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  • Why Don't We Have Free Trade with Every Country?

    With a July 31 expiration date fast approaching, both the House and Senate last week introduced legislation that would extend free trade preferences to developing countries under the Generalized System of Preferences (GSP).

    Introduced with broad bipartisan support, the extension was lauded by both sides of the aisle for supporting jobs both overseas and in the U.S. The duty-free tariffs in this program provide cheap products for American consumers and low-cost inputs for American manufacturers. They also help make imports from developing countries more competitive in U.S. markets, creating jobs in some of the world’s poorest areas and reducing their dependence on foreign aid.

    With such obvious benefits for both the U.S. and its trading partners, one has to wonder: Why don’t we have free trade with every country and for every product? Duty-free provisions under GSP apply to only 130 countries and 5,000 products and exclude some of the U.S.’s most protected industries, such as textiles, sugar, and dairy.

    If lawmakers can unite so firmly around GSP provisions, surely they can unite around free trade with all countries. The benefits are the same: Countries could specialize in their respective comparative advantages; consumers would have access to cheaper products; and manufacturers could buy lower-price inputs.

    As the GSP extension moves through Congress, lawmakers should reflect on what they are doing. They have the chance to affect the lives and economic development of millions around the world simply by lowering tariffs and barriers to trade. GSP saves U.S. consumers nearly $800 million in tariffs every year and creates more than 80,000 jobs just in the U.S. Imagine if GSP-like provisions were applied to all nations: The U.S. would truly be a free trade leader.

    Posted in Economics [slideshow_deploy]

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