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September 11, 1998 No.

A New Track for U.S. Trade Policy


by Brink Lindsey

Executive Summary

For over six decades, free traders in this ment has actually become self-defeating.
country have pursued trade liberalization By refusing to challenge (and even endors-
through a strategy of diversion and ap- ing) the mercantilist and fair trade fallacies
peasement: diverting attention away from of their opponents, free traders are helping
opening the U.S. market by focusing on to perpetuate a political culture that is hos-
exports and foreign policy goals, and tile to their own agenda. The rising tide of
appeasing protectionists at home with “fair “globalphobia” in the midst of unrivalled
trade” policies in the hope of preventing prosperity demonstrates that free traders
even worse import barriers. That strategy are doing something wrong.
achieved considerable success: it shifted the It is time for a change of strategy. Free
basic orientation of U.S. trade policy away traders need to take protectionist miscon-
from protectionism and toward gradual ceptions and special interests head-on, and
liberalization. to make an unapologetic case for interna-
But the diversion-and-appeasement tional free markets. This new approach is
strategy is no longer working well. With not merely rhetorical; it is programmatic as
the end of the Cold War, free traders have well. Free traders should expand beyond
lost their foreign policy trump card. their traditionally exclusive reliance on
Meanwhile, the advance of economic negotiated liberalization and launch a
globalization means that trade policy is no campaign for the unilateral elimination of
longer an insider’s game; international eco- specific U.S. trade barriers. At the same
nomic issues now arouse popular passions time, they should develop a new model for
that the old approach was never designed trade negotiations in which commitment
to address. In this new environment, con- to free-trade principles replaces the old
tinued reliance on diversion and appease- dogma of reciprocity.

Brink Lindsey is a senior fellow at the Cato Institute and director of its Center for Trade Policy
Studies.
To revitalize their excruciating ordeal? What has happened to
cause, free traders Introduction make trade liberalization so bitterly controver-
sial? After all, economic conditions in recent
need more than For over four years, U.S. trade policy has years could hardly have been more favorable for
better salesman- been snagged on the question of “fast track” a free-trade initiative. The United States is in
negotiating authority. Without fast track—and its eighth year of uninterrupted growth, and
ship. They need a its assurance that Congress must vote up or unemployment and inflation are at their lowest
new product. down on trade agreements, with no amend- combined level in 30 years. Meanwhile, after
ments, and within a specified period—major the competitiveness scares of the 1980s, major
new trade talks are stymied because other U.S. industries are resurgent and healthy.
countries are reluctant to bargain seriously While Europe suffers chronic double-digit
when any resulting deal could be rewritten in unemployment, Japan is mired in a lost decade
Congress.1 of bad debt and low growth, and the rest of
Since the last grant of authority expired in East Asia is roiled by a currency crisis, the U.S.
1994, more than three years of wrangling and model of open markets and freewheeling com-
posturing went by before the Clinton adminis- petition is without any serious rival. If free
tration finally came forward in September traders cannot prevail under these circum-
1997 with a new fast track bill. Weeks of stances, when can they?
intense lobbying brought the measure to with- Despite the glowing economic news, many
in a few votes of passage, but in the end the gap Americans are deeply skeptical of globalization
could not be bridged. In the wee hours of and its effects on the U.S. economy. According
November 10, 1997, President Clinton with- to a Business Week/Harris poll of September
drew the bill rather than let it be defeated in a 1997, 56 percent of Americans believe that
House floor vote. expanded trade decreases the number of U.S.
Now fast track supporters are preparing for jobs, while only 17 percent believe that expand-
another try. On July 21, 1998, the Senate ed trade increases wages. The same poll shows
Finance Committee reported out an omnibus that Americans oppose renewal of fast track
trade bill including fast track renewal. authority by a 54 to 36 percent margin.2
Meanwhile, the House Republican leadership In light of growing “globalphobia,” many
has promised a vote on fast track the week of commentators have argued that free traders
September 21. To date, though, the Clinton must do a better job of selling the public on the
administration has opposed a vote prior to the benefits of trade expansion. They point to the
midterm elections in November, and the fate of energized, grassroots opposition to trade liber-
fast track this year remains uncertain. alization and the absence of any similar effort
Even assuming that fast track is renewed on the pro-trade side. In particular, they criti-
sooner rather than later, free traders will have cize President Clinton for failing to make a
little cause for celebration. Merely avoiding the greater effort to swing public opinion on this
repetition of a fiasco is not a success. And, of issue; likewise, they fault the business commu-
course, fast track by itself accomplishes noth- nity for engaging in “just-in-time lobbying”
ing. All it does is to enable negotiations to instead of pursuing a sustained program of
begin. It does not determine what we should free-trade advocacy.3
seek to negotiate, whether we will be able to These points are well taken, but they do not
reach a desirable agreement, and certainly not go deep enough. To revitalize their cause, free
whether any agreement can win approval by traders need more than better salesmanship.
Congress. They need a new product.
Looking beyond fast track renewal, sup- For over six decades, supporters of trade lib-
porters of free trade need to ask themselves eralization have pursued a remarkably consis-
how their cause got caught in such a quagmire. tent strategy. This strategy, which dates back to
Why has just getting talks started been such an the Reciprocal Trade Agreements Act of 1934,

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is rooted in the assumption that head-on con- hostile political culture and thus contributing
frontations with protectionist forces should be to its own demise.
avoided at all costs. According to this view, free Meanwhile, new conditions have arisen that
trade is too weak politically to win a fair fight; make a frontal assault on protectionist forces
it can only hold and gain ground by alternately more politically practical than ever before. The
diverting and appeasing protectionist pressures. globalization of production has created power-
Diversion is accomplished through trade nego- ful, new free-trade interests; at the same time,
tiations, which enable free traders to downplay the worldwide triumph of free-market ideas
reductions in U.S. trade barriers while trumpet- weakens the protectionists’ ability to legitimize
ing new opportunities for U.S. exporters, as their claims.
well as playing on the need for America’s inter- It is time for free traders to make a shift in
national leadership. Appeasement, meanwhile, basic strategy. It is time to take protectionist fal-
occurs primarily through the so-called trade lacies and special interests head-on, to seize the
remedy laws—namely, the antidumping and intellectual initiative, and to make an unapolo-
countervailing duty laws, and the Section 201 getic case for free trade and open markets.
escape clause—which impose protection when The proposed change in strategy is more
certain preestablished criteria are met. than rhetorical; it is programmatic. Free traders
Thus, the traditional free-trade strategy should expand beyond their traditionally exclu-
The traditional free-
may be summarized as the attempt to achieve sive reliance on negotiated liberalization and trade strategy may be
freer trade here and abroad without ever mak- launch a campaign for the unilateral elimina- summarized as the
ing the case for it here. Liberalization of the tion of specific U.S. trade barriers. This strate-
U.S. market is achieved by changing the sub- gic shift is designed not to undermine or replace attempt to achieve
ject; a full-scale protectionist reaction is avoid- trade negotiations but to save them from them- freer trade here and
ed by providing safety valves that enable selves.
aggrieved interests to get some relief without
abroad without ever
wrecking the whole system. Stealth Liberalization making the case for it
Over the course of six decades, this strategy here.
has achieved considerable success. Tariff rates The economic case for free trade has been
in the United States and other industrialized made innumerable times over the past two cen-
countries on manufactured goods have plum- turies, but it always boils down to Adam Smith’s
meted from punishing levels during the 1930s observation in The Wealth of Nations that “the
to under 5 percent today. In this decade, the division of labor is limited by the extent of the
North American Free Trade Agreement market.”4 By expanding the scope for voluntary
(NAFTA) has substantially furthered econom- exchange beyond national borders, international
ic integration with our neighbors; and the trade fosters a broader division of labor and the
Uruguay Round and follow-up World Trade resulting gains from increased specialization. To
Organization (WTO) negotiations have ex- quote Adam Smith once more:
tended free-trade principles on a global basis to
agriculture, textiles and apparel, intellectual It is the maxim of every prudent mas-
property, telecommunications, and financial ter of a family, never to attempt to
services. make at home what it will cost him
At present, however, the traditional free- more to make than to buy. The tailor
trade strategy is no longer working well. does not attempt to make his own
Putting it quite simply, the strategy is out of shoes, but buys them of the shoemak-
date. The conditions that enabled it to suc- er. The shoemaker does not attempt to
ceed—notably, the Cold War and the margin- make his own clothes, but employs a
al importance of trade to the U.S. economy— tailor. . . .
are no longer operative. Indeed, the traditional
strategy is now self-defeating: It is fostering a What is prudence in the conduct of

