Free Trade

INTHEUNITED States, expanding trade has often been a bipartisan effort. However, there are certain trends that follow party lines. From 1877 to 1934 Democrats consistently advocated free trade, while Republicans advocated protection, resulting in changes in the U.S. tariff schedule with each party in office, according to D. Epstein and S. O'Halloran. Republicans passed the very protective Smoot-Hawley Act of 1930, while Democrats passed the Reciprocal Trade Act of 1934 that reversed protections under Smoot-Hawley. In the second half of the 20th century these positions became reversed, according to W Keech and K. Pak. Only after World War II did the Democrats begin a rhetorical opposition to free trade, while Republicans emphasized opposition to unfair competition (but ceased from calls for protectionist tariffs). By the 1960s, both parties converged in a common support of free trade, reduction of non-tariff barriers, and governmental support of domestic industry affected by imports.

Beginning in the 1970s, party positions again diverged. Democrats became more sensitive to worker hardships as a result of foreign competition (but stopped short of advocating protectionism), while Republicans promised to guard against protectionism. By the early 1980s, a clear division emerged: Republicans opposed restrictive provisions in treaties as against the interests of U.S. business and consumers, advocated aggressive export promotion, and global trade liberalization; Democrats favored domestic industry and labor demands for trade safeguards and fairness, and increasingly demanded that labor and environmental protections be written into pending trade treaties. Thus arose the new 21st century divide between “fair trade” and “anti-fair trade” (or free trade). At the center of the new trade dynamic is the fate of the president's so-called fast-track trade authority, the administration's existing power to call for a simple up-or-down congressional vote on trade pacts without opening them to amendment.

Trade proponents argue that growing commerce has created new markets for U.S. businesses abroad, while stocking shelves at home with low-priced goods. On an annual basis, globalization boosts the U.S. economy by $1 trillion, or roughly $10,000 per household, according to the Peterson Institute. Outsourcing, and the resultant growth in the trade deficit, originates with large U.S. enterprises leveraging resources offered [Page 258]by a globalized economy and their equally globalized operations. This often means moving labor-intensive operations to countries where labor is cheaper. The result is a leaner operating structure in the United States, greater profitability and competitiveness, but also a loss of American labor-intensive jobs. As trade historian Douglas Irwin of Dartmouth College notes, “It's not ‘them’ exporting to ‘us.’ It's U.S. multinationals' factories there exporting to us.” Consequently, the interests of exporting industries and capital-intensive industries lie in a free market global economy, and this is reflected in a broader free trade agenda of elected officials and parties that receive strong support from capital interests.

Not all business is in favor of free trade or free trade candidates. Presidential candidate billionaire Ross Perot's 1993 warning to Americans that a “giant sucking sound” would result from NAFTA sending millions of good jobs to Mexico remains a punchline decades after his run for the presidency. Import competing labor-intensive industries tend to side with labor organizations in opposing free trade outright or advocating a level playing field in free-trade agreements. In a 2005 Program on International Policy Attitudes poll, only 16 percent of respondents backed the current U.S. approach; 56 percent said they favor expanded trade, but only if much more is done to help affected U.S. workers. Almost one-quarter of those surveyed said they opposed further trade liberalization because the costs would outweigh the benefits.

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