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  • Morning Bell: 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 2011 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.

    Quick Hits:

    Posted in Economics [slideshow_deploy]

    59 Responses to Morning Bell: Free Trade Agreements Are A Win for Prosperity

    1. Jack says:

      Free trade agreements benefit other countries, but not your country if your country has a higher cost of living.
      In the event of a higher cost of living, low costing products (resulting from dirt cheap labor) will destroy any/all domestic production for the higher cost country. The truth is obvious simply by looking at the overall trade deficit that has been occurring for decades as a result of existing US Free Trade policy. For this country (being consumer based), it has been a major factor in the current economic crisis. The other critical factors in the current economic downturn are/have been the massive government growth and foreign parasitic organizations such as the UN, IMF, etc..

      • CraigJCasey says:

        Jack, I think you are half right, massive government growth and taxation of fees, and regulations that grow the beast are main contributors to the ongoing economic collapse.

    2. R.B.Reitz says:

      This is what's ruined the USA. Enough of Heritage.com. I quit.

    3. Carol M Kite says:

      Hooray!!! At long last, a positive action for a refreshing change! Why, in God's name, did a trade agreement, so sensible to help our economy, ever languish, ignored, on a desk for close to 5 years? Better late than never but how could such a common-sense answer to a great start be ignored so long? Now, get busy going after the same aggreement with other countries, mainly China, of course.
      Another example of what makes us wonder if anyone in our government is functioning with more than half a brain, sorry, but darn it, it seems like anything common sense just doesn't seem part of anyone's agenda in this administration!

      • Dan says:

        I am sorry, but I strongly disagree with your comment. Having once been a tire-builder at Firestone in Decatur, Il, I left before they shut the factory down and received both a BA and MA in economics before having a stroke during surgery. One of the things I remember so well was constantly disagreeing with my Instructor who taught the class on NAFTA on how badly this would damage the economy both economically and socially. Most males who lose a way to support his family, etc. will respond negatively and, sadly, in some cases physically. We need to give thought to the majority of our populace and just not to the rich. The trickle down effect doesn't always work.

    4. John Riskas says:

      Tariffs build the middle class
      Ross Perot had it right all along.
      FTAs increase corporate profit at the expense of the Middle Class.
      Manufacturing has ceased in America thanks to FTAs
      Corporate Profits have soared.
      This is simply propaganda of a different slant

      JJR

    5. Fred Yates says:

      Sounds like unrestrained capitalism at work.
      Who would have thought such a idea would work?

    6. Chuck says:

      Free trade is great but the U.S. is the laughing stock in all our agreements. We let any country send anything here with no tariffs but our exports generally meet taxes (import tariffs) of all sorts. This is one of the reasons our economy is faltering. Trade agreements have two sides and they should all be 'tit for tat'.

      • mtellius says:

        Free trade is far from great. Free trade agreements have historically helped OTHER countries who have protectionist policies in place. They have hurt the U.S. and will continue to because we rely on some misguided kind of honor system to ensure that the countries we're trading with live up to their side of the bargain. They rarely do.. NAFTA encouraged American companies to invest heavily in Mexico while our imports increased and exports actually decreased. This is typically what happens with each trade agreement we sign. With each trade agreement more and more of our technology, knowledge and even patents are transferred to other countries and they use them to create the products themselves. As soon as they can they cut us out of the equation. If this is not a recipe for collective suicide, then I don't know what is.

      • Dan says:

        What I can't understand is why do our politicians and, therefore, our government sell out this country's workers Your, brilliant, observation on how we are constantly competing with State run corporations is right on the mark. We observe Free Trade why they observe artificially inflated price trade.

    7. Larry Murray says:

      I am a small businessman in Fernandina Beach, Florida. People in this area supported us quite well until recently. Now too many of these people do not have enough disposable income to spend in my restaurant to support us and let us at least break even in our business. We have been in business 13 years. I believe our economic problems started with China's entry into the WTO, followed by its flooding us with cheap consumer goods and its refusal to trade fairly with us. FTA's have continued the problem and giving unqualified people housing loans has exacerbated the problem. We have also learned that we cannot retrain and reemploy those who have lost their jobs. The reason is too many people are unemployed or underemployed and do not have money to spend to increase demand for products enough to justify incresed production and more jobs. For years our government has wanted us to be the Information Society. We have not managed to do that. I believe our only hope is to return our consumer items production to the US. I believe Herman Cain has some good ideas to start this trend.