3
every private family, can scarce be folly made by supporters of trade liberalization.
in that of a great kingdom.5 Consider how President Clinton made the case
for fast track and trade liberalization during an
Thus, international trade gives us the East Room event on September 10, 1997:
opportunity to buy products from abroad that
are better or cheaper than what we can make We now estimate that of the impor-
for ourselves. We are richer as a society as a tant growth we’ve enjoyed in the past
result. And, over time, the workforce and four and a half years, almost a third of
resources that would have been devoted to it came because of our expansion of
making what we now import can be shifted to trade. During this period America has
making other products. In particular, since we once again become the world’s num-
pay for our imports with exports, international ber one exporter. . . .
trade leads us to specialize in producing those
products that we are relatively better at making. But I emphasize again, this is not a
Actually, the benefits of international trade static situation. In order for us to con-
extend beyond imports and exports. Even in tinue to create jobs and opportunities
the domestic market, the spur of foreign com- for our own people and to maintain
petition leads to lower costs and improved our world leadership, we have to con-
quality. For example, Americans drive much tinue to expand exports. We have to
better cars today than they did 20 years ago not use every tool we can get to open for-
just because many now drive Japanese cars; eign markets to our goods and ser-
American-made cars are also much better than vices; we have to continue the fight for
they once were, in large part as a response to open, fair and reciprocal trade; we have
Japanese competition. to continue to stand against unfair
Notice that this brief explanation of free trade practices; and we have to act now
trade’s blessings contains no mention of “fair to continue this progress to make sure
trade” or a “level playing field.” A country that our economy will work for all the
opens its markets will reap gains from interna- American people. . . .
tional specialization even if other countries
keep their markets relatively closed. Its busi- This is about more than economics….
nesses and consumers will have access to the It’s about whether other countries will
best and cheapest products the world has to continue to look to the United States
offer; the productivity of its industries will ben- to lead to a future of peace and free-
A country that efit from the challenge of foreign competition. dom and prosperity … or whether we
Of course, the gains from specialization will be viewed as somehow withdrawn
opens its markets increase if other countries allow free trade as from the world, not interested in lead-
will reap gains from well. But the crucial point is that free trade ing it, and therefore, not nearly as
international spe- enriches a country regardless of policies or con- influential as we might otherwise be
ditions abroad. for the causes in which we so deeply
cialization even if The proposition that free trade is its own believe.7
other countries reward is perhaps the most thoroughly exam-
ined and repeatedly vindicated one in all of Not a trace of Adam Smith can be found in
keep their markets economics.6 And yet, supporters of free-trade this line of argument. No mention is made of
relatively closed. policies rarely talk about it. To a striking extent, the benefits of open American markets to
the case for free trade in the policy arena bears American businesses and consumers. Instead,
no relation to the case made by Adam Smith President Clinton touted the export opportu-
and his successors in the economics profession. nities to be gained when other countries open
Last year’s failed effort to renew fast track their markets. In addition, he cast the issue in
authority highlighted the standard refrains foreign policy terms and called for the United

4
States to show international leadership by par- tion. If the United States abandons The twin themes of
ticipating in trade talks. this role, U.S. business and workers, as exports and inter-
President Clinton has been criticized for well as our overall national economic
dressing trade liberalization in mercantilist interest, will suffer. U.S. businesses risk national leadership
rhetoric.8 Actually, though, nothing was partic- ceding to their foreign competitors the dominated the
ularly distinctive about his pitch for fast track. significant new opportunities in
The twin themes of exports and international emerging markets which are so vital to
arguments made by
leadership dominated the arguments made by our continued health and expansion, as virtually all seg-
virtually all segments of the free-trade camp. the U.S. market is now mature in ments of the free-
For example, the Web site for America many sectors. . . .
Leads on Trade, a coalition of pro-fast-track trade camp.
businesses, defended fast track and trade If the United States does not retain its
expansion as follows: leadership role in global trade expan-
sion, American workers face the loss
Fast track is critical for the country’s of new and higher-paying jobs that
economic health and continued eco- result from greater exports and the
nomic growth, as well as for maintain- growth of the overseas activities of
ing U.S. leadership in the global econ- U.S. firms. Instead, workers in the
omy. markets of our principal foreign com-
petitors will benefit from expanded
Fast track is necessary for the United trade and job creation.10
States to reach agreements that tear
down barriers to U.S. trade and invest- In a similar vein, C. Fred Bergsten, a lead-
ment. These agreements will boost the ing trade expert and director of the Institute for
U.S. economy and create high wage International Economics, stressed exports in
jobs by expanding export opportuni- congressional testimony on the need for fast
ties for our companies and workers. track:

Fast track will allow the United States The American economy can reap
to keep its competitive edge against enormous benefits from new interna-
foreign competitors. If the United tional trade initiatives that reduce for-
States does not have fast track, we risk eign barriers to our exports. Imple-
being left behind. Other countries will mentation of such a strategy requires
continue to open up trade and invest- Congressional renewal of fast track
ments for their own companies and negotiating authority. . . . Provision of
workers, while retaining barriers such authority is extremely urgent
against U.S. exports.9 because our competitors around the
world are taking advantage of the
Calman J. Cohen, president of the Emer- absence of American activity, because
gency Committee for American Trade opportunities for pursuing beneficial
(ECAT), a pro-trade group representing large trade initiatives abound, and because
U.S. multinational corporations, adopted other countries will not negotiate with
almost identical rhetoric when he testified us in the absence of fast track.11
before Congress about fast track’s merits:
Why are free traders so reluctant to stress
It is critically important for us as a the virtues and benefits of free trade here at
nation that the United States maintain home? Their omission is hardly unintentional:
its leadership role in pursuing greater It goes to the core of a political strategy dating
global trade and investment liberaliza- back over six decades.

5
In 1930, the disastrous Smoot-Hawley Act a series of multilateral negotiating rounds.
raised tariffs sharply just as the nation was Eventually, as tariffs diminished in importance
falling into the Great Depression. Many coun- and negotiations began to focus on domestic
tries retaliated with tariff hikes of their own, policies that affect trade flows, the simple con-
and world trade plummeted: In the United gressional grant of tariff proclamation authori-
States, exports as a percentage of total goods ty was no longer sufficient. In 1974, Congress
production fell more than 20 percent between devised a new fast track procedure whereby the
1929 and 1933.12 president could negotiate changes in U.S. law
Free traders interpreted this catastrophe as that would then be subject to an up-or-down
evidence of a fundamental mismatch between vote in Congress.
protectionist and free-trade political forces. The negotiating strategy succeeded bril-
High tariffs offered concentrated benefits to liantly. For its first 150 years or so, the United
specific producers and imposed dispersed costs States maintained a fairly consistent high-tariff
on millions of consumers. Consequently, pro- policy, culminating in the fiasco of Smoot-
tectionist interests had both motive and oppor- Hawley. With the Reciprocal Trade Agree-
tunity to organize and apply political pressure, ments Act, the United States changed course
while free-trade interests had neither. As polit- and committed to a policy of gradual liberaliza-
Free traders hit ical scientist E. E. Schattschneider wrote in tion.14 Now, over six decades later, the United
upon a strategy of 1935: “Although . . . theoretically the interests States maintains a relatively open market and
reducing trade bar- supporting and opposed to tariff legislation . . . anchors a relatively liberal world trading order.
are approximately equal, the pressures upon Over its long and productive history, the
riers on a reciprocal Congress are extremely unbalanced. That is to negotiating strategy worked by a process of
basis through trade say, the pressures supporting the tariff are made diversion. As I. M. Destler explains:
overwhelming by the fact that the opposition is
agreements with negligible.”13 One political effect of trade negotia-
other countries. To offset their inherent disadvantage in lob- tions was to divert some trade policy-
bying muscle, free traders hit upon a strategy of making attention from the problems
reducing trade barriers on a reciprocal basis of the American market to the bene-
through trade agreements with other countries. fits of opening up markets overseas. In
First, by making tariff rates a matter of interna- fact, the very existence of ongoing
tional negotiations, this approach shifted con- negotiations proved a potent rationale
trol over trade policy from the Congress to the for deferring protectionist claims. It
executive branch, which was more insulated gave negotiators (and their congres-
from parochial special-interest pressures and sional allies) a strong situational argu-
thus better situated to appreciate the broader ment: to impose or tighten an import
national interest in open markets. Furthermore, barrier now, they could assert, would
by linking tariff cuts at home to tariff cuts undercut talks aimed at broader
abroad, the negotiating strategy recruited American trade advantages. Con-
exporting interests into the free-trade coalition versely, the unavailability of this argu-
and thus enhanced its lobbying strength. ment in periods between major trade
This strategy was first employed in the negotiations strengthened the hands
Reciprocal Trade Agreements Act of 1934, of those seeking protection. Trade spe-
which authorized the president to cut tariffs up cialists came to label this phenomenon
to 50 percent in return for reciprocal cuts by the “bicycle theory”: the trade system
other countries. Under this authority, the needed to move forward, liberalize
United States entered into dozens of bilateral further, or else it would fall down, into
trade deals in the 1930s and 1940s. Later, start- new import restrictions.15
ing with the General Agreement on Tariffs and
Trade (GATT) in 1947, the United States led The shift from import politics to export pol-

