Unions Still Hampering Free Trade

Watching politicians stammer on in attempts to justify short-sighted policy never gets boring. The interview referenced by Wall Street Journal columnist Mary Anastasia O’Grady is here. It primarily covers the results of President Obama’s trip to Asia, noting the contrast between Commerce Secretary Locke’s interpretation of the trip and what the media largely concluded.

Joe Kernen presses Locke on the opposition to free-trade agreements at home, noting that it comes from unions, and brings in a token contrarian (who assumes it’s impossible for FTAs to be mutually beneficial) to cast doubt on whether or not Americans are really benefiting from these FTAs. I’m not sure a single sentence left Locke’s mouth that didn’t involve marketing the FTA agreements based off of job creation at home.

Locke addresses the Colombian FTA near the end of the interview. He claims that there is still “intense negotiations” over the Colombian FTA as we speak. This cannot be true; the Colombian economy is approximately 1-2 percent of the U.S. economy and no individual U.S. industries will be significantly hurt by the agreement. Furthermore, the unions will never change their tune on FTAs unless they become managed trade agreements whereby American companies are guaranteed access to foreign markets. Any “intense negotiation” might involve Colombia reminding us that we are shooting ourselves in the foot over the failure to implement this. As O’Grady’s op-ed mentions, U.S. exports are facing tariffs that other countries aren’t facing, and we’re rapidly losing market share that we aren’t guaranteed to get back.

The irony, of course, is that the Colombian FTA will likely reduce (PDF, p. 23) America’s often maligned trade deficit. Colombian imports are likely to increase by ?$500 million while exports will amount to ?$1.1 billion. Though the idea of having Washington get together to figure out a way to promote American exports is unappealing, this would actually increase American exports without allowing Congress to pour billions of dollars in a desperate attempt to make American goods more competitive overseas.

Image credit: tanya~b’s flickr photostream.