Friday, December 08, 2006

A Test For Trade

As the 109th Congress prepares to close this afternoon, both the House and Senate are racing to finish up some critical business, including a bill that will serve as an excellent bellwether of the new Democratic Congress' commitment to free trade (true, the newly-elected members aren't voting on this bill, but the Democrats already in Congress may feel empowered to vote the bill down, as has already happened with free-trade agreements with Peru and Colombia).

The bill, in addition to including numerous domestic tax breaks [full disclosure: As a resident of Washington state, which has no state income tax, I stand to benefit from this bill which will allow residents of states without income taxes to deduct state and local sales taxes from their federal income], contains several vitally important trade elements, including the granting of permanent normal trade relations (what used to be known as Most-Favored Nation status) to Vietnam, an essential criteria for Vietnam's entry into the World Trade Organization. The bill will also extend existing agreements with Haiti and sub-Saharan African states to allow those countries to export textiles and apparel to the US at lowered tariff rates, and extends a program to provide low tariffs for the products of more the 140 developing countries.

It cannot be stressed enough how important free trade is to the economic health of not only this country but of the entire international community. I have blogged in an earlier post about how restricting free trade and increasing either protectionist tariff rates or subsidies produces massive harms for the poor in this country and in the developing world. But free trade is also a critical component of the democratic peace. By trading and interacting with other countries, mutual expectations of gain are formed, patterns of behavior are established, and economic interdependence is created to connect the future well-being of states to one another.

The US has spent much of the latter half of the 20th century building a liberal economic trade regime that has resulted in massive improvements in the living conditions and well-being of peoples all over the world. The creation and maintenance of this order is one of the most important components of US global leadership. This regime must not only be sustained, it must be broadened by dropping the remaining impediments to free trade so that all states might benefit.

If this bill is defeated, I fear for the future, as should you.

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