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itics was not the only diversionary tactic that The trade remedy laws impose special
free traders employed. In addition, the Cold duties or other import relief when particular
War enabled them to transform trade liberaliza- conditions are met: The antidumping law
tion from a matter of economic policy into one addresses imports with “unfairly” low prices;
of diplomacy. Reducing commercial conflicts the countervailing duty law deals with imports
with our allies served the goal of maintaining that benefit from foreign government subsi-
Western solidarity against the Soviet bloc; like- dies; Section 201 responds to import surges.
wise, opening our markets to developing coun- Together, they form a system of “administrative
tries would help to keep them in the capitalist protection,” as distinguished from the more
fold. Anticommunism thus lent powerful sup- overt legislative protection of old.
port to an ongoing policy of trade-expanding Labor unions, import-competing indus-
negotiations.16 Now that the Cold War is over, tries, and their friends in government ardently
we are left with the watery substitute of “show- defend the trade remedy laws as a bulwark of
ing international leadership,” yet even so the “fair trade.” This defense is hardly surprising,
foreign policy rationale remains. but what is striking is the extent to which sup-
Free traders determined that they could not posed free traders support these protectionist
win a head-on domestic political fight to weapons. Criticism of administrative protec-
reduce U.S. trade barriers. So they changed the tion by pro-trade policymakers has been rare
subject and fought instead over promoting and muted. Reform proposals, even in the con-
exports and resisting communism. Rather than text of regional or multilateral negotiations,
try to defeat protectionist claims, free traders have not ventured beyond marginal tinkering.
simply diverted attention from them. By shift- No doubt this state of affairs is attributable
ing the locus of trade policymaking from at least partly to intellectual confusion. The
domestic politics to international negotiations, trade remedy laws are notoriously complex and
they shifted the terms of debate and reversed swathed in the rhetoric of fighting unfair trade;
free trade’s fortunes. both of these facts help to insulate these laws
It is therefore not an accident that support- from scrutiny. In addition, though, administra-
ers of trade liberalization today make little or tive protection is defended by those who know
no mention of low U.S. trade barriers. Their its faults, on the grounds that it represents the
silence may be conscious or it may be a condi- lesser of two evils. As Richard Boltuck and
tioned reflex, but in any event it reflects a long- Robert Litan wrote:
held strategy of diverting attention from U.S.
import markets. According to that strategy, any At bottom, the imperfect success with
emphasis on the benefits of free trade at home which domestic interests have pursued The free-trade
amounts to leading with your chin. unfair trade remedies suggests perhaps
the only principled reason for the camp sometimes
Protectionist Payoffs statutes: as a legal “safety valve” for supports overt pro-
channeling the strongest claimants for tectionism here at
Free traders’ failure to defend free trade in protection away from overtly support-
the U.S. market is not the only paradox of their ing more transparent forms of protec- home.
traditional political strategy. In an even deeper tion. Thus, the overall effort to enforce
convolution, the free-trade camp sometimes the unfair trade practice program can
supports overt protectionism here at home. be rationalized to the extent it success-
Most notably, the so-called trade remedy fully prevents more unjustified protec-
laws—in particular, the antidumping law, the tion than it hands out.17
countervailing duty law, and the Section 201
escape clause law—are defended on the Seen in this light, support for administrative
grounds that they prevent worse protectionism protection complements the diversionary strat-
in the long run. egy of reliance on trade negotiations. As

7
Failure to confront Destler has noted: purist. Then again, very little in the sausage
protectionism grinder of real-world policymaking does. In
Politically, the administrative remedies defense of their compromises, supporters of the
head-on has now were another means by which Con- diversion-and-appeasement strategy can point
become a serious gress could divert trade pressures else- to an impressive record of achievement.
where. Legislators could say to those But times have changed. The political and
obstacle to contin- seeking statutory remedies, “Have you economic conditions in which trade policy is
ued liberalization. looked into the escape clause?” or “It made today are very different from those of a
sounds like a dumping case to me. . . .” couple of decades ago, let alone those of the
Rather than trying to arbitrate the 1930s. In the current environment, the tradi-
many trade claims, legislators could tional free-trade strategy is not nearly as effec-
point to “the rules” under which firms tive as it once was. Indeed, failure to confront
and workers were entitled to relief. protectionism head-on has now become a seri-
And officials of the executive branch ous obstacle to continued liberalization.
could do likewise.18 The old strategy took advantage of Cold
War tensions and used them as a cover for
The idea is that by occasionally appeasing trade liberalization. Thus, trade agreements
protectionist pressure within legally established were a means of strengthening the Western
constraints, these laws will prevent a general alliance by binding us commercially with our
breakout of protectionist reaction. Once again, European and Japanese allies. And opening our
the underlying assumption is that head-on con- markets to Third World countries could pre-
frontation with protectionist forces is political- vent defections to the Soviet camp. Now that
ly hopeless. The preferred approach is to finesse the Cold War has ended, however, free traders
claims for import relief by focusing on export can no longer rely on foreign policy considera-
expansion; when that diversion fails, measured tions as their ace in the hole. On the contrary,
appeasement is needed to avoid a rout. free trade’s association with international
Sometimes, though, protectionist pressures agreements and institutions is now generating
have overwhelmed the trade remedy safety significant opposition to open markets due to
valve. Some politically powerful and import- concerns over the loss of U.S. “sovereignty.”
sensitive sectors—most prominently, textiles In particular, nationalist sentiments are
and agriculture—managed to gain exemptions causing an erosion of support for trade liberal-
from GATT rules.19 In other cases, the United ization among conservative groups and in the
States has negotiated orderly marketing agree- Republican party.23 The National Rifle Asso-
ments (OMAs) or voluntary restraint agree- ciation and Phyllis Schlafly’s Eagle Forum both
ments (VRAs)—in other words, import quo- opposed fast track last year, as did the journal
tas.20 The authors of these deals have often Human Events.24 In the GOP, newer members
rationalized them as necessary to prevent even of Congress are especially likely to dissent from
more stringent protection from being imposed the party’s free-trade orthodoxy. Although
by Congress.21 In addition, selective import three-quarters of House Republicans support-
limits have been used to pave the way for ed fast track, most of those from the “class of
broader trade liberalization.22 Thus, free traders 1994” with publicly announced positions
have countenanced even the most naked forms opposed the measure in 1997.25
of protection in the furtherance of their non- Meanwhile, the diversion-and-appeasement
confrontational strategy. strategy developed at a time when trade policy-
making was an insider’s game. As recently as
Self-Defeating Strategy the late 1960s, imports as a percentage of gross
domestic product (GDP) totaled less than 5
It goes without saying that the traditional percent.26 In that environment, trade policy did
free-trade strategy does not appeal to the not arouse popular passions; it was of concern

8
only to relatively narrow interest groups. Perversely, though, free traders are actually
Accordingly, it was possible for a small elite of helping to perpetuate a worldview in which
free-trade-oriented power brokers in the exec- those misconceptions appear plausible.
utive branch and key congressional committees The traditional free-trade strategy relies
to manage those interests in technocratic fash- exclusively on international agreements as the
ion. There was little need to engage the gener- vehicle for trade liberalization. In trade negoti-
al public on the merits of trade liberalization. ations, countries offer to reduce import barriers
The situation has changed dramatically in in exchange for other countries’ offers of equiv-
recent decades. During the 1980s, concerns alent reductions. In other words, freer markets
about alleged U.S. economic decline and dein- at home are treated as the price we pay for freer
dustrialization transformed international trade markets abroad. Thus, the rhetoric of trade
into a subject of major public controversy. talks is premised on the mercantilist notion
Fortunately, the strong performance of the U.S. that exports are good and imports are bad.
economy during the 1990s—in contrast to eco- As discussed earlier, the “exports good,
nomic stagnation in Japan and chronic double- imports bad” mindset turns reality on its head.
digit unemployment in Europe—has served to Imports, not exports, represent the primary
calm the fears that American competitiveness benefit of international trade; exports, as pro-
is slipping. duction that we do not get to consume and Mercantilist
Nevertheless, the subject of international enjoy, are the price we pay for imports. assumptions and
trade—now captured by the buzzword of According to the mercantilist mindset, trade is attitudes color
“globalization”—has become more controver- a zero-sum game in which some countries win
sial than ever. Today, fears focus not on Europe because other countries lose, and the margin of every aspect of
or Japan but on developing countries. There is victory or defeat is measured in positive or neg- how trade agree-
widespread anxiety that competition with poor ative trade balances. In fact, however, open
but industrializing countries undermines the import markets are an unalloyed good, and
ments are currently
wages of American workers and puts down- benefit a country despite the trade balance and negotiated and
ward pressure on labor and environmental stan- regardless of whether other countries pursue evaluated.
dards. These issues came to the fore during the liberal or protectionist trade policies.
highly contentious debate over NAFTA and The whole theory of trade negotiations thus
have retained if not increased their potency ever rests on a whopping economic fallacy. More-
since. over, it is the very fallacy that lies at the root of
Globalphobia, or broad-based popular hos- most protectionist thinking. Accordingly, trade
tility to international economic integration, negotiations uphold and endorse a worldview
presents a challenge to continued trade liberal- that is unremittingly hostile to open markets.
ization that the old strategy of diversion and This is not a mere theoretical quibble:
appeasement is ill equipped to handle. That Mercantilist assumptions and attitudes color
strategy is designed to offset protectionist pres- every aspect of how trade agreements are cur-
sures from producer interests by (1) recruiting rently negotiated and evaluated. Trade negotia-
other producers (i.e., exporters) to oppose them tors, in the process of championing freer trade,
and (2) giving in to them under circumscribed demand “reciprocity” from our trade partners.
conditions. The strategy does not even con- They insist that a “bad deal” (i.e., one in which
template grassroots opposition to market-open- we liberalize more than other countries do) is
ing measures. worse than no deal at all. They oppose domes-
Indeed, now that trade policy has emerged tic reforms outside the context of negotiations
from closed doors, the old strategy has actually on the grounds that our own bad policies are
become self-defeating. To combat public anxi- “bargaining chips” that should be retained for
ety about open markets, free traders need to their exchange value. More ominously, they
address the widespread misconceptions about refer to liberalization without reciprocity as
international trade that give rise to that anxiety. “unilateral disarmament.” And when an agree-

