Free Trade: The Real Economic Stimulus
By: James M. Roberts
FrontPageMagazine.com | Friday, February 29, 2008
Congress considers a second round of economic stimulus measures, it
needs to look no farther than the pending free trade agreements (FTAs)
with Colombia, Panama, and South Korea. These agreements have been in
limbo since congressional leaders delayed action on them last summer.
trade has been one of the biggest drivers of economic growth in recent
years, and passing more agreements would accelerate that growth. FTAs
also come without the baggage of an increased federal deficit or the
inflationary pressure of government spending. What they bring instead
are productivity gains, lower prices, and more jobs. Congress should
pass the pending FTAs to stimulate the economy.
FTA Success Stories
trade is one of the fastest routes to economic expansion. U.S.
Secretary of Commerce Carlos Gutierrez recently noted that in 2007,
“U.S. exports...increased 12.7 percent to $1.4 trillion, an all-time
record. We're on track to beat that this year with continued,
Much of the growth in gross domestic product (GDP) was a result of free
trade agreements that the United States has negotiated with 14
following facts, compiled by the U.S. Department of Commerce, provide
concrete examples of the benefits that FTAs have brought to Americans.
January 2000, the U.S. has implemented seven FTAs with 11 countries.
Between 1999 and 2007, U.S. merchandise exports to these countries
increased by 75.1 percent, compared to the 66.7 percent growth in these
exports to the rest of the world.
From 1999 to 2007, U.S. merchandise exports to Chile increased By 170 percent, or $5.2 billion, to reach $8.3 billion.  Since
the United States began implementing its free trade agreement with
Central American nations and the Dominican Republic (CAFTA-DR) last
year, U.S. exports have grown by 13 percent.
 This growth accelerated a trend. From 1999 to 2007, U.S. merchandise
exports to the CAFTA-DR region increased by 78.5 percent, or $9.9
billion, to reach $22.4 billion. The U.S. trade balance with the
CAFTA-DR region improved from a $2.8 billion deficit in 1999 to a $3.7
billion surplus in 2007.
increased U.S. merchandise exports to Singapore by 61.8 percent to
$26.3 billion (in 2007); to Jordan by 211.0 percent to $857 million; to
Australia by 62.5 percent to $19.2 billion; to Morocco by 137.3 percent
to $1.3 billion; and to Bahrain by 69.9 percent to $591 million.
individually, some of these figures might not seem impressive, but
behind every dollar of export earnings are U.S. businesses and workers
who are benefiting in a wide variety of manufacturing and service
sectors. The sectors that have benefited the most include
transportation equipment, machinery, electrical equipment, appliances
and parts, textiles and fabrics, petroleum and coal products, computer
and electronic products, agricultural products, chemicals, and
miscellaneous manufactured commodities.
The Benefits of Free Trade
was quick to pass the first stimulus passage, but some in Congress are
opposed to the FTAs. Secretary Gutierrez is worried “that there
appear[s] to be a rise in U.S. protectionist sentiment that made free
trade ‘a tough sell’ at the same time that governments in Europe as
well as China were moving aggressively to increase their share of
global trade.” 
have nothing to fear from free trade. The U.S. is the world’s largest
exporter. U.S. exports amounted to $1.6 trillion in 2007 alone, and
those exports generated 25 percent of U.S. GDP growth. According to
Secretary Gutierrez, “The benefits of open markets are increasingly
important to stabilizing and strengthening our nation’s economy.” The
Commerce Department estimates that the pending FTAs with Colombia,
Panama, and Korea (plus the recently approved FTA with Peru) would
“open up markets with a combined GDP of $1.1 trillion and 126 million
Surely this is a better path to economic stimulus than short-term tax rebates or increased government spending. The economy
will certainly get a boost from the $152 billion fiscal stimulus
program signed into law by President Bush earlier this month, mostly as
a result of the business tax cuts. However, other portions of the bill
are counterproductive. As Heritage expert Rea Hederman writes, the tax rebate is “poorly targeted” and will “not have a significant effect on the economy.”
exports by approving the FTAs, however, has all of the positives of a
stimulus package and none of the negatives. As President Bush has
noted, the three FTAs would expand sales opportunities for U.S.
companies, thus providing “greater access for our exports and
supporting good jobs for American workers.”  The President pointed to one example: In Colombia, helicopter
parts face a 5 percent surcharge and a 15 percent tax that make it
harder for U.S. companies to compete. The FTAs will eliminate those
surcharges across the board for U.S. products, goods, and services
going to these countries.
export sector is the brightest spot in the U.S. economy and the main
reason it has avoided a recession. Boosting exports will do more to
keep Americans working and put more money in the pockets of American
workers than will any of other stimulus package proposed thus far.
to the propaganda of Big Labor and other anti-globalization and
protectionist special interests, the three FTAs will help the economies
of Colombia, Panama, and South Korea as well as stimulate the sagging
U.S. economy. Rapid passage of these pending agreements would be a
win–win strategy: It would send a strong signal of our continuing
commitment to global economic expansion and increase business and
employment opportunities for Americans for years to come.
M. Roberts is Research Fellow for Economic Freedom and Growth in the
Center for International Trade and Economics at The Heritage Foundation.
 Forrest Laws Farm Press Editorial Staff, “Completing Doha Round Bush Goal,” Delta Farm Press, February 8, 2008, p. 2.  U.S. Department of Commerce, International Trade Administration, “U.S. Export Fact Sheet—2007 Export Statistics.  Gutierrez, “Remarks at the Heritage Foundation, Washington, D.C.  Associated
Press, “Bush urges Congress to do more for economy, but president said
$168 billion rescue package will help labor force,” MSNBC, February 11,
2008, at www.msnbc.msn.com/id/23108344/ (February 25, 2008).
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