Free Trade

Ron Paul is a proponent of free trade and rejects protectionism, advocating “conducting open trade, travel, communication, and diplomacy with other nations.” He opposes many free trade agreements (FTAs), like the North American Free Trade Agreement (NAFTA), stating that “free-trade agreements are really managed trade” and serve special interests and big business, not citizens.

He voted against the Central American Free Trade Agreement (CAFTA), holding that it increased the size of government, eroded U.S. sovereignty, and was unconstitutional. He has also voted against the Australia–U.S. FTA, the U.S.–Singapore FTA, and the U.S.–Chile FTA, and voted to withdraw from the WTO. He believes that “fast track” powers, given by Congress to the President to devise and negotiate FTAs on the country’s behalf, are unconstitutional, and that Congress, rather than the executive branch, should construct FTAs.

Buy American, Unless… (February 12, 2001)
Members of Congress often encourage us to “buy American” during their speeches on the House floor. Some members regularly place a “buy American” clause in various trade-related bills, seeking to protect domestic jobs by encouraging the purchase of American goods. Ironically, however, many of these same legislators vote to prohibit American companies from gaining access to new markets overseas. They do so by supporting our senseless embargo policies, which simply help our foreign trading competitors at the expense of American companies.

Of course most politicians claim that they support free trade. Intuitively, most Americans understand that access to foreign markets provides significant benefits to US citizens and American-based corporations. However, we continue to pursue a policy of denying or restricting domestic companies from selling to Cuba, Iraq, Iran, China, and other countries. This inconsistency is especially evident when we consider “export financing,” which really is foreign aid designed to help other countries buy American goods. Most Washington politicians support the practice of export financing, arguing that access to foreign markets benefits American companies, and not just foreign consumers. However, the opposite argument is made with regard to our embargo policies. Suddenly, increased trade with countries some want to label as unworthy only benefits sinister foreign consumers, and not domestic producers. This nonsensical position is maintained by many in government who favor government-managed trade which benefits certain chosen special interests.

Conflicting and inconsistent views on trade policy result largely from a lack of understanding of basic economic principles. Free trade is not a zero-sum game where some countries benefit and others inevitably suffer. On the contrary, true free trade by definition benefits both parties. Free trade is the process of free people engaging in market activity without government interference such as tariffs or managed-trade agreements. In a true free market, individuals and companies do business voluntarily, which means they believe they will be better off as a result of a transaction. Tariffs, taxes, and duties upset the balance, because governments add costs to the calculation which make doing business less attractive. Similarly, so-called managed trade agreements like WTO favor certain business interests and trading nations over others, which reduces the mutual benefit inherent in true free trade.

Free Trade With All, Entangling Alliances With None (September 21, 2001)
Free trade with all and entangling alliances with none has always been the best policy in dealing with other countries on the world stage. This is the policy of friendship, freedom and non-interventionism and yet people wrongly attack this philosophy as isolationist. Nothing could be further from the truth. Isolationism is putting up protectionist trade barriers, starting trade wars imposing provocative sanctions and one day finding out we have no one left to buy our products. Isolationism is arming both sides of a conflict, only to discover that you’ve made two enemies instead of keeping two friends. Isolationism is trying to police the world but creating more resentment than gratitude. Isolationism is not understanding economics, or other cultures, but clumsily intervening anyway and creating major disasters out of minor problems.

Free trade makes sense (June 7, 1999)
[…] if someone says they are for “free trade,” one must look carefully what they really mean, for the classic (and common sense) definition does not apply.

All to often in Washington, free trade is used when one really means “subsidized trade,” or, tax dollars being funneled to foreign governments to buy American products. Similarly, the phrase can mean to use tax dollars to bail-out American firms for risky overseas ventures, or managed trade by the World Trade Organization to serve powerful special interests.

