Economic Logic Supports U.S. Free Trade Agreements

It's been two years in a row now that President Barack Obama has mentioned the pending U.S.-Panama and U.S.-Colombia free trade agreements in his annual State of the Union address. Will 2011 be the year that they are finally presented to Congress and approved?

Economic logic would certainly support it. But as we all know, when it comes to matters of policy—especially trade policy—political logic (or illogic) often enters, twisting the facts and the debate. But the facts in this case are pretty straightforward: In markets opened up by previous free trade agreements (FTAs), the overwhelming majority of states have seen exports grow—in some cases exponentially.
 

• An AQ charticle analyzes congressional support for free-trade agreements and states' export benefits, and what that means for the Panama and Colombia FTAs.

Based on research conducted by the Americas Society, even the states whose representatives have voted against nine of the recent trade pacts that have come before Congress have—by a large margin—seen their exports increase.

Just look at some of the examples of the FTAs signed with partners south of our border.

While a majority of Alabama's congressional representatives voted against the North American Free Trade (NAFTA) agreement in 1993, the state's exports to NAFTA markets have grown by more than 250 percent since then. Nevada and West Virginia's representatives all voted against the expanded North American market and yet saw their exports boom, by 535 percent and 294 percent respectively.

To take the case of the our FTA with Chile, Alaska, despite its solid opposition to the agreement in 2003, has enjoyed a near 700 percent increase in its exports to the South American country, and Vermont, which also opposed it, has seen its exports shoot up by more than 1,000 percent. This is more than Ben and Jerry's ice cream and maple syrup. These are high-end goods and jobs.

Across these agreements, the majority of Texas' congressional representatives have voted in favor of free trade, whether with NAFTA, Chile or Central America and the Dominican Republic, and its manufacturers and workers have seen the benefits, with exports growing dramatically to all three markets. When President Obama finally does present the agreements for Panama and Colombia for a vote in the Congress, the Lone State State's representatives will have good reason again to vote in favor. In 2009 Texas' exports to Colombia totaled $2.6 billion and to Panama just under $1 billion. Those numbers will only increase once markets are opened for U.S. products.

For U.S. businesses and workers, the agreement with Colombia is particularly important. Most Colombian exports already enjoy tariff-free access to the U.S. market under a program by the U.S. government to woo narcotics-producing countries to more licit goods.

The question will be if the other states that have voted against trade pacts in the past but still benefited will finally vote in favor of their own local economies. Many of them, from Alabama to Wisconsin, have huge exports to Colombia ($304 million for Alabama and just under $1 billion for Wisconsin) and Panama ($228 million for Alabama and $18 million for Wisconsin).

Let's hope this time, if and when the president presents the bill, these states and the others will finally get the facts straight on the benefits of trade and vote in their constituents' interest. Our workers, our businesses and our relations in the hemisphere depend on it.

Christopher Sabatini is the editor-in-chief of Americas Quarterly and senior director of policy at the Americas Society/Council of the Americas.