Bush Presses for Free Trade at Summit

President Bush attended his last scheduled summit at the 21-nation Asia-Pacific Economic Cooperation forum in Lima, Peru over the week-end. Trotting out the same tired cliches about free-trade, it appears that his administration will end without having learned anything. Yes, free trade is a desirable goal in the long term, but how the world gets there matters. His ideological brethren have never figured that out.

He stated, “One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin.” Insofar as that goes, he is correct. However, history is replete with examples of protectionism helping countries develop new industries upon which future prosperity is built. Japan didn't become an economic powerhouse in the 19th century or rebuild itself in the 20th by throwing open its markets to foreigners.

He also said, “expanding trade and investment has been one of the highest priorities of my administration. When I took office, America had free trade agreements in force with only three nations. Today, we have agreements in force with 14.” Again, that is factually correct, but it confuses quantity with quality. Opening the American market to other countries in exchange for equal access to theirs is not entirely a fair deal – the American market is much bigger than, say, Peru's. Furthermore, these treaties tend to have special features built into them that protect the non-US party's economy from full American access.

Mr. Bush also nagged Congress to approve the free-trade deals his administration has negotiated with South Korea, Panama and Colombia. He asked for outside help, “I urge all those who support free trade to continue to press the case for the Congress to pass free-trade agreements with Colombia and Panama and South Korea.” The lame-duck Congress is not about to do anything of the sort.

Finally, the 43rd President said that during his administration, “America's trade with the world has grown from $2.5 to $4 trillion, an increase of 60 percent.” Mathematically, this is true, but one has to look at the balance of trade to understand just what this means. In 2001, the US had a trade deficit of roughly $365 billion. In 2007, it was just over $700 billion. So, while increasing American trade with the world by 60%, Mr. Bush's policies have almost doubled the trade deficit. And this year's first three quarters don't appear to have slowed the increasing deficit despite the economic chaos of the last couple of months.

Free trade remains a good idea. Free trade agreements are desirable. However, the Obama administration is going to need to understand that incremental movement toward free trade has fewer social distortions than a big-bang, all-at-once approach. That's something the Busheviks still don't understand.



© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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