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The Kansas City Star, Mo., Mark Davis Column

Posted on: Sunday, 20 November 2005, 15:00 CST

By Mark Davis, The Kansas City Star, Mo.

Nov. 20--POLITICIANS FOCUS ON COSTS, NOT BENEFITS, OF FREE TRADE: As President Bush pushes against trade barriers on his rounds of international markets, free trade and those it displaces need a friend.

His trip to Argentina earlier this month sparked opposition to free trade with Latin America, followed by a name-calling match between Venezuela's Hugo Chavez and Mexico's Vicente Fox.

European trade leaders rebuffed calls to break down agricultural barriers when Bush met Asian trade partners in Japan and South Korea. China didn't like Bush's praise of economic success in Taiwan's open economy.

Even in Washington, former labor secretary Robert Reich, who helped push through North American free trade under President Bill Clinton, declared free trade in the Western Hemisphere to be a dead issue.

But there should be no doubt that there are vast benefits from freer trade globally.

Mostly these benefits are subtle and rarely within the grasp of politicians seeking credit or gain. But the benefits are there.

Start by looking at free trade right here at home.

Kansas wheat growers profit because Floridians don't try to grow their own wheat. And Floridians find ready orange buyers in Kansas, where citrus groves don't hold up to prairie winters.

Imagine the cost, quality and scarcity of OJ around here if all we could drink was what we produced locally.

Instead, wheat moves south and juice flows west because trade between Kansas and Florida is about as free as it gets. Juice is cheap here and wheat there, thanks to that free exchange.

We also benefit from free trade in service industries.

Many Kansas City families invest in mutual funds managed by experts in Boston or New York, although there are experts here too. At the same time, many of those East Coast mutual fund companies rely on computer systems designed and run by Kansas City-based DST Systems Inc., which employs thousands locally to keep track of the activity in fund accounts nationwide.

Now stretch these examples beyond our borders.

By opening markets, Brazil's orange groves and Australia's wheat fields have come to compete with crop producers in Florida and Kansas. Oil wells in Britain's North Sea long ago helped to loosen OPEC's grip on world oil prices.

Trade of all kinds has soared in the last decade as all sorts of trade barriers have fallen.

Trade talks have reduced tax barriers on goods unloaded at docks. Technology has opened labor markets across oceans so that computer programmers in India compete with programmers in Kansas City for jobs.

In each case, work is going where it can be done with the least demand on our finite resources.

U.S. consumers benefit whether shopping at Wal-Mart or buying cell phone service. Any idea why health-care costs have soared while apparel costs haven't? One reason is that we can import clothing a lot easier than health care.

Trade keeps shelves stocked. When Hurricanes Katrina and Rita knocked out huge chunks of our domestic oil production, we had to trim consumption only slightly because we made up the difference by outbidding oil consumers in other nations.

Workers in India and China are gaining as well. And the more we trade with them, the stronger voice we'll have in demanding workers' rights there just as we do here. Moreover, the emergence of a middle class in both nations promises huge new demand for goods from America.

The important lesson to take here is that free trade benefits both sides. Gains on one side are not at the expense of the other.

But there are costs.

The auto parts industry in this country is falling apart right now, with workers being asked to take lifestyle-crushing pay and benefit cuts. It continues a long, painful loss of manufacturing jobs, pay, benefits and security here at home.

Information workers are beginning to feel the same sort of pain.

Unfortunately, too many political interests decry these costs to preserve trade barriers and erect new ones.

Professor Peter Morici at the University of Maryland points out that the European Union banned the sale of hormone-treated beef -- shutting out U.S. and Canadian beef -- but accepts hormone-treated pork, an industry that produces little or no surplus inside the EU.

Even Bush turned protectionist on steel in his first term.

Instead of working to deny consumers the benefits of trade, government should concentrate its help on those displaced by free trade.

Reich complained that the winners from free trade in America haven't been willing to share their gains with the losers.

It means education, training and financial support to find new work. But there's relatively little of that to go around, and it doesn't win votes at election quite like blasting China, or India, or free trade.

These are not small matters. But there shouldn't be any doubt that free trade helps us collectively or that we should do more to ease the pain of those it displaces.

-----

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Copyright (c) 2005, The Kansas City Star, Mo.

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Source: The Kansas City Star (Kansas City, Missouri)

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