- The Washington Times - Saturday, March 18, 2006

Protectionism is alive and well in the United States. The massive mobilization against the takeover of a number of U.S. port operations by a Dubai-based company has very little to do with port security. It makes no difference whatsoever which companies manage U.S. port operations. The U.S. government will remain in charge of security, and the ports will continue to be manned by U.S. workers. That’s the bottom line.

Now that Dubai Ports World has decided to shed its newly acquired American assets, perhaps we can finally start debating the real issue at stake: free trade.

The port operations debate pits the Bush administration against many of the politicians and commentators who unsuccessfully opposed the Central American Free Trade Agreement (CAFTA) and other free trade initiatives. This is no coincidence.

The Bush administration has signed more free trade agreements than all other administrations combined. These pacts include CAFTA and important accords with Australia and Morocco last year. At the same time, the administration has promoted multilateral trade liberalization under the auspices of the World Trade Organization (WTO). For instance, U.S. Trade Representative Rob Portman put enormous pressure on the European Union to lower its agricultural barriers at the WTO ministerial in Hong Kong in December 2005.

This is all bad news for protectionists, and the administration has shown no sign of slowing its aggressive push for free trade. In February, Ambassador Portman announced the beginning of negotiations with South Korea that could produce the biggest U.S. free trade agreement in 15 years. In the WTO, the U.S. keeps pushing for liberalizing both agricultural and nonagricultural markets.

With their backs against the wall, protectionists and those who have second feelings about free trade in an election year have rallied around the port operations controversy. Their campaign against Dubai Ports World will raise doubts about the popular mandate behind U.S. free trade initiatives and give other countries an opening to counter U.S. pressure in trade talks.

In fact, the European Union, Japan and China have already proposed liberalizing U.S. ports operations as part of the ongoing WTO negotiations. Lack of American flexibility on this issue could give these countries an excuse for not meeting U.S. requests in other areas. The U.S. position in international trade negotiations might be even further undermined by recent efforts to block foreign ownership in other sectors such as airlines, using the spillover effect from the ports controversy.

In light of these developments, it is high time to include an assessment of the enormous benefits of free trade in the discussion. Protectionists should know what they are risking.

Free trade is the most efficient wealth creator available to mankind. During the last six decades average tariffs on manufactured goods were reduced from 40 to 4 percent. In the same period, poverty fell from 50 percent of world’s population in 1950 to less than 20 percent. Foreign companies account for 5.4 million jobs in the United States, and many foreign countries have drastically improved their living standards by opening their economies to world-class U.S. companies.

Yet the task is unfinished. More than a billion people still live in poverty, concentrated in countries with limited economic freedom and high trade barriers. These people depend on strong nations such as the United States to put pressure on their governments to open markets.

Take health care in the developing world. One-third of the world’s population lacks access to essential medicines, according to the World Health Organization. Yet many governments, especially in the developing world, maintain tariffs on medicines, some as high as 40 percent.

The United States recently joined Switzerland and Singapore in proposing an end to all tariffs on medicines and medical devices. This proposal puts much-needed pressure on Third World governments that harass multinational pharmaceutical companies with tariffs and red tape, yet blame the companies for the governments’ failure to deliver quality health care.

The campaign against Dubai Ports World during the last weeks does not bode well for the millions around the world who depend on strong champions of free trade for their livelihoods. In the long run, a setback for the U.S. free trade agenda will increase the risk of international instability and terrorism. As the French economist Frederic Bastiat once put it, “When goods do not cross borders, soldiers will.”

Henrik Rasmussen is president of World Growth, a private nonprofit organization that studies the effects of globalization.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide