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Free Trade
This is Free Trade?
Editorial
washingtonpost.com
2004-02-10, Tuesday, Page A22
THE U.S. TRADE representative, Robert B. Zoellick, has set off on a world
tour to revive global trade talks. This is a wise move, because it would be
hard for Mr. Zoellick to face his friends at home after the Australian
trade deal announced over the weekend. Even more than the Central American
pact negotiated recently, the Australian accord is a triumph for the
protectionist interests that went behind Mr. Zoellick's back to the White
House and Congress. The agricultural products in which Australia is
competitive have been mostly cut out of the deal: Removing barriers in U.S.
law that keep out Australian beef will take 18 years; the dairy
liberalization is expected to increase Australian exports to the United
States by a paltry 0.17 percent of U.S. production; and the U.S. sugar
lobby managed to prevent any liberalization whatever. The Centre for
International Economics in Australia had calculated that a real free-trade
deal might boost the country's annual exports to the United States by $1.2
billion. But $260 million of that was expected to come from dairy
liberalization and $440 million from sugar. By refusing to open those two
markets -- a refusal that entailed doing without key concessions from
Australia -- the United States wiped out more than half the agreement's
potential.
There are two justifications for trade deals with individual countries. The
first is political: The possibility of such deals may give the United
States leverage over countries that are dragging their feet in world trade
talks. This justification seems weak right now. Despite Mr. Zoellick's
energetic diplomacy, world trade talks have stagnated, as have plans for a
free-trade zone in the Americas. The second justification is that bilateral
trade deals provide an economic boost. But this happens only if you reduce
trade barriers that are holding back efficient producers, such as
Australian farmers. Cutting barriers on cell phone imports from Honduras or
Australia changes nothing. Cutting tariffs on Central America's borderline
competitive apparel manufacturers helps them sell a bit at the expense of
other countries, such as China, which is a strategic plus. But this "trade
diversion" does not lower prices to U.S. consumers, so it doesn't make them
richer. And there is less of a strategic case for helping rich Australia at
the expense of other trading partners.
Mr. Zoellick calculated that flawed trade deals are better than none, so he
went ahead with Australia. It is true that Australian tariff cuts will
boost U.S. manufactured exports. But the Australian sugar sham sends a
signal to protectionists: The Bush administration will cave if you say
"boo" to it. After the Central American pact promised the region a tiny
crack of access to the U.S. sugar market, the lobby went into high gear to
prevent a repeat with Australia. Now the lobby has won. The world's poor
farmers who are waiting for a chance to export their way out of poverty
will be the losers, as will shoppers in your local supermarket.
For queries, or to provide criticism or any other support, please contact us at:
i n f o @ h u m a n - i n t e r e s t . o r g
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