The Importance of Free Trade

President Barack Obama has fashioned his foreign policy persona around "constructive engagement" with the international community. Apparently, however, the only "engagement" he cares for is diplomatic. Free trade, one of the cornerstones of post-World War II U.S. foreign policy, is conspicuously absent. Indeed, the president's anti-trade campaign rhetoric, the "Buy America" provision in the stimulus package, and tepid support for reviving the Doha Round of international trade talks have signaled to the world that America is closed for business.

Fundamentally, the Obama administration doesn't really get free trade and entirely misses its importance to U.S. national security. Free trade isn't just about economic gains--it is also about reinforcing strategic political and security ties with key allies.

Take the pending U.S.-Colombia and U.S.-Panama Free Trade Agreements. The Bush administration concluded the agreements in 2006 and early 2007. In exchange for passage (as well as the Peru and South Korea FTAs), Congressional Democrats demanded the agreements be renegotiated to include enforceable labor, environment, and investment and intellectual property provisions.

Walking away from KORUS will likely be one of the final blows to the teetering U.S.-South Korean alliance, a pillar of American influence in the Pacific.

Apart from the Peru FTA, Congressional Democrats reneged on their part of this "bipartisan trade deal." On the campaign trail, President Obama opposed the Colombia FTA on grounds of human rights and labor issues, citing violence against labor leaders. His opposition to the Panama FTA was rooted in similar labor union generated fretting, and additional concerns that the country was a tax haven. While U.S. Trade Representative Ron Kirk has signaled that there may be willingness to move at least the Panama FTA forward, the administration may seek to again reopen negotiations on these issues before contemplating further action.

The strategic importance of these FTAs extends beyond U.S. economic gains in the relatively small Colombian and Panamanian markets. Both Colombia and Panama, as developing countries, already enjoy longstanding non-reciprocal duty-free access to the U.S. market for over 90% of their products. And even the opening of both markets to U.S. exports isn't going to change anyone's world. Rather, for Colombia, the FTA serves to reinforce its status as our closest ally in Latin America and validates President Alvaro Uribe's staunch efforts in combating the illegal drug trade that has too often spilled over into the U.S. And surely no one needs to be reminded that America has vital strategic interests in Panama, which controls the Panama Canal. Renegotiating these agreements to pander to U.S. labor interests is pure protectionism, particularly in light of the 2007 bipartisan trade deal.

Likewise, the geopolitical importance of the Korean peninsula makes the Obama administration's wavering on the U.S.-Korea FTA (KORUS) all the more perplexing. During his presidential campaign, President Obama indicated that KORUS was "deeply flawed." U.S. Trade Rep. Ron Kirk, during his Senate confirmation hearing, stated that "the president has said, and I agree, the agreement as it is just simply isn't fair. And if we don't get that right, we'll be prepared to step away from that." After the completion of over three years of intense negotiations by the Bush administration, the Obama administration has signaled that it intends to seek renegotiation of KORUS to address access for U.S. beef and automobiles. Not surprisingly, the South Korean government has balked, insisting that the deal isn't open for renegotiation.

The Obama administration is apparently overlooking the fact that KORUS is crucial to U.S.-Korea relations for reasons beyond market access. Only last year, pro-American President Lee Myung-bak nearly faced the collapse of his government over allowing limited access to U.S. beef. Walking away from KORUS will likely be one of the final blows to the teetering U.S.-South Korean alliance, a pillar of American influence in the Pacific. Seoul has been vacillating between China, its largest trading partner, and America for some years now. Dumping KORUS will make such decisions easier, and the resulting implications for Korean partnership against North Korea, on the ground in Afghanistan and elsewhere are frightening.

To be fair, some of the objections to the already negotiated agreements are legitimate--in a perfect world. We want our trading partners to do better on intellectual property rights, and to allow access to American-made goods. Environmental and labor demands are more marginal, masked protectionism for less efficient American markets. Nonetheless, we too have protected markets that will remain closed to our partners, frustrating them in turn. The principle behind free trade is to lift all boats through compromise, not to hold our breath until perfection is achieved.

President Obama is enjoying his honeymoon at home and abroad. But if the president succumbs to the protectionist wing of his party, the honeymoon, our alliances and America's stake in the international game will be gone before you can say Smoot Hawley.

Neena Shenai is an adjunct scholar at AEI.

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