sustainable, real GDP growth of 4% (we’re now at 2%, and the post-World War II average has been about 3%). One of those policies is free trade. Carlos Gutierrez, the former secretary of Commerce and CEO of Kellogg, makes the case masterfully in his chapter in The 4% Solution, our new book on getting America growing again. Until Wednesday, however, trade has been almost totally absent from the presidential campaign. That problem was remedied – by Sen. Rob Portman of Ohio, who served as U.S. Trade Representative under President George W. Bush, by the vice presidential nominee, and by former Secretary of State Condoleezza Rice, who happens also to chair the Bush Institute’s Advisory Board. She said: “We must work for an open, global economy, and pursue free and fair trade, to grow our exports and our influence abroad. If you are worried about the rise of China, just consider this — the United States has negotiated — the United States has ratified only three trade agreements in the last few years, and those were negotiated in the Bush administration. China has signed 15 free trade agreements and is in the progress of negotiating as many as 18 more. Sadly, we are abandoning the field of free and fair trade and it will come back to haunt us.” Sen. Portman, earlier in the day, pointed out that the Obama Administration is the first in modern history to fail to push for fast-track trade negotiating authority, which gives the President the power to submit an agreement to Congress for an up-or-down vote, without amendment. Without that authority, it’s nearly impossible to pass a significant trade deal. Trade agreements aren’t easy, as Gutierrez points out, because “trade is something that is often misunderstood and therefore too quickly maligned.” The change trade can bring can be painful and disruptive for workers in some industries, but the benefits – lower prices for American consumers, lower costs of inputs (like machine parts) for American manufacturers, and more open markets for American exporters (not to mention the national security benefits that Dr. Rice alludes to) – far outweigh the costs. There is virtual unanimity among economists that trade boosts economic growth, and the freer the better. Gutierrez presents a table to show that average annual growth of U.S. merchandise exports for the three years prior to each of 14 free-trade agreements averaged 3.2%, but annual growth after those agreements were implemented, through 2008, averaged 17.4%. Trade is tough politically, but highly beneficial. As a result, trade agreements require presidential leadership – the strong support of the chief executive of the nation to rally recalcitrant members of Congress, of both parties. Support and opposition to trade have not divided along party lines. “Presidents in both parties from Harry Truman to John F. Kennedy to George W. Bush had pushed for opening up trade,” writes Gutierrez. Today, however, the voice of the White House on the subject has been muted. And, in fact, Republicans haven’t been talking much about trade either – until Wednesday. Even then, we heard nothing about trade from Rep. Paul Ryan, the vice presidential nominee, even though he is a disciple of the late Jack Kemp, one of the great free traders of our time. We need to hear more about free trade – or as Dr. Rice calls it “free and fair trade” – during this campaign and beyond. To grow at 4%, we need tax and regulatory reform, more energy development, better education, more sensible immigration strategies, and a sound monetary policy. But we also need free trade – as much of it as we can possibly get.
This post was written by James K. Glassman, Founding Executive Director of the George W. Bush Institute.