9
ment has been reached, free traders focus on Free traders have paid little attention to how
the benefits to exporters, not importers. They their stealth strategy affects public attitudes
tout the benefits of reducing foreign trade bar- about trade. In the past that oversight was not
riers but say little or nothing about the benefits particularly important, but now public opinion
of reducing our own. plays a major role in shaping trade policy. And
Such pervasive mercantilism might not what the public sees in the often heated
have been a serious problem when trade policy debates over trade policy is not a contest
was hammered out in back rooms by experts between true free traders and protectionists but
and insiders who played the game with a rather a disagreement between optimistic mer-
knowing wink. Now, however, trade issues cantilists and pessimistic mercantilists. The
engage the attention and passions of the broad- optimists, the supporters of trade liberalization,
er public. The message that trade talks send to highlight the new export opportunities created
ordinary voters is that they are right to perceive by opening markets abroad; the pessimists
imports as a threat and trade deficits as a sign dwell on the supposed threat of increased
of weakness and decline. imports caused by opening markets here.
That message is underscored by support for Neither side, though, challenges the fallacious
and active use of the trade remedy laws against “exports good, imports bad” worldview.
“unfair” imports. Not only are these laws them- Consequently, it is not surprising that mercan-
selves protectionist, but also they reinforce tilist misconceptions are widely shared by the
broader protectionist attitudes. After all, if public at large.
dumping is objectionable and legally action- Meanwhile, although free traders push
able, then fears of cheap imports must be valid. optimism when they are trying to sell trade
More generally, the trade remedy laws support agreements, they unwittingly corroborate the
the protectionist gambit that “fair trade” pessimists’ fears when they are actually negoti-
trumps free trade: Openness to imports is ating those deals. Thus, our trade negotiators
appropriate only when policies and conditions never tire of claiming that the U.S. market is
in other countries are “fair,” however that term the most open in the world. Of course, within
is defined. the logic of trade negotiations, this is a sensible
The expanding definition of fair trade bargaining position, since it supports the con-
undermines free trade at two levels. First, it clusion that the United States should not have
increases the number of reasons for opposing to “give in” on this or that issue. The American
trade liberalization. The emergence of environ- public, though, hears these claims, and many
mental opposition to free trade is a case in conclude that the United States has been
Free traders have point. The asymptotic limit of this trend is that shortchanged by past negotiations. A healthy
imports are acceptable only when they come skepticism about future negotiations is there-
paid little attention from countries with policies and conditions fore in order. Similarly, U.S. trade negotiators
to how their stealth identical to ours. Second, there is an increasing complain incessantly about other countries’
strategy affects risk that the scope of free traders’ appeasement trade barriers and their failure to live up to past
will expand: Obnoxious labor, environmental, agreements. Again, this line makes sense at the
public attitudes and other provisions will be included in trade negotiating table, since it pressures our trade
about trade. agreements in order to buy off opposition. The partners to make additional “concessions.” The
NAFTA labor and environmental side agree- American public hears these repeated com-
ments were the first step in this direction, and plaints, though, and for many they confirm
unlikely to be the last. Thus, even as support suspicions that the United States is always
for trade liberalization steadily erodes, what being out-negotiated or even cheated. Trade
passes for liberalization in the future is ever liberalization therefore looks like a sucker’s
more likely to include measures that increase game.
rather than decrease government intervention Free traders are rightly dismayed by poll
in trade flows. numbers that show widespread opposition to

10
further market-opening agreements. But they ing fashion by the rhetoric used by interest Why shouldn’t the
must recognize that their own strategy bears groups opposed to high tariffs. As E. E. public view trade as
no small part of the blame for those poll Schattschneider observed in his study of
results. Why shouldn’t the public view trade as Smoot-Hawley Act lobbying: a zero-sum game
a zero-sum game when even free traders per- when even free
petuate mercantilist misconceptions? And why When groups did find it discreet to
shouldn’t the public suspect that we are losers oppose particular duties, they encoun-
traders perpetuate
in that game when even free traders are always tered a loyalty to the protective system mercantilist mis-
carping about the “unfairness” of our trade so great that it was necessary to pref- conceptions?
partners? By fostering a broader political cul- ace their pleas with tributes to the
ture that is hostile to open markets, the old principle and argue against duties in
diversion-and-appeasement strategy has the name of protection.28
become self-defeating.
To prove his point, Schattschneider cited
Nothing to Hide passages from testimony by opponents of duty
increases during public hearings on the Smoot-
Six decades ago, free traders decided Hawley bill. Here are some representative
that challenging protectionists through examples:
head-on confrontation was impossible. So
they went “under cover” and pursued trade We not only concede, but we earnestly
liberalization under the guise of mercan- urge, that every American industry
tilist export promotion and internationalist should be given adequate protection.
foreign policy. Changing conditions have ...
undermined the effectiveness of the dis-
guise. Moreover, they have undermined the We are firm believers in the policy of
reasons for going under cover at all. protecting American industries and
Free traders no longer need to be afraid of American workmen. . . .
making a frontal assault on protectionist posi-
tions. Ideologically, the climate of opinion is We are in favor of protection but. . . .
now dramatically more favorable to free mar-
kets in general—and free international markets The protective principle itself is not
in particular—than at the time when the old questioned, but. . . .
strategy was hatched. And in terms of practical
politics, the ongoing globalization of the I am a protectionist, but. . . . 29
American economy has greatly strengthened
the lobbying muscle of free-trade interests Even the president of the National Council
as compared with that of their protectionist of American Importers and Traders toed the
opponents. protectionist line:
In the 1930s, free traders were right to
believe that their cause went against the pre- The protective principle cannot be
vailing ideological tide. High tariffs had been disregarded. Whether the rates pro-
the rule rather than the exception for the posed are to be the same as at present
United States: The overall burden on imports or lower than the present, the suggest-
imposed by the Smoot-Hawley Act was actu- ed rates should as far as possible be
ally rather mild by historical standards.27 based upon the difference in costs of
Protectionism, in short, was as American as production abroad and costs of pro-
apple pie. duction in the United States. . . .30
The degree to which protectionism domi-
nated the political culture is illustrated in strik- So overwhelming was the protectionist

11
consensus that the interest group with the of integration into the international economy.
clearest and most obvious stake in free trade Where once the invisible hand was scoffed at,
advocated, not just high tariffs, but the system- there is now a truly global consensus that free
atic repudiation of the principle of comparative and open markets are essential to prosperity.
advantage. In stark contrast to the situation in the
Meanwhile, the Great Depression had shat- 1930s, supporters of trade liberalization now
tered confidence in the efficacy of free markets hold the intellectual high ground. Today, pro-
in any sphere, international or domestic. The tectionists are the exception makers and special
United States was in the midst of a dramatic pleaders. Consider the example of a recent
turn toward government intervention and cen- speech by Rep. Richard Gephardt, the House
tral planning—from securities and banking minority leader, before the Council on Foreign
regulation to agricultural production controls Relations. While advocating trade restrictions
to industrial cartelization under the National against countries with different labor and envi-
Industrial Recovery Act. Typifying the mood at ronmental policies and conditions, he wrapped
the time was this statement by Rexford his positions in the rhetoric of free trade:
Tugwell, Columbia University economics pro-
fessor and New Dealer at the Department of The mission of free trade is not to
Today, protection- Agriculture: cause a spiraling down of standards so
ists are the excep- we can compete with developing
tion makers and There is no invisible hand, and there nations.
never was. . . . [W]e must now supply
special pleaders. a real and visible guiding hand to do For trade to be ultimately successful,
the task which that mythical, non- there must be real compatibility
existent invisible agency was supposed between world trading partners — just
to perform but never did.31 as there is between the fifty states in
our country.
In that environment, a forthright call for
Adam Smith-style laissez faire in international Free trade also requires free markets.
trade would have been hopeless. And a component of free markets is
Free traders today operate under greatly free labor markets. That’s why I have
more favorable conditions. Today, the domi- fought so hard, and will never give up
nant (if embattled) tradition is one of trade lib- the fight, to have workers’ rights be
eralization, not protection. For over six an integral component of our trade
decades, it has been the official policy of the policy.32
United States to reduce trade barriers here and
abroad. All too often that policy has been hon- Where once free traders were forced to pose
ored in the breach, but despite detours and as protectionists, now protectionists like
backsliding the basic commitment to opening Gephardt feel compelled to hide their true col-
markets has held. ors:
The free-trade position has been further
strengthened by the broader triumph of free During my leadership of the effort to
markets over the past couple of decades. In the defeat the Republican-authored fast
United States, government controls on oil and track proposal, many in the press and
gas, airlines, railroads, trucking, telecommuni- public policy circles misunderstood
cations, and financial services have been lifted. and misrepresented the basis for my
Abroad, the changes have been revolutionary: position. To them, fast track was a
The communist bloc has disintegrated, while simple fight between protectionism
many developing countries have abandoned and internationalism. This myopic
autarkic “import substitution” policies in favor approach showed a lack of under-

