Tag Archives: south korea fta

CEI Podcast for October 20, 2011: Congress Passes Free Trade Agreements

Have a listen here.

CEI Adjunct Fellow Fran Smith, coauthor of the new CEI study “Free Trade without Apology,” talks about the recently passed free trade agreements with Colombia, Panama, and South Korea. The agreements will lower tariffs and other trade barriers between the U.S. and the other countries, and are expected to reap billions of dollars of economic benefits. The agreements also contain a number of trade-unrelated provisions, such as labor and environmental standards. These erode our trading partners’ sovereign lawmaking power, and are best avoided in future agreements.

CEI Podcast for August 4, 2011: Liberalizing Trade

 

Have a listen here.

Congress is likely to take up stalled free trade agreements with Colombia, Panama, and South Korea when it returns from its August recess. Adjunct Fellow Fran Smith talks about the good and bad parts of the agreements. Billions of dollars of economic benefits are offset by trade-unrelated provisions, such as labor and environmental standards. These erode our trading partners’ lawmaking sovereignty. An increase in trade adjustment assistance also seems likely. This gives money and training to workers who lose their jobs because of international trade.

Free Trade Agreements Don’t Kill Jobs

Trade is going to be a hot issue this summer. Pending free trade agreements with Panama, Colombia, and South Korea might finally pass. Opponents of liberalization are already on the attack.

My colleague Jacque Otto already covered the creative destruction defense of trade today. Over at the Daily Caller, I look at employment data and find out that the labor force has grown by 23 million people since NAFTA passed. Doesn’t sound like a job-killer, does it?

Just as trade doesn’t kill jobs on net, neither does it create them on net. The real advantage of trade is that it allows people to specialize and become more productive. That is how economic growth happens:

When governments lower trade barriers, they allow more people to exchange and to work together. In economics jargon, the size of the relevant market gets bigger. And the bigger the relevant market, the more people can specialize.

Readers familiar with Adam Smith will recognize this as his division of labor. Everyone knows that specialized workers are more productive than jacks of all trades. That’s why Henry Ford’s assembly lines were so much more productive than his competitors’. The same number of people could suddenly produce more cars in less time, because they had a more specialized division of labor.

Workers didn’t have to waste time switching from one task to another. They got very good at their tasks. And because they knew their jobs so well, they were better able to come up with new, better ways of doing them. Rising productivity is how an economy grows. Prosperity doesn’t depend on the number of jobs. It depends on how much stuff workers can create.