On the other hand, those of us who oppose using the taxes of American citizens to prop-up foreign governments or American corporations are derisively called “isolationists.” There are indeed some people who are isolationists. They call themselves “fair traders,” though. Exactly what this means is open to debate. All too often it involves letting the government determine what is and is not “fair” in the private trading between individuals who live in different countries.

Sadly, these definitions all hinge on the assumption that there are essentially only two options: tax dollars being used to subsidize corporations/foreign governments, or no trade whatsoever without the rubber stamp of government bureaucrats and special interest groups.

The bottom-line of both options, of course, is higher taxes for Americans. Higher taxes to finance the subsidies, or higher taxes on incoming products (and make no mistake, a tariff is a tax, paid by the American consumer).

There is another way. Free trade and free markets are, without a doubt, the best guarantor of peace. But this requires something all too few in Washington want: less government intervention.

It is indisputable that individuals know better how to provide for their families than government. It is also indisputable that a company is better equipped to know what its market will tolerate than a bureaucrat in Washington. In this way, a person is able to determine what goods best meet their individual needs, weighing numerous factors in their decision. But when government intervenes, it no longer becomes possible for an individual to provide for their family and business in the most expedient fashion. This is the antithesis of liberty.

The World Trade Organization (March 20, 2000)
The economic argument for free trade should be no more complex than the moral argument. Tariffs are taxes that penalize those who buy foreign goods. If taxes are low on imported goods, consumers benefit by being able to buy at the best price, thus saving money to buy additional goods and raise their standard of living. The competition stimulates domestic efforts and hopefully serves as an incentive to get onerous taxes and regulations reduced.

If one truly believes in free trade, one never argues a need for reciprocity or bureaucratic management of trade. If free trade is truly beneficial, as so many claim, unilateral free trade is an end in itself and requires neither treaties nor international management by politicians and bureaucrats. A country should promote free trade in its own self-interest — never for the benefit of someone else.

Those not completely convinced of the benefits of free trade acknowledge a “cost” of lower tariffs for which they demand compensation and fair management. Thus, we have the creation of the WTO. By endorsing the concept of managed world trade through the World Trade Organization, proponents acknowledge that they actually believe in order for free trade to be an economic positive, it requires compensation or a “deal.”


  • cohones

    Tariffs I would think would be good it would remind us while shopping to look for American goods with no tariffs plus these overseas companies would set up shop here to avoid them and lower the corporate tax rate our companies plus foreign companies would be lined up to get in here.

  • Mr. T

    I still don’t trust anyone who wants to give corporations unregulated business.

  • Brad

    No ones paying attention to this one “WTF!”

  • Patrick

    You know, I love Ron Paul, but this is probably the first time I ever disagreed with him. I agree that NAFTA type trade agreements are not free trade, but I disagree that free trade without regulation is desirable. Congress was specifically given authority to regulate interstate and international commerce. Not through wordy regulatory laws, but through taxation. That’s what the power was designed for. When our companies are closing factories and opening them in foreign countries to take advantage of cheap labor, that’s not trade. That’s importing. This is where Congress is supposed to step in and say, “no.” If you do that, we’ll tax you heavily so American companies can compete. And if megacorporations are driving all the local businessmen out of business, it’s time for them to use their power to regulate interstate commerce by stepping in and saying, “no.” If you do that, we’ll tax you heavily to give local companies can compete.

  • flipper

    Although Marx advocated the use of any means, especially including violent revolution, to bring about socialist dictatorship, he suggested ten political goals for developed countries such as the United States. all ten planks of the communist manifesto have been fulfilled and implemented in the us:

