Compete, Don’t Retreat: Promoting Opportunity and Growth through Open & Fair Trade

Compete, Don’t Retreat: Promoting Opportunity and Growth through Open & Fair Trade

Saturday, December 15th, 2007

Anti-trade rhetoric, once largely limited to populist policymakers and street protestors, has become a fixture in the political debate on both sides. Republicans and Democrats alike, spurred by surveys indicating that a majority of Americans are opposed to free trade agreements, are increasingly using isolationist language when it comes to discussions about globalization. They recognize that many middle-class Americans blame globalization in general and free trade in particular for the tremendous anxiety they feel about their economic security. That is because although the benefits are enormous, free trade has its costs – most visibly, disruption to domestic companies that compete against low-cost imports and a subsequent loss of jobs in many cases.

However, retreating from free trade agreements, though politically popular, is a short-sighted position that will ultimately damage economic opportunity for our country at a time when we need to compete aggressively to maintain our dominant position in the global economy. Free trade is an element of expanding economic growth and opportunity, since it broadens new markets for American products and services, lowers the cost of consumer goods for families, attracts foreign investment in the United States, and helps poor countries get on the path to economic development.

To rebuild support for free trade, we need a new compact on globalization that pushes for opening new markets, ensures that our trading partners meet their commitments, and addresses head-on the dislocations created by free trade by ensuring that America’s workers have a safety net, as well as the best skills and education in the world. By reshaping the debate in this way, leaders in Washington can have the best of both worlds – politically viable policies that help individuals and firms navigate the potential challenges of free trade while fully reaping its benefits for the economy. Hope Street Group urges the following approaches to build support for free trade:

  • Recommendation #1: Go global. The focus of trade policy should be on global agreements, as these would encompass a bigger volume of trade, would avoid potential distortions created by a plethora of smaller deals, and potentially would create tradeoffs that could ultimately result in lower tariffs. Regional and bilateral trade agreements should be seen only as a second-best backstop, where progress on global liberalization is impossible. “Fast track” authority, which presents trade deals to Congress for an up-or-down vote, is critical to enable executive branch officials to negotiate effectively in multilateral forums.
  • Recommendation #2: Enhance support to American workers affected by trade and economic disruptions. Making health insurance and pensions portable from job to job would increase efficiency and decrease the risk associated with labor market changes. Existing programs to help workers find new employment and relocate should be improved and fully funded.
  • Recommendation #3: Invest in the American workforce and workplace. Supporting workforce development and mid-career retraining programs would help older workers transition to new careers. Reforming the current system of corporate welfare would level the corporate playing field and lower the cost of government, helping U.S. firms remain internationally competitive.

Full report available here:

Compete Don’t Retreat Discussion Paper

Compete Don’t Retreat Executive Summary

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