July 28, 2005
How I Learned to Stop Worrying and Love...
Posted by Will Baude

CAFTA, the Central American Free Trade Agreement passed the House by 2 votes; since the Senate passed it last month, it will soon go to President Bush for his presumptive signature.
Despite my belief that free trade is one of the greatest moral imperatives in modern legislation, I originally had mixed feelings about CAFTA since it seemed largely symbolic, ineffectual, and weighed down with intellectual property provisions and other detritus. But anything opposed that fiercely by both labor unions and the sugar industry can't be all bad. ...

I have become persuaded by Tyler Cowen's argument that if CAFTA dies there will never be another trade agreement. Of course Matt Yglesias argues that this is exactly why CAFTA must die-- with trade agreements like this, he says, who needs trade agreements? I think Cowen's point is even stronger. If CAFTA died it probably would signaled an eclipse not only for trade agreements specifically but for free trade generally. Just as Clinton's political defeat of Gingrich led to the party's repudiation of 1994-small-government-Republicanism, losing CAFTA to obstructionist Democrats, defecting Republicans, and protectionist interest groups probably would lead to nobody being willing to stick their neck out for globalization for quite a while.
This would have been a disaster. The consensus that free trade is generally a wise policy for Americans, as well as a moral imperative, is so fractious and endangered that even halting steps must be welcomed. Free trade engenders competition, strangles rent-seeking factions, reduces poverty abroad, encourages economic growth, increases product variety, lowers prices, and stops wars. Attempts to resist it are either economically misguided, or covered attempts by local industries and other groups to extract rents from society; it would be cheaper to simply bribe them all and keep the lines of trade open.
This is not to say that I am totally opposed to all government involvement. I do not think there would be a tragic loss to liberty if the federal government were to drastically step-up and reform trade-adjustment-assistance programs, and provide welfare transfers to people who previously benefitted from protectionism and face serious losses as trade becomes freer. This makes my doctrinaire libertarian friends unhappy ("Why should we have to pay for liberty?", they ask) but if it means free trade, it is a price we should be willing to pay.
What to do? Unfortunately, in American legislative politics trade does not want to be free, which is why there was so much last-minute arm-twisting about which Republicans would be "allowed" to vote against CAFTA and who would have to take a hometown hit in exchange for doing the right thing. Those who value the general right to engage in consensual trades with others, regardless of where they were born or where they now live, ought to step up to the political plate.
The Senate roll-call vote is here. The house vote is here.

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