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Free Trade: Key to Job Creation

Anthony B. Kim
The Foundry, The Heritage Foundation
May 19, 2010

Trade critics charge that free trade damages U.S. firms and workers. It’s true that individuals can experience trade-related job loss. Balanced against that, however, must be the overall gains in U.S. employment and productivity that stem from an open trading environment. Indeed, free trade fosters economic efficiency, which is the basis for dynamic growth and job creation.

In a recent report entitled “Opening Markets, Creating Jobs: Estimated U.S. Employment Effects of Trade with FTA Partners,” the U.S. Chamber of Commerce points out that more than 17 million American jobs depend on trade with U.S. FTA partners, and in 2008 alone, over five million jobs were created by the boost in trade unleashed by the FTAs. Chamber President and CEO Tom Donohue appropriately remarked, “I defy anyone in town to name another budget-neutral government initiative that has generated anything like this number of jobs.”

Unfortunately, in recent years, free trade has become a victim of special interest politics in the U.S. America’s competitiveness, credibility and leadership in global markets are at stake and American workers and firms will prosper more, even in a time of economic slowdown, if the U.S. continues its historical trend towards trade liberalization and openness. Regrettably, Congress, bowing to labor union pressure, has focused on demands for concessions from other nations. Such intransigence has a cost. While America merely talks about trade, the rest of the world actually moves forward with new trade pacts, which push U.S. firms towards the sidelines and take away opportunities for more job creation.

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