Economics of Liberty

Sorry, Anti-TPP Libertarians: In Modern Era, We Need Trade Agreements

Trade May Have Been the Natural State Once, but Not Today

By Brett Linley

Trade agreements have turned into a contentious subject among libertarians. While free trade and free markets have been long-standing tenets of libertarianism, many reject government trade arrangements. One of the most popular arguments is that free trade doesn’t need any deal.

The latest agreement to come under fire is the Trans-Pacific Partnership. The pact would remove many of the trade barriers that exist between the United States and eleven other nations. However, this move to reduce tariffs and promote trade is still unsatisfying for many libertarians.

Opponents of the TPP decry the strengthened intellectual property rights protections. They claim that corporations would have inflated power to settle international disputes in their favor. Labor provisions of the deal have come under scrutiny. Above all else, they say you don’t need a deal for free trade.

In truth, these libertarians are seeking a perfect deal. It doesn’t matter that the deal cuts out China, allowing the U.S. and other members to shape the rules. Increasing trade among the twelve states that account for 40% of the world’s trade already is irrelevant.

Few complain about the competitive effects on our industry, but some do. For those who do hold such concerns, it’s worth noting that other countries are removing barriers to their markets too. American industry could create a lot of wealth by breaching these zones.

The general consensus seems to be that through these agreements, we’d be acknowledging that the government has a role to play in trade. This is the antithesis of free trade to many, and they believe we’d be better off with no deal at all. To be truthful, this is a short-sighted attitude that damages libertarian ideology.

Libertarians Need to Accept the “C-Word” (Compromise)

If there’s one thing libertarians hate, it’s being told what to do or think. It is therefore an anathema to be told to compromise in any shape or form. We relish the opportunity to subject others to arbitrary purity tests. In short, we like to dig into our own ideas and debate “statists.” And thus, we are where we are today.

No one would mistake America for a true free market economy. Slowly but surely, the corrosive powers of the state have eroded our right of association. And yet, libertarians stand firm against any incremental progress.

Any position that doesn’t immediately end state coercion is for sell-outs. Real libertarians would never allow anything that we don’t like, even in a larger context. Free-trade doesn’t need government, and neither do we.

As nice as that all is, it dramatically ignores the reality of our situation. The two major parties have fielded two of the most anti-free trade candidates seen in years. Ultimately, the cause of economic freedom will suffocate under either of them.

It is clear that, at this point in the game, free trade is no longer the natural state of things. Truthfully, no agreements were needed when man first started to barter and exchange. However, no libertarian can realistically say that the state of nature hasn’t changed over these past hundreds of years.

Libertarians Need to Rethink Free Trade

As it stands, American manufacturers can’t enter certain markets. Japanese standards, for example, have made it very difficult for Americans to sell their goods. Tariffs are always a burden on business. Regulations stifle our attempts to breach foreign economies.

Institutions like the World Trade Organization (WTO) and its predecessor, the General Agreement of Tariffs and Trade (GATT), speak to the recognition that barriers must be removed. They must be removed, to be a little redundant, because they have become the natural order of things.

Clearly, they aren’t going to disappear over night. Unless we want to delude ourselves, we should not believe that countries will remove barriers unless they have something to gain. It’s a principle of economics that people will not accept deals where they’ll lose ground without due compensation.

If we want Brazil to alter their tariffs, we’ll have to alter ours. For Japan to receive increased access into our markets, they have to share the benefits. If legislators want any chance to pass such an agreement, they’re going to have to include some provisions to protect intellectual property.

We may not like how this process works. Many libertarians are fairly outspoken in their opposition. However, the great benefits reaped from trade far outweigh the losses. We do need agreements, as imperfect as they may be, because the alternative is pure protectionism.

Support Free Trade, or Get Off the Bus

Some people are genuinely opposed to free trade, and they have a right to their opinion. However, so-called “free traders” masquerading around as such, all the while rejecting any progress, help no one.

When people get a taste for free trade, they’ll want more. It will lead to more agreements in the future, with less cronyism as we progress. Trump and his supporters often bash NAFTA as they oppose the TPP, all the while ignoring how NAFTA has generated over 5 million jobs.

One can only imagine the value that would be created with a deal as large as the TPP. It’s not a perfect deal, and no one should mistake it as such. But if you want to do what’s necessary to cut down protectionism, you’ll have to accept some good or some bad.

Free trade isn’t the natural state anymore. That doesn’t mean we can’t get there again.

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