The Value of Trade

WTO's new video, titled “Trade matters to me,” captures the consumer value of trade on an everyday basis, from pants to fuselage. Reminiscent of CEI’s “I, Pencil,” the video shows how pieces of everything we wear and use are made available through international trade. And developing countries are a vibrant part of those activities, as shown by jeans that are sewn in Mauritius, leather from Morocco for shoes, or lychees from Madagascar.

Even defenders of free trade sometimes get caught up defending only the need to improve our export base and forget the benefits that imports provide. Imports expand consumer choiceproviding consumers with a greater variety of products and services at various quality levels and at varying prices. Imports can also spur innovation and competition as companies respond to consumer demand and try to keep pace with outside competitors and improve their own products.

What’s often overlooked too is the fact that most U.S. imports are not finished goods. Domestic companies heavily depend on imports for the raw materials, machinery, parts, and other inputs they use to produce products in the U.S. In fact, data from the Bureau of Economic Affairs and analyzed by AEI scholar Mark Perry showed that over half of U.S. imports55 percentwere used as inputs by companies in their domestic production.

It’s worth reminding policymakers about the value of free tradeboth exports and importsas the House of Representatives ponders legislation on trade promotion authority (TPA), H.R. 1314, which would give the President “fast-track” authority so that implementing legislation for trade agreements can be voted up or down without amendment. TPA will be critical in considering the Trans-Pacific Partnership Agreement, still being negotiated.