      • Clearhead says:

        It's not only simple, Larry, but a completely obvious and age old maxim: "Iff'n ya ain't a-gonna work, then ya ain't a-gonna eat !"

    8. johninohio says:

      We conservatives like to ridicule Obama because he keeps trying the same failed solutions to our economic problems while expecting different results. Is't it time we stop sending American jobs to foreign countries as a solution to job loss in this country? Sure it raises people out of poverty in other countries, but at the cost of Americans being pushed into poverty. Foreign countries put up barriers, then we have to give away the store just to get them to lower them a little. This is smart??? This makes America stronger?? Stop the insanity!

      • mtellius says:

        Thank you. You're one of the few conservatives who are actually saying this…I voted for Ross Perot in '92 because he talked about the giant sucking sound of jobs being pulled out of this country. He may have been a bit nuts but he was right about that! NAFTA sounded insane to me then and as soon as corporations obtained the right to "corporate person-hood" I could see the writing on the wall for America.

    9. Grover says:

      While I can see the benefits of free trade, there is a down side; they always include rules that compromise our nation's sovereignty. One more way to compromise our Constitutional rights and privileges.

    10. Mel Nelson says:

      Since 2007? Why did Bush sit on them?

    11. Richard A says:

      Free trade agreements work if the playing field is level: The Peru Free Trade Agreement enacted a few years ago resulted in a trade imbalance favorable to Peru of approximately 2.5 billion dollars. (Peru exports ~5 billion dollars worth of goods to us; we return ~2.5 billion to Peru) The imbalance leaves Peru with billions of dollar bills that must go somewhere. Peru will want her pound of flesh one way or the other….perhaps she will be interested in buying Long Beach, California; the Chinese backed out of the deal.

    12. Greg Mowrey says:

      It pains me to say this as I think of myself as a free market supporter and conservative but while I agree that in a perfect world free trade is a good policy in the case of the US versus the rest of the world I think it has been a disaster for the citizens of the US. We have allowed our corporations to outsource millions of high paying jobs to low wage countries. In return we get access to low priced consumer goods that typically end up in the dump. This situation has fed the consumer debt driven economy that helped lead us to where we are now. The blame for this falls on our politicians and government – instead of encouraging our companies and workers to develop high technology manufacturing (like Germany) and save more we are always looking for the cheapest goods and service type jobs to replace the manufacturing jobs we shipped overseas. Obviously, tax policy has also failed us in this area.

      This policy may be a good idea if your goal is to insure world stability but it has cost the US mightily. The elite of this country has pushed a policy that they knew would lead to the lowering of US living standards for the many who couldn't or didn't want to compete in our brave new world. The current economic conditions are the result of these failed policies promoted by the "ruling class" of this country.

      Finally, I doubt very much whether China (a mercantilist economy) or Korea will truly open their economy but to the typical US commodity goods like grain, lumber, financial services and protein. Especially since our corporations who can compete globally already have moved their manufacturing to the far east and S. America.

      The Heritage Foundation needs to re-think their view point on this issue in my humble opinion since the results of these policies don't match up with the rhetoric.

      • Dan says:

        Well said, Greg. The old conservative way of thinking would work better if their was a fair playing field involved. But as we know, many countries production, like China, are stimulated by the artificial manipulation of their currency and control of their goods and services aren't initiated by supply and demand but by the governments directive. There is not doubt in my mind the politicians who vote these bills though know exactly what they are doing.(at least I hope they are that smart) So what could be behind these consistent economy wrecking policies? That is the million dollar question which needs to be answered by those who vote this way.

    13. Betty P says:

      This is a great idea, however, when is BIG government going to stop subsidizing ethanol? I am sure Iowa farmers would sell more corn for food than this nonsense of ethanol. It is nearly impossible to find a station that sells REAL gas anymore. It reduces the mileage any car gets so why are we still going this route?

    14. Pete Houston says:

      The agreements have been on the presidents desk since 2007. I don't think Obama was in much position to sign them before he was president. Why did Bush hold up on them as well when things were not going well in 2008. Maybe he thought it was a waste of time with a Democratic held House and Senate for his last two years.

