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Sen. John Thune: For the president to hold trade opportunities hostage to a demand backed by his union base leaves us with nothing but missed opportunities

Sen. John Thune serves as the chairman of the Senate Republican Policy Committee and ranking member on the Finance Subcommittee on International Trade, Customs and Global Competitiveness.

In November 2006, the United States signed a free-trade agreement with Colombia, paving the way for better access to millions of consumers there. This was a big win for our trade negotiators — and they followed it up with similar agreements with Panama and South Korea in June 2007.

And then — nothing. For the deals to go into effect, the president must officially submit them to Congress for consideration. But Democrats in Congress blocked any possibility of a debate on the agreements until President Barack Obama took office. Now he has refused to send them down Pennsylvania Avenue to Congress. Instead, the White House is insisting that the agreements must include new spending on an expansion of the Trade Adjustment Assistance program.

At a time of budget austerity, programs with new spending should be considered separately and on their own merits — without preconditions.

Keep reading at Politico...

Negroponte, McLarty, Jones and Mosbacher Jr.: Approve the free-trade agreements

John D. Negroponte, a deputy secretary of state and director of national intelligence in the George W. Bush administration, is chairman of the Council of the Americas. Mack McLarty, a former special envoy for the Americas and White House chief of staff in the Clinton administration, is president of McLarty Associates. Jim Jones, a Democratic former U.S. representative from Oklahoma, was White House appointments secretary in the Johnson administration. Rob Mosbacher Jr., the president of Mosbacher Energy, was president of the Overseas Private Investment Corporation during the George W. Bush administration. All are members of the Council of the Americas’ trade advisory group.

The U.S. economy needs swift approval of the pending free-trade agreements with Colombia, Panama and South Korea. Yet a week after the release of a disappointing employment report, procedural disagreement over a program that has provided benefits to American workers for almost 50 years is stalling the entire trade agenda.

Deficit reduction is an urgent task requiring intense scrutiny of spending measures. But it is counterproductive to delay long-overdue trade agreements that finally have a chance of passing over a relatively inexpensive assistance program designed to smooth out the rougher edges of the global economy.

 Republicans have argued in the debt-ceiling negotiations that economic growth, rather than higher taxes, is key to raising revenue. At the same time, they understand that the United States will not achieve such growth without the benefits of international trade. Given political realities, the cost-benefit analysis should be clear: better to incur the fiscal cost of renewing the Trade Adjustment Assistance program than to lose the much greater benefits of free trade with three important trading partners.

Keep reading at the Washington Post...

Rep. Robert Dold: The importance of free trade

Robert J. Dold is the US Representative serving the 10th Congressional District of Illinois.

Nations commonly enter into free trade agreements to increase economic prosperity, lower the cost of goods, better allocate resources, access new markets, and encourage innovation. Since World War II, America has consistently sought and received these benefits by liberalizing its trade policy and by becoming a party to a number of bi-lateral and multi-lateral trade agreements across the globe. Currently, our participation in these trade agreements significantly increases trade and investment that benefits America and other member nations. Right now, the U.S. has free trade agreements pending with Korea, Colombia, and Panama.

The U.S. Chamber of Commerce estimates that every $1 billion increase in exports directly results in 6,250 manufacturing jobs created here in America. Expanding free markets brings benefits to consumers in the form of lower prices, greater variety, and better quality. It also encourages companies to innovate and specialize.  Extending these three trade agreements will bring new economic opportunities to the United States.  

According to the President’s analysis, if the U.S. were to sign these three agreements it would create 250,000 U.S. jobs without any government spending.  Compared to most countries in the world, the United States has relatively low tariffs on imported goods, so free trade agreements remove the higher barriers of our trade partners.  Lowering these artificial barriers to goods and services will help all businesses, big or small, and create new jobs.  Every day that the U.S. delays signing these agreements is yet another day of higher tariffs imposed on our country. These tariffs amount to nothing more than a tax on US consumers.  Removing such artificial barriers and tariffs has so far increased the purchasing power of American families by $10,000.  With rising gas and food prices, this would be a welcome relief for the family budget. 

Just last week, a free trade agreement between the European Union and Korea went into effect.  This is putting American companies at an extreme disadvantage.  At this very moment, Europe is establishing new business ties in Korea, meanwhile we sit idly by and continue to pay steep tariffs. The European Union is now benefiting from lower trade barriers, increased export opportunities, and job creation.  The U.S. needs to stop the delay and sign these pending trade agreements.  America only falls behind when other nations pass free trade agreements.

There is no question that passing these pending free trade agreements helps every American family and creates new opportunities for growth for American businesses. Given this winning combination, it is unacceptable for Washington to play political games with these free trade agreements and delay their passage.

