With the Trump administration’s announcement of a new trade deal with Mexico and Canada, some free traders are breathing a sigh of relief, as others investigate and discern the more detailed pros and cons and technical implications across workers, products, and industries.
“The tentative pact, which Congress must approve, spares auto makers from costly tariffs on cars imported from Canada and Mexico,” write Chester Dawson and Adrienne Roberts in the Wall Street Journal,” a major relief for an industry that has for more than two decades relied on duty-free trade to expand operations in North America.” But what about for others?
However the balance actually shakes out—whether trade is, on the whole, actually freer for more people as a result—it’s an opportune moment to remember that trade deals aren’t the same as free trade, no matter how positive a particular deal may be compared to the alternatives.
It may seem a simple distinction, but in an essay for EconLog, economist Pierre Lemieux worries that amid our wonkish analysis of the various costs and benefits of such agreements, we might forget the underlying reality. As a result, we risk adopting the right policies while embracing the same faulty assumptions of the governments who orchestrate them:
A free trader is tempted to support such agreements for the good they do, not for their bad justifications. But this imbroglio risks entrenching the idea that free trade is a privilege of domestic producers instead of the liberty of both domestic consumers and producers (or their intermediaries) to individually make the best deals they can find. Another danger is to reinforce the idea that free trade requires free trade agreements, while in reality unilateral free trade would produce most of the benefits. In truth, as free trade agreements are now as much about regulation of trade as about free trade, unilateral free trade would potentially be more beneficial.
Such confusion is compounded by an incoherence at the root. Why, we should ask, are these agreements needed in the first place? What is the goal of protectionism to begin with?
On this, Lemieux offers a unique position, arguing that protectionism doesn’t just contradict the values and priorities of an “individualist” perspective, but that it also falls apart from a collectivist point of view:
Protectionism is difficult to defend either from an individualist or from a collectivist viewpoint. From an individualist viewpoint, protectionism prevents individuals from satisfying their own preferences by making their own bargains—which is the essence of the definition of economic efficiency. Protectionism cannot be coherently defended from a collectivist viewpoint either, as it glorifies the use of ‘our’ collective resources for the benefit of foreigners, like using ‘our’ American farms and farmers to feed Canadians.
For such meddling to be justified, then, a more convoluted ideology needs to be at play:
To be defended in a coherent way, protectionism requires a sort of organicist and authoritarian nationalism; or an autarkic environmentalism; or a moral argument for coercive redistribution to a certain part of the public; or a very thin and naïve theory of the state—in which, for example, angelic politicians and omniscient bureaucrats calculate the “optimal tariff” to selflessly maximize the welfare of the populace. In most cases, the belief in protectionism may flow from a simple ignorance of the economic arguments for free trade.
This isn’t to say, of course, that we abandon support of any and all trade agreements, no matter how much or how little they the move our activity toward free exchange. Such a position would rely on a future scenario that is highly fanciful in our political and economic environment.
Rather, in fighting for increased freedoms in trade, and even in fighting for gradual improvements in existing agreements, we can stay mindful of why, exactly, we’re fighting for these freedoms in the first place. Though we may, indeed, end up supporting and adopting variations of politically managed trade in hopes of avoiding worse alternatives, we can remember that beneath it all lies a commitment to something far more simple and straightforward: the moral and economic value of human exchange and collaboration.
Expanding opportunities for trade is simply expanding opportunities to connect the work of our hearts and hands to those of our neighbors through creative service and collaboration. Conversely, hindering those opportunities doesn’t just provoke and strain relations, it cuts off paths for creative collaboration with real people, disrupting a diverse, peaceful, and productive web of relationships among workers and creators from across the globe.
As our trade agreements improve, the wellbeing of this or that domestic industry or worker group is important, but it should be taken in full consideration of whether those circles of exchange are expanding and human collaboration is improving on the whole.
Image: MichaelGaida, Port, CC0