GAO FINDS THAT TRADE AGREEMENTS PROMOTE TRADE

August 21, 2009

The Government Accountability Office (GAO) recently released a report that found that four trade agreements implemented during the Bush administration "have largely accomplished the U.S. objectives of achieving better access to markets and strengthening trade rules."  That's a finding that will be controversial only to the most hardened opponents of trade liberalization, says Daniel Griswold, Director of the Cato Institute's Center for Trade Policy Studies.

The GAO examined free trade agreements (FTAs) with Jordan, Chile, Singapore and Morocco, all enacted since 2001.  Here are the basics:

  • All the FTAs have eliminated import taxes, lowered obstacles to U.S. services, increased protection of U.S. intellectual property rights and strengthened rules to ensure government fairness and transparency.
  • Overall merchandise trade between the United States and partner countries has substantially grown, with increases ranging from 42 percent to 259 percent.
  • Services trade, foreign direct investment and U.S. affiliate sales in the largest partners also rose.

No big news here.  Trade agreements are supposed to promote more trade, and each one of these agreements has delivered on that central objective, says Griswold.  But opponents of trade have attempted to thwart such a straight-forward agenda:

  • They demand that trade agreements become vehicles for enforcing more stringent labor and environmental standards in the partner countries.
  • Yet, GAO found that FTA negotiations spurred some labor reforms in each of the selected partners, according to United States and partner officials, but progress has been uneven and U.S. engagement minimal.
  • Critics will interpret this as a failure, but it really shows the limitations of FTAs as a club for imposing our social standards on what are often less developed countries.

The real question is not whether every provision of these agreements has been fully enforced, but whether most people are better off, says Griswold.  As the GAO report confirms, the answer is a clear, "Yes."

Source: Daniel Griswold, "GAO Finds that Trade Agreements Promote Trade," Cato At Liberty, August 10, 2009.

For text:

http://www.cato-at-liberty.org/2009/08/10/gao-finds-that-trade-agreements-promote-trade/ 

 

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