Free Trade’s Past, Present, and Future
The importance of a potential US-EU free trade agreement, which some have tentatively labeled the Trans-Atlantic Free Trade Agreement (TAFTA), cannot be overstated. Likewise, the potential pitfalls and dangers of such an agreement cannot be overstated either.
Existing trade barriers between Europe and the United States hurt American producers and consumers. One of the arguments favored by TAFTA proponents is that a trans-continental deal would remove these restrictions and barriers to entry. Iain Murray, writing for The Huffington Post, is one such starry-eyed proponent.
Murray’s outlook on the future of US-EU trade is astoundingly optimistic. What he completely ignores is that the producers and exporters of Europe have absolutely no interest in abandoning a system that currently places them at an advantage above the United States.
If it’s not broke, why fix it?
Murray, like most “free trade” ideologues, believes that if the United States can just set the example of openness and fairness other nations will join hands and follow. Why would they do that?
Free traders and tax cutters seem to drink from the same cup. The solution for failure is always “more of the same”.
The United States has unilaterally disarmed itself on international commerce. We have virtually no barriers to entry in our market. Foreign companies need only apply for huge tax benefits in exchange for moving production to our shores. Our politicians then point to their factory shouting about “jobs”. No attention is paid to the fact that a non-union, low-wage, taxpayer-funded Kia plant in Georgia means highly paid American workers at a Chrysler facility in Michigan were just laid off.
This is the system in which European producers compete.
American exporters are forced to pay a value-added tax at the border, driving up the cost of imported American goods. European exporters are refunded part of the value-added taxes paid on goods that are exported to the United States, driving down the cost of foreign-made production for American consumers.
There is absolutely no chance that European leaders would sign any free trade agreement dissolving these built-in advantages. If Washington does sign a blockbuster free trade deal with Europe it will not level the playing field.