Most of what I read on liberal American blogs about free trade makes me cringe. While Americans are only slightly more parochial than, say, Europeans, the chronic lack of stepping back and taking an international view in the US leads people to insane conclusions about free trade.
The last straw in this case was a comment by Interrobang on Echidne, “Free trade should be scrapped anyway. North America is still having trade wars.” Interrobang’s comment fields a pretty good argument that what passes for free trade in the Western hemisphere – that is, elimination of tariffs and quotas without a concordant elimination of subsidies – is a bad idea.
But, you know, the Americas aren’t the only part of the world with free trade agreements. Western Europe has had one since 1957. Southeast Asia has had one since 2003. Southern Africa has had one since 1910. South America has had one since 1969 and is in the process of creating a continentwide free trade area.
North America’s experience with free trade has been mostly negative. Forget Michigan’s bleeding jobs to Mexico; Mexico itself saw its poverty rate skyrocket after the implementation of NAFTA, and the US and Canada are still engaging in trade wars. But that’s only one experience, and dismissing free trade out of hand because of it is disgustingly parochial.
In contrast, Europe’s experience has been largely positive. The idea that the EC (now EU) equaled prosperity drove many undemocratic countries in the region to liberalize in order to join. Free movement of people and goods has prevented the poverty growth seen in Mexico; in the Czech Republic, income at the 5th percentile grew 3.7% between 2004 and 2005. Excluding Luxembourg and Ireland, which have had off-the-charts economic growth, there has been strong evidence of convergence in the last 20 years.
So, a good free trade agreement for North America would take the European approach – that is, free movement of people, customs union, and a common market. The problem is, of course, that farmers in Iowa are going to vote against any politician who suggests Mexican farmers should receive the same subsidies as American farmers; hence, the Western hemisphere keeps producing trade agreements where “free trade” doesn’t extend beyond the title.