How Long Does a Free-Trade Agreement Need to Be?
Only in a world micromanaged by civil servants can the simplest of principles be spliced and diced into hundreds of pages and dozens of chapters. That is the volume of just one multilateral trade agreement: NAFTA.
Various proponents of Free Trade Agreements (FTAs) posit that some trade is better than no trade.[1] While that is arguably true in terms of marginal units, these politically crafted bilateral and multilateral agreements should really be called Some Trade, More Trade, or Kinda Free agreements, but certainly not Free Trade.
Better yet, to accurately reflect their true nature, all of them should be called Managed Trade because on each page within every agreement are quotas, stipulations, and byzantine clauses that rival the federal tax code.[2]
False Advertising
Over the past several weeks, numerous large-scale protests have taken place here in Seoul. Students, parents, tenured salarymen, day laborers, and retirees have all taken to the street to protest a provision in the Korea-US (KORUS) FTA.[3] The main issue centers on the importation of beef from the United States.[4]
During the past years several rumors have circulated around the hermit kingdom that American cows are infested with mad cow disease. There are also insinuations that the American cattle industry cannot find any voluntary buyers of the meat, so they have worked behind the scenes to strong-arm the Korean government into allowing the beef imports.
This issue originally became a political hot potato in 2003 due to the fact that countries like Japan and Korea restricted and then prohibited the importation of American beef out of mad-cow hysteria.[5]
And while protecting consumers is certainly a laudable task, the facts in this case underscore why the KORUS FTA is more about managed trade than free trade. While it is tragic that anyone still dies from food contamination and pathogens, a grand total of three Americans are confirmed to have died due to the resulting CJD disease.[6] Furthermore, less than half of one percent of American cows were found to be infected with the disease.[7] And to top it off, none of the million-and-a-half Korean-Americans died from eating American beef.
So Where's the Beef?
Instead of simply voting with their wallets, activists, under the rhetoric of consumer protection, are trying to legislate their hypothetical nightmares into law.[8] As a result, their moral grandstanding and sensationalism have become a vehicle which socialists, protectionists, domestic cattle ranchers, animal rights groups, and a plethora of special interests have latched onto.
Cui bono is the Latin term for "who benefits." If the importation of beef is outlawed, then domestic producers do not have to compete with the Americans. Thus, rancher Kim and farmer Lee may in fact be marching in the streets because they will have one less player to worry about.
Students march because they receive extra credit from their professors. Animal rights groups march because they took Gary Larson's bovine-friendly comics literally. And socialists march because they are in favor of subsistence and against any kind of global trade that does not involve re-enlightenment camps.[9]
Perhaps the most onerous aspect of managed trade: it (un)intentionally outlaws competition. It only benefits the incumbents — their special interests — and prevents newcomers from entering the market. FTAs routinely erect trade barriers that stymie alternative, international, and even domestic competitors from participating under the new stipulations.[10] It creates a privileged caste system that superficially appears to be noble, yet in practice disgraces the spirit of free markets.
Over the next several days, the trade ministers of both the United States and Korea will be meeting to discuss possible resolutions to this conundrum. However, no matter what the agreement turns out to be, they will be doing a disservice to the hundreds of millions who were pulled out of subsistence due to the genuine free-trade movement spearheaded by the Anti–Corn Law League over 150 years ago.[11]
Signed, Sealed, and Delivered
So the question remains, just how long should an all-encompassing, tariff-busting, labor-liberalizing FTA be? How about 16 words?
Regulated trade between the individuals, companies, and institutions within our respective countries will be illegal henceforth.
I am sure that creative essayists could synthesize the main idea even more concisely, but the point remains, current FTAs are bloated behemoths containing a slew of provisions that sully the spirit and message of the centuries-old anti-protectionist movement.
Free the free in "free trade."
Notes
[1] Organizations like The Club for Growth criticized individuals like congressman Ron Paul for holding a purist stance. But why compromise over a fundamental principle when doing so further legitimizes government intervention in the marketplace?
[2] To be fair, according to senator Jim DeMint, as of 2006 the federal tax code is comprised of 44,000 pages, 5.5 million words, and 721 different forms. NAFTA only has a couple dozen chapters, each less than a hundred pages.
[3] Where is the proportional outrage against intestinal cancer caused by kimchi (soaked in capsaicin) and other spicy foods? Dozens of Koreans die each year due to an unhealthy level of chili pepper consumption. Why is no one marching in the streets?
[4] The uproar is also comprised of anti-occupation sentiment: for more than 55 years, the US military has stationed 30,000 troops in bases throughout the small peninsula. In addition, Korea has had an unfortunate history, filled with aggressors and occupiers (first the Chinese, then czarist Russia, then Imperial Japan, and lastly a disastrous civil war).
[5] Beef originating from Australia has been given the green light for years. In fact, McDonalds restaurants use it exclusively, in part to assuage fears. It should also be noted that prior to being banned, the US share of the Korean beef market was 63% in 2002.
[6] According to the Illinois Department of Public Health, 200 Americans die each year from CJD. However, few, if any, are directly linked to beef consumption. For instance, a rash of CJD-related deaths in Kentucky was found to be caused by eating squirrel brains. Furthermore, in cases where someone has contracted CJD from beef and died, the subjects usually had spent many years in England, the region hit hardest by the disease.
[7] According to a report by the Congressional Research Service (pdf), by the end of 2006 only 11 cases of BSE (mad cow disease) had been found in North American–born cattle. Only 3 of these cases occurred in the United States. Furthermore, the controversial hygiene and husbandry techniques that allegedly lead to BSE have all been banned for over a decade.
[8] For the same reason Koreans voluntarily choose not to eat kimchi or kimbap every meal, nothing is preventing them from not purchasing American beef at grocery stores. It is not like Lotte Mart, Costco, or HomePlus are lined with buckaroo cowboys that force Korean shoppers to buy American beef.
[9] Ironically, socialists will battle anything with the word "free" in it unless it involves free hand-outs. It is the Baptists and bootleggers all over again.
[10] The KORUS FTA has so many tentacles that it even tackles issues of IP and Fair Use.
[11] The 19th-century Anti–Corn Law League was spearheaded by Englishman Richard Cobden and later, on the continent, by French economist Frederic Bastiat.
