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Free Trade without the But
by Sheldon Richman, May 2001
Heads of state throughout the Western
Hemisphere gathered recently in Quebec City to talk about setting up a
hemispheric free-trade zone. But as usual, the politicians spoke with forked
tongues.
When these guys say free trade
they really mean free trade, but. There are more exceptions than you
can imagine. Everyone wants an exemption for some unique industry or situation in
his own nation. Everyone says, in effect, I want you to fully open your
markets to my exporters, but I have good reasons not to fully open my markets to
your exporters. Thats not free trade.
Guess whos leading the way in this
charade: the United States. U.S. leaders always talk a good free-trade game, but
their actions never measure up to their words. The United States could set a good
example by offering to scrap its farm subsidies and anti-dumping laws, but
dont hold your breath. Its not going to happen.
So how can U.S. negotiators get angry when El
Salvador or St. Lucia ask for special exemptions for their products? The
anti-dumping laws are designed to keep out low-priced products that undersell similar
American products. They are often used against steel imports. The theory is that if
another nations manufacturers are unfairly selling at a low
price dumping the government should step in to protect the U.S.
manufacturers who will be harmed.
But the idea of dumping is meaningless. Any
price can be branded unfair if your price is higher. The affected domestic industry
and the government can always use their arcane formulas to show that the foreign
price is below costs. But even if they were, so what? When K-Mart
does it, we call it a sale. Who gets upset? Why cant
Americans buy the lowest-priced goods no matter how they got that way? Free
trade is supposed to mean free trade.
Ah, say the free-trade-butters, after the
foreign manufacturers drive the American firms out of business with their low
prices, they will raise prices to exorbitant levels. This is the same warning made
about free competition among American firms. But it doesnt happen. Low
prices are usually the result of efficiencies, not chicanery. And if it did happen, it
would still be good for American consumers. Wed buy up the cheap goods,
and when the foreign firms jacked up their prices, American competitors would
return to the marketplace (assuming they left it in the first place). We dont
need the government to protect us from trade.
Thats really the key point. Consumers
dont need protection. All protection is aimed at producers. Who are they
being protected against? The temptation is to say against the unfair
practices of foreign competitors. That would be wrong. It is protection
against us consumers! All barriers to trade are of this nature.
That is why the trade talks are deceptive.
They are premised on the idea that the most important beneficiaries of open trade
are exporters. That is wrong. The most important beneficiaries are consumers. In
fact, the whole economic system exists for the benefit of consumers. We produce
in order to consume, not vice versa.
But what about workers who lose their jobs to
foreign competitors? They find other jobs, and thats good. We live in a
world of scarcity. Our demand for things always exceeds the supply. Any time
labor is freed up from one task, it can be devoted to other tasks we couldnt
afford to take on yesterday. We are richer, not poorer, when competition destroys
jobs.
The free-trade-butters and
crypto-protectionists dont see it that way. Their loyalty is to established firms,
not consumers. Thats why they set up managed-trade regimes designed to
open export markets and agree to open their own markets only as much as
necessary.
Lets finally get this straight. We
should open our markets not as a favor for others in order to get them to open
theirs. We do so as a favor for ourselves as consumers. Free trade is good because
it makes consumers incomes worth more by giving them access to the
worlds full array of products.
Government has no right to tell us who we can
buy from. If we really want free trade, all we have to do is declare it.
Sheldon Richman is senior fellow
at The Future of Freedom Foundation in Fairfax, Va. (www.fff.org), and
editor of
Ideas on Liberty magazine.
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