Protectionism doesn’t work

Published 5:04 pm Saturday, May 16, 2009

Free trade creates jobs. It raises the standard of living of entire nations. No country has benefited more from the largely unfettered flow of goods and services across national boundaries than the U.S.

Unfortunately, a large part of the American public does not understand or appreciate this. Their antipathy to free trade is often understandable. Free world markets do not guarantee success for every industry. There are winners and losers in economic competitions and often those losers are the loudest critics of trade. If those critics gain the support of politicians, you can bet that the overall economic well-being of the nation is not the top priority.

In an economic downturn such as we are facing now, the political pressure to protect certain industries intensifies, often shrouded in the mantra of false patriotism — Buy American! We’ve all heard it.

Congress recently passed legislation that forces American firms receiving stimulus funds to use American-produced materials. That certainly benefited some U.S. firms who gained new business, but the economic impact is not confined to that transaction. For instance, what was the response of foreign firms who saw their exports to the U.S. ended by legislation? Of course they went to their own lawmakers and demanded action, which means U.S. firms will lose Canadian business.

Tit-for-tat, with both sides suffering a net economic loss.

Now, more than ever, the U.S. needs to set the pace for liberalization of trade. We are the world’s economic leader and can set the standard for encouraging a return to robust trade on a worldwide scale.

The world will benefit.

We will benefit.



The Daily Citizen