  • flipper

    thomas wood on how child labor only can and does happen in a non market economy and why: the question becomes why are the children working? No one asks this question. The assumption is that if you have one of these third world countries where a lot of children work the assumption is that all the parents in that country stink. Like this a country of stinko parents. That we should just go in there and take these children away from all these parents. But we should really just ask try to understand the world around us. Why are the kids working in the first place. It is because the society they live in is so physically unproductive that if the kids dont work the family starves. That is why they work. That is why child labor has existed since the beginning of time. It is not like people said kids capitalism is here of to the mines. Kids have been working forever in evrey society. It never occured to anyone that someday you could live in a society in which your labor was so productive thanks to the capital goods at your disposal that you could work and earn enouph purchasing power so that your kid wouldnt have to. It never occured to anybody. But like at how much more work a person could do with a steam shovel then a regular shovel and multiply that extravagant that through our whole eocnomy. But up till the free market come along up till a capitalist economy evreybody just assumed okay life consists of grinding proverty and then you are dead. Evreybody assumed that. So no one in the year 1100 is going around protesting proverty. No one you will not find anyone protesting proverty or having a hunger strike or a candle light vigil about proverty because evreyone assumed of course you are going to be poor that is the way life is you are poor live with it. I mean even the king has to urinate and then toss it out the window because they did not have flushed toilets until very recently. The king for heavens sake. It is only when the free market comes along and we see that proverty begins to diminish that people become impatient with proverty and they say wait a minute for the first time it seems that proverty can be done away with then they start complaining about it. But what is the point complaining about it when you think it is a fixture of life. So in terms of the child labor issue child labor goes away not because you pass a law saying children are not going to work. It goes away becuase the economy thanks to the free market becomes capital intensive enouph that it produces enouph stuff that mom and dad can work the kids dont have to. That is what does it. In bangladesh the children charity oxfam pointed out that when a bunch of americans and europeans where griping and complaning about child labor in bangladesh. They have this big campaign against child labor in bangladesh. Did child labor go away when the banladesh goverment got rid of it. No what happened was as oxfam reported the children either went into prositution instead which as bad as it is to work in a sweatshop you know obviously it could be worse. They either went into prostitution or they starved. That is what happened. Well nice going geniuses. What way to solve that problem but that was the approach. Even the internatioal labor organizing which doesnt concede anything it admits okay the reason kids are working is because the society is so poor that they are contributing at least a quarter of the family income. when you are living in a society like that if you lose a quarter of the family income you are dead that is it. So what they need is more capitalism:

  • Free trade has never been free. The seller wants the most for his product and the buyer wants to pay as little as possible. Depending on whether you are the consumer or the seller, the process at its core has a self interest. That is why in freer market economies of the past the super rich businessmen were able to control competition and thereby maintain prices high, wages low, working conditions horrible. If you are a consumer you want businesses to compete fairly(?) so that the consumer goods and services are low and the supply of product and services are unending. The reality, if history can be a guide, is that good wages occur when a business has no choice in raising wages, either because of a union boycott or a government law establishing a minimum wage. Free trade on a global scale is worse, as other governments do not protect their employees. That is why when American unpatriotic businesses flood our markets with cheaply produced goods from China in the name of free trade, we, as consumers, need to become aware that the products overseas are replacing our jobs here.

  • Jason

    The world has natural borders, mountains, rivers, oceans. Even if you created one world government without borders and with only one legal system, access to jobs and resources wouldn’t be the same. That is a fantasy. The reality is a hugely diverse world with all sorts of complicated beliefs, laws, and governing systems. I believe in liberty, but a lot of people who hold power in the world couldn’t care less about my liberty or anyone elses. As a people, most of us agree on some forms of regulation that make the world safer for us, our children, and for those around us. I may or may not agree with all the regulations, I may or may not feel a need for more or less regulations. If I am to exist and thrive in this world I must abide by the regulations of the nation I live within. If some poor sap in some other nation has near zero regulations to protect him, his family, or those around him, then he may have a crap life but he will work for toilet paper so in a free market where the 1% can afford to travel and ship items and resources vast distances, I lose access to jobs and he loses because his totalitarian government now has more economic stability. Free Trade only works in Star Trek where everyone has a replicator and toilet paper is free.