12
standing of both the complexity of my free traders, though, should not be overstated.
position but more important the com- Admittedly, the consumers who are the ulti-
plexity of the whole question of inter- mate beneficiaries of free trade cannot organize
national trade and economics. and lobby effectively.36 But the fact is that,
aside from tourist purchases made abroad, all
I am a progressive internationalist. I imports represent a cost—whether as raw
embrace the new internationalism, materials and components, machinery and
but. . . . 33 equipment, or merchandise to be resold—to
some U.S. business. Import-using firms,
Protectionists are on the intellectual defen- dependent on foreign suppliers and anxious to
sive. There is no longer any reason for free keep costs down, have a direct commercial
traders to avoid a headlong attack on their stake in open markets and thus a strong incen-
opponents’ misconceptions. In the hostile envi- tive to counter protectionist pressure in
ronment of the 1930s, discretion may have Washington. And in recent years, free-trade
been the better part of valor. Under present business interests have been responding to
conditions, to stick with the old diversion-and- those incentives with increasing effectiveness.
appeasement strategy is to forfeit a battle of Back when free traders were launching the
ideas in which free traders have the advantage. diversion-and-appeasement strategy, the mis-
The defenders of the current strategy might match in lobbying muscle did indeed seem
counter that free traders have always had the overwhelming. Schattschneider made this
better of the intellectual argument, going all the withering assessment of the interests that
way back to Adam Smith. Successful policies, opposed Smoot-Hawley tariff increases:
however, require more than good ideas. As John
Stuart Mill observed, “A good cause seldom tri- The most conspicuous characteristic
umphs unless someone’s interest is bound up in of the opposition was its extreme pros-
it.”34 And the conventional wisdom in the free- tration combined with a certain incli-
trade camp is that the interests that support nation to vanish. Duties on a remark-
open U.S. markets cannot match up politically ably large proportion of items covered
with those that seek to close them. in the bill encountered no adverse
That pessimism comes from an analysis of pressure whatever. Importers were
how the costs and benefits of trade policy are active, but could do little more than
distributed. Economist Paul Krugman summa- cover the retreat, while consuming
rized the familiar line of reasoning in a recent manufacturers, whose resistance might
article in Slate: have been effective, fought against the To stick with the
duties on only a small fraction of their
The benefits of free trade, though sub- materials and supplies. Altogether, the
old diversion-and-
stantial, are thinly spread, so it isn’t in active antagonism of domestic eco- appeasement strat-
the interest of any individual to spend nomic groups to the legislation was egy is to forfeit a
a lot of money promoting that cause. fitful and feeble, and determined
Protectionism, by contrast, tends to opposition by powerful groups was battle of ideas in
impose widely spread costs but to con- exceptional.37 which free traders
fer benefits on concentrated interest
groups, who therefore have a strong In the past couple of decades, though, the
have the advantage.
incentive to lobby for it. . . .35 situation has been very different.38 In 1982-83,
when Congress was considering onerous
The problem of imbalanced costs and ben- domestic content legislation for automobiles, a
efits is a real one, and one that extends far coalition of car dealers and other groups active-
beyond trade policy: It underlies special inter- ly opposed the measure. The bill stalled with-
est lobbying of every stripe. The problem for out coming to a vote in the Senate.

13
The number of Controversy over auto trade peaked again in restrictions and Congress must decide whether
businesses with a 1995, when the United States threatened to to overturn the presidential waiver.41 A broad
impose 100 percent duties against Japanese coalition of exporting, importing, and investing
stake in free trade, luxury automobiles in retaliation against Japan’s companies has lobbied hard—and to date, suc-
and the size of the allegedly closed market. The U.S. plants of cessfully—to maintain normal trade relations
Japanese auto producers, together with car with China.
stakes, have multi- dealers, waged a lobbying blitz against the Of course, there have also been many trade
plied accordingly. sanctions; the United States ultimately backed policy setbacks in recent years, and lobbying by
down from its demand of market share guaran- anti-protectionist businesses was only one ele-
tees in Japan and withdrew the sanctions ment in the victories. Nevertheless, the dis-
threat. missal of free-trade lobbying as an exercise in
In 1985, legislation to roll back textile and futility no longer squares with the facts.
apparel imports appeared unstoppable—over What explains the change? First, American
half of the Senators and over 290 representa- business is much more dependent upon
tives had signed on as cosponsors. A coalition imports than in the past. Imports amounted to
of retailers fought back and managed to strip only 4 percent of GDP back in the 1930s, and
away enough House cosponsors to enable a stayed that way until the late 1960s; now, how-
presidential veto to be upheld. Restrictive leg- ever, the inflow of foreign goods and services
islation resurfaced in 1990; again importers and exceeds 12 percent of GDP.42 The number of
retailers launched an active lobbying campaign, businesses with a stake in free trade, and the
and a presidential veto of the bill was sustained. size of the stakes, have multiplied accordingly.
Of particular significance was the decision by Beyond increasing import penetration, the
the American Apparel Manufacturers rising inward flows of direct foreign invest-
Association, representing two-thirds of U.S. ment, especially in manufacturing, have created
apparel production, not to support the 1990 powerful new constituencies for open markets.
bill. Although some members would have ben- Foreign-affiliated firms now account for nearly
efited from tightened quotas on apparel 6 percent of U.S. gross product originating in
imports, others would have suffered from the private industries, and nearly 5 percent of total
restrictions on foreign fabrics. Previously, tex- private-sector employment. In the manufactur-
tile and apparel makers banded together in ing sector, the foreign-affiliated presence is
spite of such internal conflicts, but growing even greater, accounting for approximately 13
dependence of clothing makers on foreign sup- percent of output and 11 percent of employ-
pliers ruptured the long-standing coalition.39 ment.43 With their American factories and
Steel imports have long been subject to spe- American employees (and voters), foreign-
cial restrictions. In 1988, though, the Coalition owned firms bring significant free-trade clout
of American Steel Using Manufacturers, led by to policy disputes.44
Caterpillar, Inc., organized to oppose extension Furthermore, in a silver lining to an other-
of the voluntary restraint agreements on steel wise dark cloud, free trade has benefited from
imports, which were due to expire in 1989. the overall expansion of organized political
Although President Bush did fulfill a campaign lobbying.45 For example, the number of nation-
pledge to renew the VRAs, the extension was al associations increased from 4,900 in 1956 to
only for two and a half years, rather than five as 23,000 in 1989.46 A generally greater partici-
the domestic steel mills had urged. And in pation level of corporate interests in policy-
1992, the VRAs were allowed to expire. making has reduced protectionist lobbies’ tra-
Throughout the 1990s, the issue of “normal ditional insider advantage. Also, new informa-
trade relations” (formerly known as “most tion and communications technologies have
favored nation” status)40 with China festered, as facilitated the organization of anti-protection
each year the president must determine coalitions, thus helping to overcome the “con-
whether to waive Jackson-Vanik amendment centrated benefits/dispersed costs” problem

14
that makes protectionism politically appealing. Foreign producers can now make an end run
Perhaps the most important reason for the around import barriers by building plants here.
increased vigor of free-trade lobbying is the fact After a VRA on Japanese automobiles was
that protection is no longer endemic. Back in announced in 1981, the major Japanese car
the 1930s, nearly all industries that suffered on manufacturers began setting up U.S. factories.
account of duties on inputs benefited from Over time, the VRA’s quantitative restrictions
duties on their outputs. As Schattschneider became ineffective. Similarly, in 1994 an
observed: antidumping investigation imposed drastic
reductions in imports of color photographic
Even if a producer saw clearly where paper from Japan; Fuji Photo Film responded
his interests lay in opposition to the by building a plant in South Carolina—which
system, the whole political logic of the now produces film as well as paper. When for-
situation is against an attempt to eign companies establish American operations,
redress the balance by getting a gener- the threat of protectionism in the future is sig-
al reduction of the rates on his materi- nificantly reduced.
als. It is easier to move with the stream Finally, protectionist interests are now seri-
by asking for an increase of the duties ously constrained by U.S. commitments under
on the ouput of his industries than it is international trade agreements. Maximum tar-
The rise of free-
to provoke conflicts on a wide front by iff levels are bound by GATT negotiations; ad trade lobbying
resisting the series of duties levied hoc product-specific tariff increases are there- strength has been
against him.47 fore proscribed. VRAs exploited a loophole in
GATT discipline and became a popular protec- accompanied by
By contrast, thanks to multiple rounds of tionist vehicle in the 1980s; the Uruguay Round weakening on the
trade negotiations, tariffs today average less agreements closed that loophole, though, and
than 5 percent, and quantitative restrictions are VRAs are now banned. Protectionists are thus
protectionist side.
limited to a few sectors; in general, openness to caught in a squeeze: Their traditional barriers
foreign competition is now the rule rather than have been whittled away steadily by progressive
the exception. As a result, the cycle of “if you negotiations, while new outlets for protection
can’t beat ’em, join ’em” has been broken. are being shut down. The trade remedy laws are
The rise of free-trade lobbying strength has the only major remaining option for closing
been accompanied by weakening on the pro- down American markets.
tectionist side. Most obviously, employment in Both intellectually and politically, support-
traditionally import-competing industries has ers of trade liberalization today enjoy advan-
fallen off sharply in the past decade or two. As tages that their predecessors back in the 1930s
a result, the number of voters for which those could barely have imagined. It is high time that
industries and their labor unions presume to free traders recognize their good fortune, and
speak is not what it used to be. Declines in dare to make use of it.
union membership tell the story: Between
1975 and 1995, United Steelworkers plunged Turning the Tables
from 1,062,000 members to only 403,000; the
United Autoworkers (UAW) went from To revive their cause’s flagging fortunes,
1,357,000 members to 751,000; the Interna- free traders should come out fighting.
tional Ladies’ Garment Workers’ (ILGWU) Abandoning the old diversion-and-appease-
Union fell from 363,000 members to 123,000; ment strategy, they should launch a campaign
and the American Clothing and Textile to eliminate U.S. trade barriers unilaterally—
Workers Union (ACTWU) dropped from that is, regardless of whether other countries
254,000 to 129,000.48 make similar reforms.
Meanwhile, the inflows of foreign direct There are many possible targets of such a
investment undermine protectionist lobbying. campaign.49 Here are a few that are particular-