Phil Levy: Four reasons why demonizing trade is costing American workers their jobs

Philip I. Levy's work in AEI's Program in International Economics ranges from free trade agreements and trade with China to antidumping policy. Prior to joining AEI, he worked on international economics issues as a member of the secretary of state's Policy Planning Staff. Mr. Levy also served as an economist for trade on the President's Council of Economic Advisers and taught economics at Yale University. He writes for AEI's International Economic Outlook series. 

In a companion piece, I argued that it was strongly in the U.S. national interest to pursue a policy of open trade and to take the lead in bolstering the global trading system. But enthusiasm for such prescriptions is often tempered by concern about what open trade has done to American labor. Prominent voices have claimed that trade agreements have cost American jobs and exacerbated wage inequality. These claims cause particular alarm in a time of high unemployment and have taken a toll on public support for trade.

In fact, there is little evidence to support the claim that trade is responsible for job woes. The public has been misled. The misplaced blame is particularly dangerous because it offers voters false hope. If only we block trade from China, or repeal NAFTA, or avoid an FTA with Colombia, the critical voices seem to suggest, we can return to the halcyon days of a labor market in which workers with limited educations enjoyed lifetime employment, good pay, and generous pensions. Not true.

Today, four arguments about what really ails the American labor market and the role trade plays.

1. Trade deficits are not driving job loss and trade is not the main driving force behind wage inequality. The trade deficit ballooned at a time when the economy was booming. That’s not a coincidence. When people feel flush, they consume more. Some of that new consumption is domestically made, but some comes in as imports. When the United States plunged into the most recent recession, unemployment soared and consumers recoiled in horror, the trade deficit plunged, too. That would seem to belie facile arguments that equate every billion dollars of trade deficit with thousands of jobs lost. The question of rising American inequality and job tumult is more subtle, and the voter can easily be forgiven for confusion. Even in healthier economic times, there is enormous turnover in the American labor market and concern that conditions have worsened for workers at the lower end of the pay scale. There are three prime candidates for roiling the job market: technological change, domestic competition, and international competition (trade). The only one that can be blocked by policy is the last, but most of the evidence points toward the first. Technological change is what leaves domestic manufacturers looking for skilled machine operators with math training while laid-off factory workers with less education search in vain for jobs.
2. Misreading the causes of labor’s discontent can lead to policies that are counterproductive. Consider two popular targets of anti-trade fervor: service outsourcing and American investment abroad. It is tempting to think foreign call centers are stealing jobs from Americans and that U.S. multinationals are opting for foreign labor instead of U.S. labor. Yet studies of outsourcing have shown that it creates American jobs, on net, by lowering business costs. On foreign investment, Dartmouth’s Matt Slaughter concludes: “Academic research…has consistently found that expansion abroad by U.S. multinationals tends to support jobs based in the U.S. More investment and employment abroad is strongly associated with more investment and employment in American parent companies.”
3. The American job market of the future looks to be a dynamic one, in which workers hold multiple jobs over the course of their careers. The misguided focus on trade as a culprit has distracted from the need to create institutions that address this unsettling dynamism, such as savings schemes, effective worker retraining programs, safety nets that work, and health insurance that is not dependant on a prolonged stint with a single employer. Instead, we have excessively narrow programs to provide trade adjustment assistance, as though only trade-driven job loss required a response.
4. In the long run, the well-being of American workers will depend on their education and productivity. The President, in this week’s State of the Union address, described the recent economic progress of India and China and said “We need to out-innovate, out-educate, and out-build the rest of the world.” Yet this language of competitiveness misleads. It suggests that if only these new competitors had remained quiescent, we could rest on our laurels. In fact, American prosperity would depend on American productivity in any case. We certainly should improve our educational system and business climate, but we should do it for the right reasons.

It is worth sorting this out, not only because doing so will build support for an essential program of trade leadership, but also because a clear articulation of these points will demonstrate that Republicans have a positive vision for how to prepare the country for the economic challenges of the 21^st century.

These issues need not be partisan. If Democrats and Republicans can work together to effect these changes, so much the better. We have yet to see leadership, however, that makes this case. Republicans have the opportunity to move beyond stale and defensive rhetoric on trade and push a broader, more thoughtful program for American prosperity. 

Phil Levy: Four reasons why the new GOP majority needs to support a bold trade agenda

Philip I. Levy's work in AEI's Program in International Economics ranges from free trade agreements and trade with China to antidumping policy. Prior to joining AEI, he worked on international economics issues as a member of the secretary of state's Policy Planning Staff. Mr. Levy also served as an economist for trade on the President's Council of Economic Advisers and taught economics at Yale University. He writes for AEI's International Economic Outlook series.