    15. toledofan says:

      Trade is good for any economy, but, the devils in the details. If any of the deals put us into a strategic disadvantage, then they shouldn't be enacted. The other part of the coin is that there is very little or almost nothing being done here to create more jobs in many industries like energy, manufacturing, and new technology, so, to just farm work else where with out a comprehensive plan for America would be a disaster. Because of the current administrations lack of leadership and vision, we may end up with something that is the best deal in town?

    16. frances says:

      After all this delay why should President Obama be in such a hurry to enact the Pending Free Trade Agreement? What are the unknowns (not necessarily Constitutional but unknowns)?

    17. Jackie says:

      Free trade agreements are great if you are the economically smaller entity. For us as a nation, we get the short end of the stick everytime we enter these agreements. The more inferior products that come from overseas at a little discount means that more jobs are lost here at home. We need to be putting tariffs nearly everything that comes into this country. There is no way that we can compete with third world countries in the arena of manufacturing costs. The only way that we can get jobs back into this country is to decrease the tax burden on those who do hire Americans and institue a tariff system that will spurr Americans to buy and create a market for products made in the U.S.A.

    18. Frank Andrews says:

      I respectfully disagree. Poverty rates are lower in the countries after "free" trade agreements are signed only if they have poorer economies than the nations they sign with. Also, as in NAFTA, the USA gives up sovereignty to arbitration in disagreements. That is unconstitutional! Ross Perot's "giant sucking sound" of jobs still holds true. The only beneficiaries of such agreements are multinational corporations and the graft takers of the poorer nations.

    19. JWS says:

      I am not so sure and if you look at the numbers you could never come to this conclusion.

    20. Blair Franconia, NH says:

      Free Trade Agreements work. The unions just don't like them.

    21. eyeswideopen3 says:

      I agree with free trade. However, that does not mean everything we own comes from China! We need to keep a workforce here in America. I do not want to go to the grocery store and buy apple juice that has been bottled in China and Asparagus from Peru. We grow asparagus and we grow apple trees for juice. I want my own countries products not someone elses. I think alot of the problem with America's economy is not having jobs here, companies have moved to other countries because its cheaper to be there. Make it more profitable to be here again. If it means cutting back on free trade, so be it, because what we have is not free trade and it surely has not been good for America !!

    22. Wayne says:

      Free trade should be a 2 way street. Most of the FTA's I've seen are more beneficial to the other countries involved than they are to the US.

    23. Jim Olson says:

      I do not agree with this. NAFTA only succeeded in sending jobs overseas and making foreigners standard of living higher. If we've got the highest standard of living, free trade only brings us down to other countries standard of living. Unfortunately we can't get Rent, Food, or other daily items as cheap as they can in their country, so WE LOSE!

      • Tami G. says:

        I'm not sure I agree with FTA's either. NAFTA really hurt Michigan because our fruit growers couldn't compete with the cheaper prices of Mexico and Canada, and several of my local orchards (one in the family for 50 years) had to close down. Sad.

    24. June says:

      Obama and his cohorts know exactly what they are doing. They are trying to bring our country down. They have held onto the trade agreements and now are going to put them through , just in time for elections. Again they will seem like they are doing something for all of us. He plans on 4 more years to turn our country over to a one world government under muslim control. There is nothing good about this administation but too many people have blinders on. I don't have much hope for us. The so called riots now are part of the plan to give excuses for keeping us in our place. Wherever that is?

    25. The Farmer says:

      Yes, to the free trade agreements, for sure!
      BUT!! There is a more important issue right now; and that is, if and when Congress passess interstructure money for roads, bridges are any thing that has labor connected to it, Congress needs to make sure that the money goes to the lowest bidder, and non-union labor needs to have not only a place at the table, but must not be discriminated aganst !!!!!!

      • Larry says:

        However, lowest bidder can be from any nation.

        I wrote to Montana Senator Max Baucus about an Alberta contractor underbidding Montana contractors and getting highway construction jobs here, bringing equipment across the border duty free.

        He sent me the actual federal rule that quarantees that the best deal for us taxpayers determines who gets the contract.

        So far, I never heard if any Mexican or Chinese company got wise to this ploy.