15
ly inviting: result of these programs, Americans are
forced to pay prices far above world levels.
• Antidumping Law. Today this law is the sin- For example, the average annual world price
gle most effective tool for erecting new pro- for raw cane sugar from 1991 to 1995 ranged
tectionist barriers against foreign goods. from 9.22 to 13.86 cents per pound, while the
Although justified as a remedy against “unfair average annual U.S. price varied from 21.39
trade,” in fact the law itself is blatantly unfair. to 22.76 cents per pound.52
Its horribly complex and convoluted provi- • Jones Act. This law, enacted in 1920, requires
sions subject the pricing of imports to far all merchandise shipped between U.S. ports
more onerous restrictions than those that to be carried on U.S.-built and U.S.-owned
apply to domestically produced merchandise. vessels. The elimination of foreign competi-
Such discrimination stifles honest competi- tion raises costs for agriculture, petroleum,
tion and gouges U.S. businesses and con- and other industries that ship within the
sumers. Beyond the specific economic dam- United States; the effects are especially severe
age caused by the law, the fact that it is sup- in Alaska and Hawaii. The International
ported by free traders and protectionists alike Trade Commission (ITC) has estimated that
strengthens the mercantilist political culture repeal of the Jones Act would cause the price
that views cheap imports as somehow inher- of previously restricted shipping services to
ently unfair. fall by 26 percent.53
• High Tariffs. After 50 years and eight rounds
of GATT tariff cutting, the United States still All of these policies are economically non-
imposes restrictive duties on many products. sensical. They punish American businesses and
The problem is especially severe with textiles consumers; they restrict choices; they drive up
and apparel. Even though the Uruguay prices; they blunt the forces of competition that
Round agreements provide for a 10-year are responsible for increased productivity and
phaseout of quotas, high tariff rates persist. rising standards of living. They are a tax on
Here are a few examples: sewing thread, 11.4 American economic health for the benefit of
percent; woven nylon fabric, 14.9 percent; narrow interests that cannot possibly justify
denim fabric, 8.4 percent; cotton blouses, 19.7 their special immunity from market discipline.
percent; T-shirts, 16.5 percent; wool sweaters, The fact that other countries have similar poli-
16 percent; babies’ shirts and blouses, 22 per- cies or worse is no reason at all for us to cling
cent; bathrobes, 14.9 percent; men’s swim- to our own folly. The protectionist barriers list-
wear, 27.8 percent; curtains and draperies, ed, and others like them, richly deserve all the
The fact that other 11.3 percent; and women’s hosiery, 14.6 per- intellectual and political firepower that free
cent. Duty rates also remain high in a random traders can muster.
countries have simi- assortment of other products, including: light Meanwhile, free traders can combine an
lar policies or worse trucks, 25 percent; ball and roller bearings, 9 attack on U.S. import barriers with their con-
is no reason at all percent; ceramic wall tiles, 10 percent; napkin current efforts against U.S. export barriers.
rings, 20.8 percent; leather gloves, 12.6 per- Although we complain about other countries’
for us to cling to our cent; and sneakers and running shoes, 37.5 policies that block American exports, the fact is
own folly. percent.50 that U.S. policies are a serious and worsening
• Sugar, Peanut, and Dairy Progams. Import problem. The proliferation of foreign policy
protection is an essential component of larg- sanctions and the holdover of Cold War export
er price support programs for these products. controls impede American companies in mar-
Specifically, imports in excess of specified kets around the world. According to one recent
quota limits are subject to high tariff duties; estimate, unilateral sanctions alone cost $15
for example, the bound over-quota tariff rates billion to $19 billion a year in lost overseas
are 163.8 percent for in-shell peanuts and sales.54 And although touted as a means of pro-
approximately 125 percent for butter.51 As a moting democracy and combating terrorism,

16
the growing web of commercial restrictions has while times are good, it is vitally important for A campaign for
had virtually no effect on the regimes being tar- free traders to change course and squelch glob- unilateral liberal-
geted.55 alphobia before it can do serious harm.
This policy fiasco presents a political oppor- In that light, the greatest benefit of a cam- ization would
tunity. Free traders can propose a comprehen- paign for unilateral liberalization is that it enable free traders
sive overhaul of U.S. trade policy on both the forces a head-on confrontation with protec-
import and export sides, uniting importing and tionist misconceptions. It is impossible to argue
to reclaim their
exporting interests behind a wide-ranging for the unilateral elimination of trade barriers populist roots.
package of reforms. The same coalition build- without making the case that free trade is its
ing that trade negotiations achieve can thus be own reward. Free traders would have to explain
replicated on a unilateral basis. why imports make us richer, not poorer; why
A campaign for the unilateral reform of trade deficits are meaningless; why the elimina-
U.S. import barriers represents a sharp break tion of particular jobs is sometimes necessary in
from accepted ways of doing things. The inter- a healthy economy.57 The trade debate would
ests that benefit from protectionist policies are no longer be an echo chamber of optimistic
already well organized; the interests that could and pessimistic mercantilists. Americans would
challenge those polices are not. It is reasonable finally begin hearing the other side of the story.
to assume that, at least in the short term, victo- Furthermore, the unilateral approach would
ries would be difficult to come by. enable free traders to frame the debate in terms
But the benefits of such a campaign dwarf that give them the natural advantage. Rather
the specific gains from dismantling particular than simply defending free trade, they would
remaining trade barriers. Today the United attack its alternative: protectionism in actual
States is already largely open to foreign goods, practice. Admittedly, the case for free trade is to
services, and investment; existing protection- some degree hypothetical and counterintuitive;
ism is at most a marginal hindrance to overall two centuries and counting since Adam Smith
American economic vitality. A 1995 survey of have proved that point beyond all debate. On
major U.S. trade barriers by the ITC estimated the other hand, the case against protectionism
that their elimination would yield a $15.5 bil- is much clearer: It raises prices, restricts choic-
lion increase in total output.56 Even if that cal- es, and benefits a favored few at the expense of
culation were a serious understatement, the fact everyone else. Protectionism is unfair, plain and
is that protectionism’s present costs are relative simple. An attack on U.S. trade barriers would
peanuts in a $8 trillion economy. allow free traders to put their opponents on the
Of far greater importance is preventing a defensive for a change. The beneficiaries of
return to seriously protectionist policies. At protection would be forced to explain why they
present, a significant strain of globalphobia deserve their special privileges, and why the
runs through American public opinion; the welfare of other American businesses and their
level of anxiety and confusion is especially wor- workers, not to mention consumers, should be
risome given that it exists and grows even in sacrificed on their account.
the face of extremely favorable economic con- A campaign for unilateral liberalization
ditions. In the event of any kind of sharp eco- would thus enable free traders to reclaim their
nomic downturn, anxiety and confusion could populist roots. Before the diversion-and-
quickly mutate into panic, and we can rest appeasement strategy was devised, the trade
assured that politicians will emerge who play to debate typically pitted Democrats and the
that panic. In such a scenario, a full-scale pro- common man for free trade against
tectionist spasm is a real possibility. Republicans and big business for protection.
By acquiescing in and even actively encour- Free traders used explicitly populist rhetoric,
aging mercantilist and fair trade fallacies, free condemning tariff walls as bastions of corrup-
traders are now unwittingly increasing the like- tion and privilege.58 Today, unfortunately, free
lihood of such a disastrous turn of events. Now, trade is all too often depicted as elitist—

17
padding the bottom lines of Fortune 500 initial unilateral reforms were actually far more
multinationals and confirming the cosmopoli- sweeping than the additional reforms it
tan prejudices of highly educated profession- promised under NAFTA.60
als.59 The stereotype is only confirmed by trade Recent experience thus disproves the con-
liberalization’s reliance on secretive negotia- ventional wisdom that negotiations are the pri-
tions and international bureaucracies. mary driver of trade liberalization abroad.
Unilateralism would help to counteract that Unilateral reforms have been far more signifi-
stereotype by focusing on those aspects of the cant. And those reforms have come when
free-trade cause with the greatest populist politicians perceived that their countries were
appeal: cutting taxes and eliminating corporate falling behind freer, more dynamic economies.
welfare. In other words, protectionist countries have
changed their policies in order to catch up eco-
Leading by Example nomically with more open countries. Accord-
ingly, the most important thing that the United
Skeptics of a unilateral approach might States and other relatively open-market coun-
argue that even if freer trade here is a desirable tries have done to encourage liberalization else-
objective, freer trade here and abroad is even where is to set a good example. It follows,
Protectionist better. By eliminating trade barriers without therefore, that the United States can do more
countries have bargaining for other countries to do the same, to promote continued liberalization by drop-
changed their poli- the United States would be wasting a valuable ping its remaining barriers than it can by hang-
opportunity to promote liberalization abroad. ing onto them. Indeed, it is difficult to picture
cies in order to We should kill two birds with one stone and anything that would more greatly enhance the
catch up economi- use our remaining trade barriers as leverage to prospects of free trade around the world than a
achieve freer trade here and around the world. consistent and principled commitment to open
cally with more This argument against unilateral liberaliza- markets on the part of the world’s largest and
open countries. tion rests on two assumptions: first, that inter- most prosperous economy.
national negotiations are the only (or at least Moreover, the United States can continue
the primary) means by which trade barriers to play a leading role in trade negotiations even
abroad are reduced; and second, that successful if it lacks protectionist policies to offer as con-
negotiations require offers of liberalization by cessions. Consider the recent WTO agree-
the United States to spur reciprocal offers by ments on telecommunications and financial
other countries. Both assumptions are false. services. Both agreements represent important
The past couple of decades have witnessed breakthroughs, and both were negotiated in the
dramatic reductions in trade barriers around absence of U.S. fast track authority. How was
the world, and by and large these bold moves this possible? Fast track was unnecessary be-
toward freer trade have occurred outside the cause none of the U.S. commitments under
context of trade negotiations. Countries as either agreement required changes in legisla-
diverse as Australia, New Zealand, Argentina, tion. The major U.S. “concession” was to agree
Chile, and the Philippines have decided unilat- to “lock in” current levels of openness.
erally to forsake the old autarkic model of Furthermore, participation by the United
import substitution in favor of integration with States lent legitimacy to the agreements that
the global economy. The driving force for otherwise would have been lacking, thereby
sweeping change in those countries was not increasing other countries’ confidence in the
tough bargaining or the prospect of a quid pro integrity of each others’ commitments. Thus,
quo but rather the realization that protection- U.S. involvement was desirable apart from any
ism was causing economic stagnation. The considerations of concessions.
same can be said of our NAFTA partner A similar dynamic operated in the NAFTA
Mexico: It began dismantling protectionist negotiations, Ross Perot’s hysterics notwith-
policies on its own in the mid-1980s, and those standing. Before the agreement, U.S. tariffs