This is the first of two posts by Dr. Levy on why the GOP should embrace a bold trade agenda. The second post will run on Thursday.

As new GOP members of Congress settle into their offices and assemble their staffs, they are already feeling pressure to take a stance on international trade. The House Republican leadership, particularly on the Ways and Means Committee, has made clear that it supports an ambitious agenda of trade liberalization. The White House has called for the U.S.-Korea Free Trade Agreement to be passed by mid-summer. At the same time, FTA opponents have begun to target conservatives with warnings that linking the Korea agreement to a variety of imagined evils.

For many new conservative arrivals in Washington, the trade issue is a difficult one. It was only rarely the subject of campaigning last fall and members of Congress who won on domestic issues may never have dealt with the arcane issues of World Trade Organization dispute settlement or non-tariff barriers. These members will likely be aware of conservatives’ long-standing principled attachment to free trade. They will also note growing public wariness about the effects of trade and ‘outsourcing’ on jobs. 

In fact, the trade issue presents an opportunity for the GOP to show political courage and articulate a vision for American economic leadership in the 21^st century. It need not be a partisan vision, but there is a leadership vacuum on trade now that is begging to be filled.

To carry this mantle, it is important to see not only how a vigorous trade policy benefits the country as a whole, but how it is integral to preparing individual American workers for the challenges they face in the economy of the future.

On Thursday, I will examine trade and worker insecurity here at ConservativeHome.  Today, I focus on four reasons why an open trade policy is good for the United States.

1. This is America’s economic future. When we produce goods and services, they are sold either at home (domestic consumption) or abroad (exports). If we are to grow the economy while paring back excessive consumption, we need to expand exports. As the Obama administration has discovered, this global rebalancing is not easy, but it is necessary and the country will need to have access to an open, rules-based trading system if it is to succeed economically.
   Right now, U.S. trade deficits are the necessary counterpart to U.S. borrowing from the rest of the world. In years to come, when the world begins to demand repayment, it will be cashing in its dollar bills and government bonds to get American goods and services.
2. We live in an integrated global economy. The days are long gone when one country made wine, another made cheese, and they sent them back and forth on tall sailing ships. Now, leading manufacturers use components and tools from all around the world. It is not possible to have world-class businesses if they are shut off from competition and cannot benefit from the best supplies the world has to offer. Some of those top-notch supplies are certainly made in the United States, but others will only be available from abroad. For too long, an antiquated view of modern commerce has bred a mercantilist approach, under which exports are glorified and imports are shunned. The country benefits from both.
3. Free trade follows directly from the principles of limited government, free enterprise, and entrepreneurialism. Just as open domestic markets reward effort and ingenuity, so do open global markets. American manufacturers, farmers, and service providers have done exceedingly well in these competitions. Despite its substantial borrowing-induced trade imbalance, the United States remains one of the top exporting nations in the world.
   Just as there are clear parallels between the virtues of open markets at home and abroad, there are equivalent perils to government intervention. The alternative to open markets is a policy that erects barriers to competition. In practice, the erection of these barriers offers opportunities for influence very reminiscent of earmarks. The difference is that the transfers go directly from the pockets of jilted consumers to favored industries, without passing through federal coffers.
4. The distinction between global economic leadership and foreign policy leadership is small and shrinking rapidly. The quest for economic prosperity is so central to the mission of governments around the world that it has become increasingly difficult to have warm diplomatic ties but frosty economic ones. This is a major reason the Obama administration ultimately backed the Trans-Pacific Partnership talks begun by President Bush in late 2009 and then moved to pass the KORUS FTA in late 2010. The same arguments apply with Colombia and Panama and at a global level as well. It was no accident that G-20 gatherings to address the recent financial crisis repeatedly featured vows to bolster the global trading system. Unfortunately, those vows have not been fulfilled. That, in no small part, is because of a void in global trade leadership left as the United States has tried to adopt a diminished role. This is a prime area in which the world looks to the United States for leadership and judges the country on the basis of its ability to fill that role. In 2008, a popular theme in the U.S. presidential campaign was the restoration of America’s popular standing in the world. The United States will not enjoy that esteem until it once again takes up a leadership role in trade.

The danger of portraying trade this way is that it can come off as bitter medicine – you swallow it with a grimace, only because you’re told it’s good for you.  In reality, many of the downsides attributed to open trade are inescapable features of any modern economy. Thus, crafting a sensible approach to meet this challenges in the trade context is an essential part of crafting a broader, workable vision for American economic success.