House Ways and Means Committee Chairman Charlie Rangel (D-NY) was in Peru yesterday with Trade Subcommittee Chairman Sander Levin (D-MI). (Reuters story.) Rangel’s committee will debate a Free Trade Agreement (FTA) with Peru in September. The Peru agreement is the first to include provisions that each country observe basic labor rights which was inserted at the insistence of the House leadership in a political playoff to organized labor. (USTR summary sheet here.)
Even if Rangel and Levin conclude Peru will live up to its commitments, many members of Congress remain opposed to free trade. Approval of new FTAs and renewal of Permanent Trade Negotiating Authority are in peril. This is not good. Our economy is irrevocably intertwined with the world economy. The last time the Unites States turned inward, with the Smoot-Hawley tariffs of 1930, it worsened and prolonged the Great Depression. After World War II, we championed open markets and free trade. Our economy has benefited enormously.
To be sure, unfair trade practices must be dealt with. But that doesn’t mean backing away from opening foreign markets for U.S. goods. We need to keep in mind that the U.S. exports about $70 billion a month in manufactured goods, which supports a lot of jobs in the U.S., and exports are growing faster than imports. Only a miniscule share of our overall trade deficit – about 6 percent – is with countries where we enjoy free trade agreements. Where U.S. exporters can compete on a level playing field, they more than hold their own.
“We have expressed our concerns, but we leave convinced that both the United States Congress and Peruvian Congress enthusiastically support this agreement,” Rangel said. Let us hope he is right and that Congress will summon the will to support free trade despite the blandishments of the unions.
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