The Benefits of Trade
Friday, March 7th, 2008 By Marc KilmerAs any Ohio voter knows, the Democratic presidential primary campaign in the state seemed focused on which candidate was more anti-trade. Yesterday’s Wall Street Journal has an excellent article detailing why these views are problematic:
It is true that there is a lot of churning as jobs are destroyed, but even more are created as firms enter, exit or are resized in a dynamic economy. Back in 2004, Ben Bernanke, then a Federal Reserve governor, looked at Bureau of Labor Statistics data stretching back a decade and pointed out that about 15 million jobs were lost and 17 million created each year — an annual net creation of nearly two million jobs. What’s more, only about 2.5% of the jobs lost were a result of import competition. The vast majority of jobs lost were caused by changes in consumer tastes, domestic competition, and technology. It is also true that U.S. manufacturing has been shedding jobs since the late 1970s, with workers increasingly moving into services. But we have seen this process before. In 1900, it took about 40% of the American workforce toiling on the farm to feed the country. Today, thanks to farm mechanization, agricultural chemistry and other innovations, a mere 2.5% of the workforce feeds the nation and exports about third of U.S. farm production.
Trade is not the threat Mrs. Clinton and Mr. Obama allege. It is a central reason why American workers are among the world’s most productive and prosperous. An economy open to trade is also an economy free enough to thrive in a changing world….
Trade agreements are also important for noneconomic reasons, because they have foreign policy implications. Take South Korea, a longstanding ally in Asia. Both Mrs. Clinton and Mr. Obama oppose ratifying a trade deal with Seoul. But failing to do so would send a troubling signal — that the U.S. is uninterested in supporting an ally at a time when our friends in the region are worried about an ascendant China.
Or take Colombia, a vital U.S. ally in Latin America. Mrs. Clinton opposes, and Mr. Obama has declined to embrace, a trade deal with Bogotá. Colombia is a stalwart ally in the drug war and essential to neutralizing Hugo Chávez’s Venezuela. Nafta helped spur economic reform, private-sector growth and political stability in Mexico. A trade deal with Colombia could work similar magic in a country where it is desperately needed.
Tags: Trade
