Free Trade Agreements are a Win for Prosperity
Free trade agreements (FTAs) have economically benefited nations the world over since their inception. Poverty rates in countries with low trade barriers are significantly lower, and data in The Heritage Foundation's Index of Economic Freedom demonstrate that free trade also leads to higher incomes, more jobs, and greater equality.
That's why it's vitally important to quickly enact the three pending U.S. trade agreements with Colombia, Panama, and South Korea. These FTAs have been sitting on the President's desk since 2007 for no good reason. President Obama has finally made them a priority by sending them to Congress last Monday night.
House Speaker John Boehner (R-OH) endorsed the bills, and it is past time to put them through--especially considering the opportunities already lost in the four-year stall. So far, Washington's inaction on trade has given other countries the upper hand, delivering new jobs and exports overseas and eliminating such prospects for American workers who desperately need them.
In Korea, the U.S. has lost $40 billion in exports, leaving U.S. businesses at a major disadvantage against EU competitors. Heritage's Bruce Klingner writes, "At a time of economic malaise, a cost-free jobs stimulus initiative is exactly what the United States needs." The FTAs are exactly that.
Regarding Panama, Heritage analyst Ray Walser notes, "Enactment of the FTA will remove the 7-15 percent tariff anchor holding back U.S. trade with Panama." His Heritage colleague Bryan Riley adds that U.S. farmers need the Colombia agreement to compete with exports from Canada, which already has an FTA with Colombia.
Our latest rankings of trade freedom worldwide demonstrate that FTAs generate a more prosperous livelihood for every country that participates in them--so they are critical to the successful sustainability of some nations. For America, they are necessary for keeping up with a competitive world economy. The reasons for moving forward are many.
America is a global leader in trade, and passing these agreements swiftly will enhance that position, demonstrating the benefits of utilizing free trade to bolster local economies and create jobs.
The U.S. isn't exactly a model of economic prosperity at the moment--and the world audience is keenly aware. Unfortunately, the President needlessly waited to move on these important bills while instead prioritizing a failed $787 billion stimulus, which caused the U.S. economy to plummet even deeper into severe debt.
President Obama should understand that the best way for America to stay competitive and benefit within the world market is to remain committed to advancing free trade at every opportunity. We need to take every step we can to begin running that debt clock in the other direction.
The FTAs have recently been held up by disagreements over the expansion of the Trade Adjustment Assistance program, a policy created to provide benefits and services to workers who supposedly become displaced by free trade. The best way to help workers is by embracing policies like free trade that encourage private-sector growth and create new jobs, not by increasing government spending.
In fact, the U.S. International Trade Commission predicts that these three agreements will increase U.S. exports and gross domestic product (GDP) by $12 billion a year. For a country that's over $14 trillion in debt, that sounds like a heck of a deal to take.
As Congress considers these important FTAs in the coming days, they should refer to the 2012 Index of Economic Freedom, which demonstrates that people in the United States and around the world gain prosperity and equality when their governments allow them to trade freely.