In Praise of Free Trade

Editorial / Wall Street Journal 11may01

Review & Outlook

George Bush did something pretty unusual this week for a President, or any politician for that matter. He gave a strong and eloquent speech Monday on the moral basis for free trade. You won't hear Dick Gephardt or Tom Daschle do that, not in our lifetime. Yesterday the President sent Congress his request for what is now "trade promotion authority," formerly called fast-track negotiating authority. Naturally the Democrats have said this would be dead on arrival unless he agreed to jack up production costs in poor countries by mandating U.S.-style labor and environmental rules.

Democrats have coasted for years on a presumption of moral superiority to everyone else, but this is the kind of issue that could be changing that. This is what the President said:

"Open trade is not just an economic opportunity, it is a moral imperative. Trade creates jobs for the unemployed. When we negotiate for open markets, we are providing new hope for the world's poor. And when we promote open trade, we are promoting political freedom. Societies that open to commerce across their borders will open to democracy within their borders, not always immediately, and not always smoothly, but in good time."

Here is an example of what Mr. Bush is talking about. In famously poor El Salvador, there is a textile and apparel plant on the outskirts of San Salvador called the Hilasal Company. We have been there and seen it. In the fields and neighborhoods beyond the plant, peasant women and children haul firewood in worn serapes strapped to their backs, lug buckets of water and comb through trash for scrap to sell. What is inside the plant is better; workers, most of them women, sew garments, pick up their paychecks, shop in the company store and see a medical doctor for regular checkups.

This same scene, which of course never reaches American TV screens, may be seen all over the developing world, or we should say, wherever there is investment and trade. Inside the global trading system thousands of formerly desperate, downtrodden individuals have opportunity; outside the system, these same kinds of people remain mired in poverty.

In the Third World, free trade is a women's issue. Inside the world trading system, women achieve economic independence and personal stature. Outside the system, they live with equally hopeless husbands who often beat them up. In the First World, women's groups and labor unions organize boycotts against the companies that employ these women, tarring them all as "sweatshops."

Mr. Bush began the process of setting the record straight on this issue as well: "We've allowed a new kind of protectionism to appear in this country. It talks of workers, while it opposes a major source of new jobs. It talks of the environment, while opposing the wealth-creating policies that will pay for clean air and water in developing nations. It talks of the disadvantaged, even as it offers ideas that would keep many of the poor in poverty."

He made one other point, of the sort one would expect but doesn't often get anymore, from someone looked at as the leader of a world economic power: "We must understand that the transition costs of open trade are dwarfed by open trade's benefits, that are measured not only in dollars and cents, but in human freedom, human dignity, human rights and human progress. We must make those benefits a reality for all the people of our hemisphere."

Mexico, Taiwan and South Korea have all moved toward greater democracy and political stability, he pointed out, since they have become engaged in the global trading system. "Americans want human rights and individual freedom to advance. Open trade advances those American values, those universal values."

Indeed, given the compelling economic evidence, for anyone who bothers to look, that the misery index drops whenever and wherever markets expand, the morally responsible goal would seem to be to bring more of the world's five billion people into the global trading system. Opening markets is, to be sure, hard work, and free traders have their work cut out. But the job will be made infinitely easier if liberalizers are willing to refute the moralistic claims of the protectionists. Mr. Bush this week took a first, important step.