January 5, 2001

January 5, 2001 | News Releases on Foreign Aid and Development

President-Elect Bush Should Create Global Free Trade Group, Analyst Says

WASHINGTON, Jan. 5, 2001--President-elect Bush's oft-stated desire to promote free trade can best be realized through the creation of a global free trade association-a goal that can met by 2004 if Congress gives him "fast-track" authority to negotiate such agreements, a new Heritage Foundation paper says.

With "fast-track" authority, President-elect Bush could assure countries interested in joining such a group that Congress would decide their agreements with the United States with quick up-or-down votes. The president then could create a free-trade group with countries as diverse as Chile, Estonia, Hong Kong, Ireland and others committed to economic freedom, writes analyst Denise Froning in a chapter for "Priorities for the President," an issue-by-issue guidebook for the next administration to be published later this month.

"The incentive to join the group, of course, would be the lure of even greater access to each other's markets, most particularly open access to the U.S. market," Froning writes. "For the United States itself, free trade is vital to ensure that our vibrant economy continues to grow and, by doing so, help to encourage a global tide of prosperity."

Congress approved "fast-track" authority for the president routinely between 1974 and 1993, but denied it twice to President Clinton. "This failure forced the United States to deal defensively on trade policy throughout most of the 1990s," Froning writes. "Without fast-track authority, the United States cannot be a major player on trade."

Based on a shared commitment to economic freedom, the global free trade association she proposes-first outlined in the 2001 "Index of Economic Freedom," published annually by Heritage and The Wall Street Journal-would be voluntary and respect the sovereignty of its member nations. The 11 countries eligible for immediate entry include Chile, Ireland, the Czech Republic, Hong Kong, the United Kingdom and Singapore. Twenty-six other countries, such as Germany, Japan and Canada, could join once they meet the criteria spelled out in the Index for economically free countries in each of the following areas:

  • Freedom to Trade. Members must keep an open trade policy, with an average tariff rate that falls below 9 percent. They must have few, if any, non-tariff barriers, such as import quotas or licensing requirements that restrict trade.

  • Freedom to Invest. Members must be open to foreign investments, treat such investments impartially and have an efficient approval process. Restrictions on foreign investment must be few and do no significant economic harm.
  • Freedom to Operate a Business. Members must avoid overly burdensome regulations, maintain simple licensing procedures and apply regulations uniformly. Regulations also cannot be biased against foreign businesses.
  • Secure Property Rights. A country with a well-established rule of law protects private property and provides a secure environment where business transactions can take place. Potential investors must know that the judicial system of a member is not subject to outside influence.

"Upon entering office, the new president must quickly reassert U.S. leadership and promote global economic freedom by pursuing free trade policies with countries that embrace the same core principles," Froning says. "Fostering relations with these like-minded countries in this way would show the world that economic freedom is indeed the best route to prosperity."

"Priorities for the President" is part of an ongoing series of policy guidebooks published by The Heritage Foundation every four years (with one exception) since 1980. It is part of Heritage's "Mandate for Leadership Project," named for the original policy blueprint that The Washington Post said served as the "bible" of the Reagan administration.

About the Author

Related Issues: Foreign Aid and Development