    26. james a says:

      Obama and the democrats holding up Fair Trade Agreements with friendly countries that really benefit both countries in order to slip in a benieits and assistance program for political purposes shows malice of for thought by this regime.

    27. johninohio says:

      We conservatives like to ridicule Obama because he keeps trying the same failed solutions to our economic problems while expecting different results. Is’t it time we stop sending American jobs to foreign countries as a solution to job loss in this country? Sure it raises people out of poverty in other countries, but at the cost of Americans being pushed into poverty. Foreign countries put up barriers, then we have to give away the store just to get them to lower them a little. This is smart??? This makes America stronger?? Stop the insanity!

    28. Willie Green says:

      Twenty years ago, Ross Perot warned us of "The Giant Sucking Sound" that would occur if we downsized and outsourced our industrial tax base.

      Today, we now have a consumer driven service economy that cannot afford to consume the services that it produces. And we have unemployed "mobs" occupying Wall Street.

      When in Heaven's Name will our political leadership ever get a clue and stop undermining American Middle Class Prosperity with these self-destructive trade agreements?

    29. Rick_in_VA says:

      It seems to me that the reason Obama is opposed to these FTAs is BECAUSE they would help our economy.

    30. RogerConklin says:

      These FTAs will unquestionably contribute to increased US exports, but will likely help Panama, Korea and Colombia more that the US. Why? Because exporters in those countries will send their citizens to the US to sell their products, but because of US tax laws few US citizens will move abroad to sell US products. No foreign country subjects its citizens to home country taxation when they relocate to another country, but the US does. Americans who go abroad pay taxes on their world wide income to their host country and then are double taxed on this same income by the US. This makes US citizens generally non-competitive for deployment abroad and, in order to survive they must be compensated higher in order to net the same after tax income as non-US citizens who live and work in a country other than their own.

      Exports do not sell themselves. They must be sold and that requires feet on the ground in foreign markets.
      Trade battles are not won by foreign mercencaries any more than it would have been possible to take out bin Laden if we had hired Paquistani mercenaries to do the job rather than using our own Navy SEALS.

    31. Bobbie says:

      how about "fair" trade agreements since "free" has become contentious and controversial and based on personal interpretation?

    32. sarah says:

      How can you promote this kind of trade? I watched as NAFTA destroyed jobs in Southwest Georgia during the 1990's. Free trade has been great for countries like China, Mexico and India….but this is the root of the job problem in the USA today. The facts/statistics support my opinion. The corporations have profited greatly from this type of trade. Is that why you guys support it?

    33. Mauiguy says:

      So called "free trade" has been ruinous for the U.S. We are importing trash from countries which refuse to accept goods from us in return. The U.S. used to make everything we needed right here on our own shores and because the quality of our manufactured goods was excellent, the world lined up to buy from us. Now we only export our jobs and our dollars to buy inferior goods from abroad. What we need is fair trade whereby we accept no imports beyond the dollar amounts of our exports ordered by each trading country.

    34. ga4ry sheldon says:

      I do not like NAFTA because it seems to eliminate soverign borders and trample on culture, especially American cuture much to the joy of the socio-com leftists who rule without the consent of the governed.

    35. Wes Evans says:

      With the exception of taxing and regulating it the private sector of the US this president does not appear to have much of a concern about it. He is not a private sector person nor are his advisors and his political base seems to be anti-private sector business. His support from the business community appears to be from among those that seem to welcome a liberal progressive/fascist agenda.

    36. 2Dokie says:

      I hope this proves profitable for us, so far our foreign commerce hasn't been too successful for us overall.We sell technology often to our permanent regret. Trump is unfortunately right too often. We trde like a bunch of Bumpkins.

    37. Len Goldstein says:

      This is exactly what we need, NOT. We don't need to make it easier to kill our endangered Auto Industry buy making it easier for Kia and Hundai's to compete with us. We don't need to send more of our jobs to Columbia and Panama. We need to not worry about the globslization of US industries as that will happen soon enough on tere own. We need to create American jobs by insisting on proportional and equitible trading with some of our existing partners like China for example.

