Free trade is America's best weapon

Free trade is America’s greatest weapon. Not the U.S. military and certainly not President Obama’s Nobel Peace Prize. Free trade trumps all. It improves countries, empowers people in other countries to create businesses and jobs, improves businesses in the U.S., and encourages freedom and liberty. The Arab Spring started when a Tunisian businessman self-immolated in 2010 because he wasn’t allowed to sell his goods. It could even be argued the USSR fell in 1991 because of its expanded trade relations with the U.S. President Ronald Reagan certainly believed expanded trade was worth it because of the reforms done by then Soviet General Secretary Mikhail Gorbachev. From the June 1, 1988 Moscow summit:

The two sides reconfirmed their strong support for the expansion of mutually beneficial trade and economic relations and noted recent activity in this area. They reiterated their belief that commercially viable joint ventures complying with the laws and regulations of both countries could play a role in the further development of commercial relations. They welcomed the results of the meeting of the Joint U.S.-USSR Commercial Commission in April and noted with satisfaction that working groups had been created under the Commission to further the establishment of better conditions under which mutually advantageous trade can develop. Taking note of the 1974 Joint Statement and Protocol amending the Long-Term Agreement between the United States of America and the Union of Soviet Socialist Republics to Facilitate Economic, Industrial and Technical Cooperation issued at the conclusion of the Joint Commercial Commission, they agreed that the Commission should continue to meet to build upon the forward momentum which has been generated.

Free trade and free markets are even causing China to become more liberalized. Reason Magazine did a feature in 2011 on what the underground market and free trade has done to Wenzhou. Businessmen and private citizens took over road construction, banks, and more. Wenzhou has been able to avoid being dominated by the communists because of their location. It’s a fantastic story on why free markets and free trade are awesome (emphasis mine):

In southern China, things look rather different. The Chinese say that in this region “the mountains are high and the emperor is far away”—in other words, the government isn’t paying much attention. Companies are mainly small or medium-sized enterprises, government services are slight, and laws are routinely ignored…The Wenzhounese have a reputation for both an uncanny sense of business and an almost pathological disregard for the government…The Wenzhounese government received directives from Beijing but found that without accompanying support they lacked resources to run the economy by diktat. Fortunately, a central government that wasn’t offering much support also wasn’t paying much attention.

So private citizens quietly took over many of the services that elsewhere are either provided or heavily regulated by the state. Local authorities, lacking other options, didn’t try to stop them. The most important development in those early days was the city’s flourishing underground financial system, which according to the local branch of the People’s Bank of China (China’s central bank) currently is used by 89 percent of Wenzhounese private citizens and 57 percent of local companies. 

This is why the Trans Pacific Partnership is a massive headache. It ought to be a no brainer for free marketers to support: a free trade agreement involving 12 nations, with opposition coming from unions, Massachusetts Senator Elizabeth Warren, and Vermont Senator Bernie Sanders. The devil is in the details and the lack of details is a big red flag. There’s no transparency and TPP certainly seems to be more than “just” trade. National Review is skeptical on TPP because of its secrecy:

The Obama administration, self-proclaimed epitome of openness and transparency, has conducted TPP negotiations largely in secret, with members of Congress permitted to review documents only in person in the office of the U.S. trade representative, without staff. Most of what the public knows about the negotiations has come through a series of releases from WikiLeaks. The level of secrecy here might be appropriate to missile-defense negotiations; it is excessive for a trade deal, especially one involving mostly free and open societies. The Obama administration has promised that the environmental aspects of the deal will be “fully enforceable in the core of the TPP agreement, on equal footing with the economic obligations our trading partners take on.” We can expect the same to be true of the labor and human-rights aspects of the deal — just as we can expect the Obama administration’s policies in these areas to be as daft and dangerous as the White House’s attitude toward environmental questions. And there surely will be a substantial bill for so-called trade-adjustment assistance, which purports to be a program for workers who are negatively affected by new trade deals but is in reality more of a political slush fund.

National Review also wants TPP to get a hearing in Congress because of the importance of trade and increased investment. Cato has a similar take with Daniel Ikenson pointing out Congress could always just vote it down.

 Congress and the public will have the opportunity to scrutinize the TPP for 60 days before the agreement is signed, up to another 135 days during the “Reporting and Mock Markup” period, and up to another 90 days during the “Congressional Consideration and Implementation” period.

It’s a good point to make, but not a good selling point. Ikenson’s better argument is pointing out how the only way to know what’s actually IN TPP is to pass Trade Promotion Authority and Trade Adjustment Assistance. But the big problem is whether Congress is willing to take the time to actually look at what’s in the agreement. It isn’t like Congress ever, ever had issues with reading bills before passing them (Obamacare).

Republican presidential candidates are certainly split on TPA/TAA. Rand Paul is against it:

I’m hesitant to give blanket authority on stuff we haven’t seen. I’m not saying there wouldn’t be a time I could be for it, if I’d seen the trade agreement, and it’s fine. I still might vote for the trade agreement, but I hate giving up power. We give up so much power from Congress to the presidency, and with them being so secretive on the treaty, it just concerns me what’s in the treaty.

Ted Cruz is in favor, and completely disagrees with Paul’s interpretation of TPA:

Under the Constitution, there are two ways to make binding law: (1) through a treaty, ratified by two-thirds of the Senate, or (2) through legislation passed by a majority of both Houses of Congress. TPA employs the second constitutional path, as trade bills always have done. It has long been recognized that the Constitution’s Origination Clause applies to trade bills, requiring the House of Representatives’ involvement.

Both know what’s in TPP because they’ve looked at the text. Both are publicly saying they haven’t decided on whether it’s worth approving. It’s a pretty smart strategy because there’s no point in tipping hands. But both Paul and Cruz note the negotiations are still going on. This is a big problem. There’s no reason to fast track TPP if the final language isn’t finished. It’d be like declaring victory in the Iran negotiations when nothing has been agreed to.


The reality is it should be simpler to reach free trade agreements with other nations. America should be able to call Japan and say, “We want to trade freely with you,” with Japan replying, “Okay sure!” or “No, we want tariffs.” The same with Taiwan, Australia, Brunei, Malaysia, New Zealand, or any of the other countries involved in TPP. The secrecy about it is disturbing. It’s frustrating and lends itself to conspiracy theories which may or may not be true. The conservative/libertarian support of TPP makes sense because it’s free trade and the concern about China’s involvement in the region. The conservative/libertarian opposition to it makes sense because of the possibility it could hurt more than help. TPP is a big mess. The only way to actually solve the problem is to wait until negotiations are done before deciding whether to sign it. The alternative is to make free trade agreements with all the other nations to avoid the TPP headache, which may actually be the best way to go about it.