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Many miss benefits of free trade

Chris Farrell Apr 17, 2008


Lisa Napoli: The president of Colombia says it would be incomprehensible if the United States rejects a free trade deal with his country. But, it doesn’t look like Democrats on Capitol Hill will budge on the matter. Colombia bought nearly $7 billion of U.S. goods last year. And President Bush wants to fast-track a free trade agreement with the fourth largest country in South America. Economics correspondent Chris Farrell weighs in on the debate.

Chris Farrell: Well, there’s a lot of politics going on. But let’s take a step back and just actually look at the agreement itself. There’s a trade agreement with Colombia, and basically, it changes very little, especially on the U.S. side. And here’s the reason why: Colombia goods, they already come into the U.S. freely, except for, and you could probably guess, agriculture. Because that’s our most protected industry. But basically what we’re saying to Colombia is, “Your goods are coming in free. You know what? We’re just gonna make that permanent.”

Napoli: But, so what is the bigger picture here? Why is everybody going to all this trouble to get it passed, if there really isn’t anything at issue?

Farrell: Well, the deeper issue with the politics is, look, we know, and I think economists have made a good case, that the benefits of free trade are real. And you can use whatever number you want. In recent history, it’s benefited our economy to $500 billion to a trillion dollars. But, we ignore the losers, and the losers are saying — they’re not really losers; they’re the average American — and so they’re saying, “Wait a minute. There’s some downside here. Why is it in our system that if someone loses their job because of international competition from Mexico or Colombia or China, their family loses their health care?” Or, maybe it’s the technological upheaval. I don’t know. But those are the real discussions about how do you create a safety net for people who lose out to free trade. But by and large, the benefits of free trade are real. But it’s much simpler to sort of yell and scream about Colombia than it is to actually deal with health care.

Napoli: Do you know what is the reaction? Here, it’s divisive. Is it divisive in Colombia, too? Are there two factions?

Farrell: Oh, it is divisive in Colombia, and one sector that is very fearful is the agricultural sector in Colombia and for good reason. They fear that they’re going to have more cheap U.S. agriculture flood their market and that will hurt their farmers. I mean, it’s essentially, oh if you want to use a code word, a pro-business policy being pushed by a pro-business administration. The agricultural sector is particularly worried, and they do have some good reasons to worry, cuz remember, our agricultural sector is among the most protected sectors in our economy.

That’s Marketplace’s economics correspondent Chris Farrell.

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