November 9, 2001

November 9, 2001 | Commentary on Taxes

Stop Holding Trade Hostage

The United States may reap numerous trade benefits at the World Trade Organization meeting now underway in the tiny Middle East nation of Qatar.

But we won't do nearly as well as we could have.

The reason: Congress still hasn't granted the president Trade Promotion Authority (TPA) -- a situation that makes the United States a far less attractive trading partner than it could be.

TPA gives the president the authority to negotiate free-trade agreements that are presented to Congress for approval or rejection, but no changes. Without it, any trade deal the president negotiates can be completely rewritten, or loaded with deal-killing amendments, by members of Congress.

TPA essentially tells our trading partners that the deals they negotiate are the deals we will honor. They are understandably reluctant to forge trade agreements with a president who continues to be denied this power by Congress. Indeed, without it, the United States runs the risk of losing its influence in the global economy -- not to mention being saddled with an increasingly moribund agricultural industry.

America's unparalleled agricultural productivity (we produce far more food than any other country) means our farmers need maximum access to foreign markets. Already, one out of every three American farm acres is devoted to export, and one out of every four dollars made by American farmers comes from overseas.

And with 96 percent of the world food market located outside the United States, it's essential that American goods be able to compete overseas. That won't be possible unless President Bush can negotiate trade deals that remove or at least reduce the 62 percent average tariff that gets added to the price of our goods in foreign markets.

Our competitors are busy taking advantage of the handicaps President Bush encounters without TPA. Canada has used its trade deal with Chile to claim large blocs of market share in some agricultural sectors. Japan is trying to resurrect its economy by establishing trade agreements with historic U.S. partners such as Canada, Mexico and Korea.

Meanwhile, we struggle to close deals because President Bush lacks an authority his predecessors had from 1974 to 1994.

Today, America is party to only three of the 131 trade and investment agreements in the world (including one of the 30 in our hemisphere alone). The European Union is involved in 27 trade deals, is negotiating 15 more, and recently completed one with Mexico -- our biggest trading partner. Canada, Korea, Chile and countries throughout East Asia have quickened the pace of negotiations for their own deals.

The North American Free Trade Agreement and the Uruguay Round have yielded huge benefits for the United States. They have added between $1,300 and $2,000 annually to the pocketbook of the average family of four. (A recent University of Michigan study showed that a new trade round could give this same family an additional $2,450 annually.)

NAFTA also has added 600,000 new American jobs at wages 13 to 18 percent higher than the national average. Hardly the "giant sucking sound" of U.S. jobs going south of the border that Ross Perot predicted. And some 12 million U.S. jobs depend on exports.

But we have no real hope of either expanding on or adding other such agreements without TPA. The United States can't even establish itself as a "credible trading partner," says Pascal Lamy, the European commissioner for trade, unless Congress grants the president this power.

It's time for Congress to put politics aside and stop holding trade hostage to special interests. The economic well-being of our nation depends on it.

Sara J. Fitzgerald is a trade policy analyst at The Heritage Foundation, a Washington-based public policy research institute.

About the Author

Sara J. Fitzgerald Policy Analyst
Center for Trade and Economics (CTE)

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