A Free Market Case Against "Free Trade" Deals

A Free Market Case Against "Free Trade" Deals

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Mitchell Stern, Fiscal Policy Contributor

With the surprise triumph of Donald Trump in this year’s presidential election, it is time to take a serious look at his policies. His trade policy in particular has brought strong criticisms from conservatives and libertarians. Breaking with Republicans going back to Ronald Reagan, Trump has explicitly criticized free trade deals, including NAFTA and the likely doomed TPP.  Critics of Trump on this front point to the economic consensus of the harms of protectionist trade policy and have condemned Trump on trade.

However, while Trump’s solutions for trade policy are not to be supported because they are rooted in old protectionist fallacies, he is not wrong per se to be critical of these agreements.  These agreements are not simply pursuing free trade. An inevitable consequence of these trade deals is the creation of supranational bureaucracies that overall leave the economy less free. The bureaucracies created by NAFTA and the TPP are analogous to the European Union and have much of the same shortcomings. While differences exist, these deals do create bureaucracy. International bureaucracies make free market policies almost impossible to implement, even if done nominally for the cause of free trade and market liberalization.
Furthermore, there are the general anti-competitive policies that accompany these deals.  These agreements generally do not create free trade, but rather a form of managed trade that prevents genuine free trade. Additionally, these agreements seek to harmonize regulatory policies with other countries. While this theoretically could free up markets, generally it has the opposite impact and results in countries with less regulations increasing them, as even supporters of trade deals have noted. This leads to an overall decline in market freedom.

This all can be traced back to the corporatist elements of these deals. Buried in the thousands of pages of each trade deal are provisions designed to shelter well-connected corporations from international competition. For instance, NAFTA prevents Americans from purchasing generic drugs from Canada, even though they are cheaper and should be able to be accessed under the terms of the trade deal. The TPP has similar provisions and in addition, has strict intellectual property policies. Stronger intellectual property provisions can be justified from a free market standpoint, but even so, these provisions go far beyond what can be considered justified.  

Overall, free trade deals fail to create true free trade and come with numerous anti-capitalist strings attached. For this reason, it is proper to criticize these deals and even reject them outright. While true free trade is undoubtedly a positive, prioritizing other deregulation efforts would be the best realistic path going forward. Meanwhile, while we shouldn’t embrace Trump’s misguided protectionism, we should understand that the deals he criticizes are indeed bad deals and should be rejected. Perhaps a better path going forward to encourage genuine free trade would be pursuing either total unilateral free trade or bilateral negotiations to lower trade barriers with one country at a time rather than seeking to create large-scale trading blocs.  


You can follow this author on Twitter @mitchellastern

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