Free trade is critical to the American economy and is an essential component to guaranteeing a high standard of living for all Americans. Free trade cuts and reduces tariffs – taxes on trade – and other barriers to global commerce. Fewer barriers on American exports means less money taken by foreign governments out of the pockets of workers and business owners seeking to trade overseas. Fewer barriers on imports into the U.S. results in more competition and access to a greater range of products at lower prices for consumers across the country.
Although both Presidential candidates have spoken negatively about trade, they are mistaken. Free trade is a positive, not negative force. In a letter to members of Congress, ATR together with 35 conservative, free-market groups urged Members of Congress to continue advocating for free trade policies that benefit the American economy.
Since Adam Smith published Wealth of Nations in 1776, economists have universally supported free trade. In the past, tariffs were the chief source of federal revenues. However, these taxes on trade have inhibited economic growth and produced serious economic consequences. Conversely, cutting them has led to economic prosperity. Today, more than 1 in 5 American jobs are tied to trade, and these workers earn 16 percent more than jobs in industries not tied to trade.
While the concept of trade is sound, the execution is not always perfect. The 12 member Trans-Pacific Partnership (TPP) contains more than 18,000 tax cuts on American exports and will benefit consumers and businesses, but also contains flaws that may undermine property rights. These issues should be addressed before the agreement moves forward.
Under U.S. law, medical innovators have access to 12 years of exclusivity, while TPP grants as little as five years. The 12 year protection exists for a reason — it was legislated by Congress following careful consideration of the extensive development costs associated with medicines.
Similarly, TPP explicitly excludes the tobacco industry from the use of investor-state dispute settlement (ISDS), a “neutral, international arbitration procedure, ”designed to act as a safeguard to ensure that countries do not skirt their responsibilities toward free, open trade.
Despite these flaws, TPP will produce significant economic growth. A recent report by the International Trade Commission found that TPP will increase U.S. exports by $57.2 billion annually by 2032 and increase overall U.S. real income by $57.3 billion annually over the same period.
The fact is, free trade is pro-growth, pro-business, and pro-American. Members of Congress should freely support and defend free trade.