18
against Mexican goods averaged only 2 per- remain engaged in the process of negotiated
cent. The chief advantage that Mexico gained liberalization, but without fostering miscon-
from the United States by entering NAFTA ceptions that undermine free trade in the long
was the guarantee that open access to the U.S. term. The United States can still exert power-
market was now secured by an international ful leverage in negotiations—most important,
agreement. Actually, the primary benefit of by refusing to participate in watered-down
NAFTA from Mexico’s perspective had noth- agreements—but without clinging to wrong-
ing to do with the United States. The main headed policies simply because other countries
reason President Salinas sought a free-trade have not yet gotten rid of theirs. In short, the
agreement was to consolidate Mexico’s prior United States can enjoy the best of both the
unilateral reforms and insulate them from unilateral and the multilateral worlds.
change by future administrations.61 Unilateral liberalization, far from undermining
These overlooked facts suggest a new, more trade negotiations, can put them on a much
promising model for trade negotiations—one sounder footing.
that is free of the corrupting dogmas of mer-
cantilism and fair trade. A United States with- Conclusion
out trade barriers clearly would not seek to
“win” at the bargaining table by “getting” more Many supporters of free trade will be reluc-
than it “gives.” Nor would it seek to erect new tant to abandon a strategy that has achieved
barriers to trade by making market access con- real-world results for over six decades. But a
tingent on harmonization of environmental, sober assessment of the facts demonstrates that
labor, or other policies. Instead, it could define the diversion-and-appeasement strategy has
negotiating objectives—for example, reduc- outlived its usefulness. It is contributing to
tions of tariffs, reforms of antidumping laws, popular anxieties about globalization. It is
rules on the treatment of foreign investment, bending trade negotiations away from true lib-
rules against the protectionist misuse of health eralization and toward international bureaucra-
and safety standards, and so on—and offer to tization. In short, it is creating more problems
elevate its own unilaterally adopted free-trade than it solves.
policies into binding international commit- Admittedly, it is possible that we will still be
ments, provided that some “critical mass” of able to muddle through without a major
other countries agree to exceed a defined min- change of course. Powerful intellectual and
imum threshold of liberalization. economic forces may continue to push us
The viability of such an approach is not toward freer trade—or at least prevent a pro-
theoretical: The United States pursued a very tectionist relapse—in spite of ourselves. The The United States
similar strategy in both the telecommunica- threat of globalphobia may fizzle on its own.
tions and financial services talks and it worked. Opponents of harmonization run amok may
can enjoy the best
In those talks, though, the U.S. position was stop it even with the terms of the debate of both the unilat-
couched in terms of demands for reciprocity. stacked against them. eral and the multi-
Under the proposed model, the United States But there is a better way. Free traders have it
would abandon that kind of rhetoric and focus in their power to promote their cause, here and lateral worlds.
instead on its commitment to free-trade prin- abroad, with much greater effectiveness than at
ciples. The U.S. position would be as follows: present. They can seize the intellectual initia-
We pursue free-trade policies at the national tive. They can frame issues in ways that give
level because we believe it is in the U.S. interest them the natural political advantage. They can
to do so, but we will not commit ourselves set an example for the rest of the world to fol-
internationally to any agreement unless it is low. And best of all, they can achieve these
reflects a sufficiently serious international com- things by standing up for what they know to be
mitment to free-trade principles. true.
It is thus possible for the United States to At the messy margins of policymaking,

19
The diversion-and- there are frequently tradeoffs between sticking Free Trade (Princeton: Princeton University Press,
appeasement strate- with principles and getting things done. But 1996).
free traders must recognize that now is not the
gy has outlived its time for compromise; now is not the time for 7. “Remarks by the President on Fast Track
usefulness. diversion and appeasement. After six decades, Authority,” September 10, 1997, available at
compromise has become self-defeating. Free http://www.pub.whitehouse.gov.
traders today are in that happy circumstance
when holding to their ideals is the most 8. See, for example, Ted van Dyk, “Off Track on
intensely practical thing they can do. Trade,” New York Times, November 7, 1997; Marc
Levinson, “Kantor’s Cant: The Hole in Our Trade
Notes Policy,” Foreign Affairs 75, no. 2 (March-April
1996): 2.
1. For an analysis of fast track authority, see Daniel
T. Griswold, “Fast Track to Freer Trade,” Cato 9. http:www.fasttrack.org.
Institute Briefing Paper no. 34, October 30, 1997.
10. Testimony before the Subcommittee on Trade
2. “Freer Trade Gets an Unfriendly Reception,” of the Committee on Ways and Means, House of
Business Week, September 22, 1997, p. 38. It should Representatives, September 30, 1997.
be noted that polling results on trade issues are
inconsistent and appear highly sensitive to how 11. Testimony before the Committee on Finance,
questions are formulated. Thus, in a nationwide United States Senate, June 3, 1997. Although
survey conducted by EPIC/MRA, one-half of the Bergsten did go on to mention the benefits of
respondents opposed “giving” the president fast imports, the overwhelming emphasis of his testi-
track authority by a 49-41 margin, while the other mony was on export expansion.
half favored “renewing” fast track by a similar 48-
41 margin. “Poll Sees Some Erosion in Public 12. I. M. Destler, American Trade Politics, 3d ed.
Support for Free Trade,” National Journal’s (Washington: Institute for International
CongressDaily, May 14, 1998. Nevertheless, surveys Economics and the Twentieth Century Fund,
do reveal clearly and consistently that a significant 1995), p. 11.
portion of the American public seriously misun-
derstands the effect of international trade and 13. E. E. Schattschneider, Politics, Pressures and the
investment on the U.S. economy. Tariff (New York: Prentice-Hall, 1935), p. 285.

3. See, for example, Brian R. Russell, “Getting 14. For an analysis of how the Reciprocal Trade
Back on Fast Track,” Journal of Commerce, Agreements Act transformed U.S. trade politics,
November 19, 1997; Julie Kosterlitz, “The see Douglas A. Irwin and Randall S. Kroszner,
Pinstripers Ignored ‘Ordinary Americans,’ ” “Interests, Institutions, and Ideology in the
National Journal, November 1, 1997, p. 2191. Republican Conversion to Trade Liberalization,
1934-1945,” National Bureau of Economic
4. Adam Smith, An Inquiry into the Nature and Research Working Paper 6112, July 1997.
Causes of the Wealth of Nations (New York: Modern
Library, 1937) p. 17. 15. Destler, pp. 17-18.

5. Ibid., p. 424. 16. For an interesting if protectionist-oriented


analysis, see Alfred E. Eckes, Jr., Opening America’s
6. For an excellent account of the free-trade doc- Market: U.S. Foreign Trade Policy since 1776
trine’s development and its unflagging vitality in (Chapel Hill: University of North Carolina Press,
the face of numerous challenges, see Douglas A. 1995), pp. 157–77; see also Charles K. Rowley,
Irwin, Against the Tide: An Intellectual History of Willem Thornbecke, and Richard E. Wagner,

20
Trade Protection in the United States (Brookfield, 25. Ibid., p. 21.
Vt.: Edward Elgar, 1995), p. 165.
26. In 1967, imports amounted to only 4.79 per-
17. Richard Boltuck and Robert E. Litan, eds., cent of GDP; in 1968 the figure climbed to 5.12
Down in the Dumps: Administration of the Unfair percent. See http://www.bea.doc.gov/bea/dn/
Trade Laws (Washington: Brookings Institution, 0897nip2/tab1.htm.
1991), p. 13.
27. Under Smoot-Hawley, duties as a percentage of
18. Destler, p. 24. dutiable imports were the highest in U.S. history,
peaking at roughly 60 percent. However, approxi-
19. Note that the Uruguay Round agreements pro- mately two-thirds of U.S. imports remained duty-
vided for the reintegration of textiles into the free; accordingly, duties as a percentage of total
GATT system after a 10-year transition period. imports came to only around 20 percent. By con-
They also imposed modest discipline on agricul- trast, the 1828 “Tariff of Abominations” raised
tural export subsidies and required the conversion duties to over 55 percent of imports; after three
of agricultural import quotas into tariffs. decades of steady liberalization, Civil War tariff
hikes raised duties from around 15 percent to over
20. For example, in the 1970s the United States 45 percent. See Bruce Bartlett, “The Truth about
negotiated OMAs on specialty steel and Japanese Trade in History,” in Edward L. Hudgins, ed.,
televisions; in the 1980s it entered into VRAs on Freedom to Trade: Refuting the New Protectionism
autos, carbon steel, and machine tools. (Washington: Cato Institute, 1997), p. 13, Figure 1.

21. In the case of the 1981 VRA on Japanese 28. Schattschneider, pp. 140-41.
automobiles, U.S. Trade Representative Bill Brock
later stated that protectionist presssure from 29. Ibid., pp. 141-43.
Congress made some kind of import limits
unavoidable. “ ‘The Congress was going crazy,’ 30. Ibid., p. 141.
Brock says. ‘We had to keep from falling into the
abyss, with a major draconian action.’ ” Steve 31. Quote taken from John M. Jordan, Machine-
Dryden, Trade Warriors: USTR and the American Age Ideology: Social Engineering and American
Crusade for Free Trade (New York: Oxford Liberalism 1911-1939 (Chapel Hill: University of
University Press, 1995), p. 268. North Carolina Press: 1994), p. 250.

