Free Trade vs. Free Trade agreements

Many smart people understand that tarriffs and subsidies are not good policy. They’re corporate subsidies, and while they protect some jobs sometimes, there are much better and more efficient ways for governments* to create and promote jobs that don’t harm consumers and workers abroad. I’ve become convinced that this view is generally (though not necessarily always) appropriate, and as such I’m a provisional supporter of the idea of “free trade.” When it comes to American, Japanese and European agricultural subsidies, I become a vigorous supporter of the logic of free trade, as these policies impoversh many millions of the world’s poorest while enriching a narrow and reasonably well off and very small group of first worlders.

Why the scare quotes? Because it would be a mistake to go from the view stated above to active support for many, indeed most, “free trade” agreements. Most of them go a whole lot further than simply reducing tarriffs and cutting subsidies. In fact, many of them don’t really even do much of that (and those that do rarely do it equally and fairly–the refusal significantly address developed world agricultural subsidies has become the sticking point in WTO negotiations). Rather than explain this further, I’ll refer you to John Quiggin’s excellent post on the US/Australia free trade agreement that’ll likely be finalized soon.

Update: Matthew Yglesias has a similar reaction.

Readers will know that I’m something of a dogmatic free trader, and dogmatic free traders will know that Australia is considered the model of a modern major industrialized nation’s approach to trade policy, so when I saw that there was a US-Australia free trade agreement coming down the pike I just sort of assumed it was a good thing.

But why would one be tempted to assume that? Given Australia’s free-traderific trade policy, they don’t really need to be a party to free trade agreements. The U.S., has a lot further to go to become a model for free traders. If you think Australia is going to get the U.S. to give up anti-free trade policies that Europe and the WTO can’t get them to move on, you got a thing or two to learn about international relations. One needn’t be a hard-core realist to see the problem here. A “free trade” agreement between Australia and the U.S., especially given their current respective administrations, has shenanigans written all over it.

*this doesn’t apply to governments headed by George W. Bush.