NCPA - National Center for Policy Analysis


November 11, 2009

America is leaving itself behind as the rest of the world tries to liberalize trade, says the Wall Street Journal.

The numbers tell the story:

  • At least 266 bilateral or regional trade deals are in force, according to the World Trade Organization, and there are roughly 100 more of which the WTO has not yet been formally informed.
  • The United States is a party to only five of the 64 trade pacts that have taken effect since 2005 -- with Australia, Morocco, Bahrain, Oman and Peru.
  • In contrast, eight of those 64 deals involve the European Union (plus a round of EU expansion) and Japan has signed nine.
  • Overall the United States has trade deals with only 17 countries including Canada and Mexico under Nafta.
  • The EU has struck 29 deals on trade ranging from customs unions to larger free-trade agreements with 40 economies.

The danger is that U.S. companies could find themselves on the wrong side of deals negotiated among other countries, says the Journal:

  • The EU-South Korea pact, for example, will tear down almost all remaining tariff barriers between the two sides.
  • It will also address such technical barriers as the excessive safety standards that Seoul has long used to block imports, and it will open Korea to European services.
  • The United States has long tried to address these hurdles so American companies could gain better access to the world's 13th-largest economy.
  • The EU is now beating Washington to the punch -- largely by copying the trade deal the Bush Administration negotiated with Seoul but that Congress refuses to ratify.

The same holds for Canada's deal with Colombia:

  • That deal eliminates Colombia's average 12 percent tariffs on nonagricultural goods from Canada.
  • U.S. exporters will still have to pay those tariffs even as Colombians keep tariff-free access to the United States under an earlier agreement.
  • Over time Canadian farmers will gain tariff-free access to Colombia for most of their agricultural exports while farmers in Iowa or Nebraska will be stuck with tariffs of between 5 percent and 80 percent.

When the United States sits on the sidelines, the rest of the world is going to find its own trading way, however imperfect, says the Journal.

Source: Editorial, "America Leaves Itself Behind; A world of trade deals without the U.S.," Wall Street Journal, November 11, 2009.

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