    38. Larry Murray says:

      So far our "free trade agreements" including the WTO and China's participation, have cost the US about 2,000,000 net jobs. FTA's with Columbia, Panama and South Korea will cost another 250,000 net jobs. The idea of retraining and employing those who have lost their jobs doe to free trade agreements has not worked because there is not enough demand for US products to require more employees. Proof of this is 12,000,000 or more unemployed now. Please don't create more unemployed.

    39. jaxyankee says:

      We get cheap goods at the price of jobs here. I've always been on board with FTA's but my thinking has been changed. Screw the cheap imports and bring jobs back here.

    40. mdidier says:

      1) these are not FREE TRADE agreements; they are managed trade agreements

      2) they may be good for the importers and exporters in both countries, but WHO PAYS for the TRADE DEFICIT? — American taxpayers are responsible for settling the BALANCE OF PAYMENTS account

      3) these "jobs" come at a steep price; it would be cheaper to just put those people on UNEMPLOYMENT than incurr massive TRADE DEFICITS for 30+ years….

      Accumulated Trade Deficits since 1960s: $7.2 Trillion
      Including NAFTA deficits of $493Billion since 1994 – prior to 1994 the US had TRADE SURPLUSES with Mexico,no the annual deficit is about $50B – money that Mexico could use to help those 12 million Mexicans who live in the US and mooch off of hapless US taxpayers

      FREE TRADE is another WEALTH TRANSFER to companies and foreign countries

    41. GODSAVETHEUSA says:

      Trade Agreements should contain provision(s) for lost jobs and taxes in this country.

    42. doc-polymer says:

      unfortunately our leaders have a dismal record of enforcing the terms of such agreements. It seems that the agreement always winds up favoring the other participants. NAFTA is the perfect example.
      Why can't we put together a real trade agreement based on the amount of trade each country does with the other. A floating tarriff schedule that encorages equal trade. zero difference in trade balance equal zero tarriffs. As the balance becomes unbalanced A tarrif is imposed on the the country with a positive trade balance. As the difference widens the tarriff increases proportionately . This would encorage both countries to strive for an equal trade balance

    43. Larry says:

      For some unknown reason, my informative post was not posted, so here I am, trying again.

      To repeat, in regard to The Farmer:

      For many years, any federal aid project I worked at required proof of citizenship,
      while at the same time, a Canadian contractor was allowed to underbid Montana
      contractors and get highway projects in Montana under federal nondiscrimination
      rules, using Canadian supervisors to oversee Montana employees.

      All he had to do was pay the federally determined prevailing wage ,and at that time,
      our money was worth a lot more than Canadian, which was greatly in his favor.

      I contacted my Montana senator Max Baucus and received a written verification that
      for taxpayers to get the most value, bids must be given to low bidder, without regard for
      national origin or address outside the borders of the USA.

      So far, I never heard if any Mexican or Chinese company got wise to this ploy.

      Workers had the owner thrown in jail for overstaying his visa, and I don't know if he ever tried
      again, but NAFTA had allowed him to bring his earthmovers across the border duty free.

      As a matter of course, all contractors coming into Montana from another state were assessed property tax on the earthmovers and other equipment, so I assume that this Alberta company was likewise assessed.

    44. jOHN j. says:

      It was noted today in the commodities business section that the South Koreans had just built a new steel mill costing 5.5billion, which produce a specialty steel that is enviormentaly safe. The steel will be used to build automibles that can be shipped to the US The making of the steel and the finished rolls were introduced to the US by an American Reporter. IS THIS WHY WE NEED AFAIR TRADE AGREEMENT WITN S. KOREA.

    45. edree says:

      First obama put these on hold for years, then he has done everything possible to make it difficult for US commerce to compete. Way-to-Go socialism, lower our former exceptionalism to the levels of the rest of the world.

    46. Jeff says:

      What this country needs is Real jobs. Are we going to get from this guy. Soon we will be bought out by china. Wake up america. We will be a Third world country in yrs, If we have this guy for another 4 years. They been outsourcing since the late 50's. And those of u remember the blow dryer. Then they went to Tv etc. What we need is jobs now. We have to save america. So many people are going under. At this rate. We will become a third world nation. And we will be sucking china for money… Like we are now. We have too clear vizor to save this country.

    47. Will says:

      We need to help ourselves for a change. We can't trade with others when we don't produce anything ! ! ! !

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