22. For example, the Kennedy administration 32. Hon. Richard A. Gephardt, “Preserving World
negotiated comprehensive import restrictions on Capitalism for the Next Century: A Plan of
textiles in a bid to ease passage of the Trade Action,” Address to the Council on Foreign
Expansion Act of 1962 that launched the Kennedy Relations, March 3, 1998, available at http://
Round of GATT talks. Similarly, Special Trade www.house.gov/democrats/speeches/imf2.html.
Representative Robert Strauss convinced President
Carter to sign off on the OMA on Japanese televi- 33. Ibid.
sions to maintain congressional support for the
Tokyo Round GATT negotiations. See Dryden, 34. Quoted in Jadgish Bhagwati, Protectionism
pp. 54-55, 214-15. (Cambridge, Mass.: MIT Press, 1988), p. 18.

23. For a perceptive analysis of this trend, see Peter 35. Paul Krugman, “Who’s Buying Whom? The
Beinart, “The Nationalist Revolt,” New Republic, Milliken Man March on Washington,” Slate, post-
December 1, 1997, pp. 20-26. ed September 25, 1997.

24. Ibid., p. 22. 36. Indeed, as poll numbers show, many consumers

21
do not even perceive that free trade is in their operations from outside competition. For example,
interest. French-owned Bic filed a U.S. antidumping peti-
tion against cigarette lighters from Thailand and
37. Schattschneider, pp. 114-15. China (its parent company filed a similar case in
the European Union). Nevertheless, as a general
38. The best analysis of the rise of free-trade lob- matter foreign-affiliated companies tend to take
bying, which, unfortunately, is somewhat outdated, generally free-trade positions, especially with
is I. M. Destler and John S. Odell, Anti-Protection: respect to policies that affect the countries in
Changing Forces in United States Trade Politics which their parent companies are headquartered.
(Washington: Institute for International
Economics, 1987). 45. See Destler and Odell, pp. 28-30.

39. See Clyde Farnsworth, “Senate Votes Import 46. Jonathan Rauch, “The Parasite Economy,”
Curbs but Veto Looms,” New York Times, July 19, National Journal, April 25, 1992, p. 980.
1990.
47. Schattschneider, p. 128.
40. As a result of the Internal Revenue Service
Restructuring and Reform Act of 1998, “most 48. Statistical Abstract of the United States: 1997,
favored nation” status has been renamed “normal p. 440; 1975 figures for UAW and ACTWU
trade relations.” membership were taken from Leo Troy and Neil
Sheflin, U.S. Union Sourcebook, 1st ed. (West
41. The Jackson-Vanik amendment, a holdover Orange, N.J.: Industrial Relations Data and
from the Cold War, prohibits normal trade rela- Information Services, 1985), Table 3.71.
tions with countries that do not allow free emigra-
tion. Its original target was Soviet restrictions on 49. For a review of U.S. protectionist policies, see
Jewish emigration. The president can waive the Stuart Anderson, “Unclean Hands: America’s
sanctions annually, but then Congress can pass leg- Protectionist Policies,” in Hudgins, ed., Freedom to
islation to overturn the waiver. In the case of Trade, p. 49; see also Cato Handbook for Congress:
China since the 1989 Tiananmen Square mas- 105th Congress (Washington: Cato Institute,
sacre, the Jackson-Vanik process has become a pre- 1997), chapter 52, p. 507.
text to link China’s trade status to broad issues of
human rights and nuclear proliferation. 50. Duty rates are for representative products (i.e.,
the verbal description may encompass multiple tar-
42. The relevant figures are available at http://www. iff items). The rates are the ultimate bound rates
bea.doc.gov/bea/dn/0897nip2/tab1.htm. pledged by the United States in Schedule XX of
the Uruguay Round agreements. Some of these
43. For foreign affiliates’ share of total output and rates will not be fully phased in until 2004.
employment in 1996, and of manufacturing
employment in 1996, see Mahnaz Fahim-Nader 51. The above-quota tariff rate for in-shell peanuts
and William J. Zeile, “Foreign Direct Investment is the bound rate as indicated in Schedule XX of
in the United States,” Survey of Current Business, the Uruguay Round agreements. The above-quota
June 1998, pp. 47, 50. Foreign affiliates’ share of tariff rate for butter is ultimately bound at $1.541
manufacturing output in 1994 was derived from per kilogram, or approximately 125 percent ad val-
Fahim-Nader and Zeile, p. 47, and Statistical orem. See The Economic Effects of Significant U.S.
Abstract of the United States: 1997 (Washington: Import Restraints: First Biannual Update,
Bureau of the Census, 1997), p. 448. International Trade Commission Publication
2935, December 1995, p. 4-9.
44. Of course, foreign-affiliated firms can and
sometimes do seek protection of their American 52. Commodity Programs: Impact of Support

22
Provisions on Selected Commodity Prices, Tennessee claimed that Republican tariff
GAO/RCED-97-45, p. 18. policy “involves a corrupt partnership
between politics and vested industrial inter-
53. International Trade Commission Publication ests, the poison of which constantly breeds
2935, p. 5-4. national scandal.”

54. Gary Clyde Hufbauer, Kimberly Ann Elliott, Eckes, p. 35 (footnotes omitted). Interestingly, it
Tess Cyrus, and Elizabeth Winston, “U.S. was Cordell Hull who later did more than anyone
Economic Sanctions: Their Impact on Trade, Jobs, to conceive and launch the diversion-and-appease-
and Wages,” Institute for International Economics ment strategy. As Franklin Roosevelt’s secretary of
Working Paper, 1997, available at http://www.iie. state, Hull was the mastermind behind the
com/sanctnwp.htm. Reciprocal Trade Agreements Act of 1934, which
initiated the process of pursuing trade liberaliza-
55. For an analysis of the track record of U.S. sanc- tion through international negotiations.
tions against Burma, see Leon T. Hadar, “U.S.
Sanctions against Burma: A Failure on All Fronts,” 59. See, for example, Patrick J. Buchanan, The
Cato Institute Trade Policy Analysis no. 1, March Great Betrayal: How American Sovereignty and
26, 1998. Social Justice Are Being Sacrificed to the Gods of the
Global Economy (New York: Little, Brown, 1998).
56. International Trade Commission Publication
2935, page xi. 60. See Paul Krugman, Pop Internationalism
(Cambridge Mass.: MIT Press, 1997), pp. 163-64.
57. For an analysis of the trade deficit, see Daniel
T. Griswold, “America’s Maligned and Misunder- 61. See Dryden, p. 369, for a description of
stood Trade Deficit,” Cato Institute Trade Policy Salinas’s motivations for proposing a free-trade
Analysis no. 2, April 24, 1998. agreement to President Bush.

58. The following passage from the protectionist


trade historian Alfred Eckes makes the point:

Democratic orators spoke at length about


monopolies and robbery. During debate
over the proposed Dingley Tariff in 1897,
Senator Roger Q. Mills, a free trade
Democrat from Texas, claimed that the bill
was a “stupendous system of legislative rap-
ine and robbery.” In 1912 Democratic pres-
idential candidate Woodrow Wilson
attacked “our tarriff-walled system of privi-
lege” and asserted that “the bills of the
Republican party were paid by businessmen
who wanted a high tariff.” During World
War I Senator Oscar Underwood, of
Alabama, who as chairman of the House
Ways and Means Committee had authored
a substantial reduction in tariff rates,
accused Republicans of giving “the selected
few the right to monopolize and abuse the
American market.” And Cordell Hull of

23
24
CENTER FOR TRADE POLICY STUDIES

he mission of the Cato Institute’s Center for Trade Policy Studies is to increase public
T understanding of the benefits of free trade and the costs of protectionism. The center
publishes briefing papers, policy analyses, and books and hosts frequent policy forums and
conferences on the full range of trade policy issues.
Scholars at the Cato trade policy center recognize that open markets mean wider choices
and lower prices for businesses and consumers, as well as more vigorous competition that
encourages greater productivity and innovation. Those benefits are available to any country
that adopts free trade policies; they are not contingent upon “fair trade” or a “level playing
field” in other countries. Moreover, the case for free trade goes beyond economic efficiency.
The freedom to trade is a basic human liberty, and its exercise across political borders unites
people in peaceful cooperation and mutual prosperity.
The center is part of the Cato Institute, an independent policy research organization in
Washington, D.C. The Cato Institute pursues a broad-based research program rooted in the
traditional American principles of individual liberty and limited government.

For more information on the Center for Trade Policy Studies,


visit www.freetrade.org.

Other Trade Studies from the Cato Institute


“The Blessings of Free Trade” by James K. Glassman, Trade Briefing Paper no. 1 (May 1,
1998)

“America’s Maligned and Misunderstood Trade Deficit” by Daniel T. Griswold, Trade


Policy Analysis no. 2 (April 24, 1998)

“U.S. Sanctions against Burma: A Failure on All Fronts” by Leon T. Hadar, Trade Policy
Analysis no. 1 (March 26, 1998)

“The Fast Track to Freer Trade” by Daniel T. Griswold, Cato Institute Briefing Paper no.
34 (October 30, 1997)

Freedom to Trade: Refuting the New Protectionism, edited by Edward L. Hudgins ( July 1997)

Nothing in Trade Policy Analysis should be construed as necessarily reflecting the views of the
Center for Trade Policy Studies or the Cato Institute or as an attempt to aid or hinder the pas-
sage of any bill before Congress. Contact the Cato Institute for reprint permission. Additional
copies of Trade Policy Analysis are $6 each ($3 for five or more). To order, contact the Cato
Institute, 1000 Massachusetts Avenue, N.W., Washington, D.C. 20001. (202) 842-0200, fax
(202) 842-3490, www.cato.org.