Falling Down, Falling Behind, Losing Out on Trade

By November 27, 2009Trade

Investor’s Business Daily editorializes on the United States falling behind as a nation and economy benefitting from trade, arguing in “Losing Out Big Time” that the decline must be reversed quickly or become a permanent disadvantage.

Tuesday, Cato Institute economist Daniel Griswold took issue with U.S. Trade Representative Ron Kirk’s congratulatory claim that the U.S. is “the most open market in the world.”

Actually, it slipped from No. 2 in 2000 to No. 26 in 2007, the last year for which data are available, in Cato’s 2009 Economic Freedom of the World annual report.

“If an Olympics were held for the most open economy, the United States would be out of medal contention,” Griswold wrote, citing tariffs, regulatory barriers and other factors.

It’s reportedly down to No. 28 in 2008 data, and getting worse. Given that size of government, freedom to trade internationally and regulation are the criteria used in Cato’s index, you can bet that the U.S. ranking will drop even lower in 2009.

It puts the U.S. behind Hong Kong, Singapore, the United Arab Emirates, Chile, the Netherlands, Ireland, Switzerland, Slovakia and Estonia, all nations that have seen their living standards rise based on an aggressive strategy of free trade.

Here’s Griswold’s column at Cato@Liberty, “U.S. ‘the Most Open Market’? Not Even Close.

Investor’s Business Daily also cites the NAM’s Frank Vargo, who has analyzed export data and finds that the United States ranks last among 15 industrialized countries in the percentage of its manufactured goods exported. (See this Shopfloor.org post.) The editorial concludes:

Competitiveness isn’t lost through a single event; rather, it’s lost over time as the effects of many bad policies are felt. Right now, on trade, the U.S. is going in the wrong direction. It could turn things around quickly by getting back on the free-trade bandwagon.

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