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.”


  • Citizenelect

    Free trade is an English oligharcy,s way of destroying sovereign nations! Fair trade is the ideal alternative. An example of free trade, buy tomatoes in brazil cheap, sell to italy higher price, buy from italy cheap, sell to Australia at higher price. This goes on and on and on, Profit for the oligarchy at same time destroying nations economy. We cannot buy Australian products here, coles and woolworths both brit- corporations shutting down our economy. Literaly killing our farmers. WAKE UP. Stop these London Banksters who also control your Fed-and our reserve bank!

  • RichardLudwig

    how about this – never mind free trade – how about FAIR TRADE instead?

  • fungus

    I agree with every position by the Paul campaign except this. This is the one area that needs alot more explaining by the Paul platform to the average citizen. I too agree with Joe Krill. It has to be about FAIR trade. Comments like the one I heard the other day from Rand Paul saying “Americans have to understand that when they go to Wal Mart, the avg family saves over $900 per year on their household expenses” make no sense to me. We have sent the majority of our jobs overseas and we don’t make anything here anymore! We have killed small business and the small community in this country. How does this make sense? Pretty soon we won’t have anything to trade!

  • Troyss12

    You can’t be for free trade and against NAFTA. That is double speak. Ron Paul does this all the time. It’s nothing but focus group language

  • jbrack

    I am all for free trade but part of your platform should be that foreign factories need to comply with the same laws/regulations that domestic factories do. The ethical stance is that we want even footing for U.S and foreign workers. We don’t want our trade with foreign countries to be at the price of exploiting foreign workers or polluting their environment. We want them paid the same wages, and live/work in the same clean, safe environment.

  • rich m

    Joe Krill makes more sense than any politician running for the office of CEO of the U.S. We should hire him before someone else realizes the truth that he speaks and gets the upper leg.

  • Joe Krill

    “Fair Trade” is having the qualities of impartiality and honesty; free from prejudice, favoritisn, and self interest. Just, equitable, even-handed; equal. Why does everyone forget that what we should be championing is “fiar” trade and not free trade. Joe Krill

  • waterwarcrimes

    The Canada US Free Trade Agreement and the NAFTA were vioalted by Canada, Queen Elizabeth and her agents, the moment the ink dried and there has been a continuiing violatio never since in relation to WATER EXPORTS—grand-plan-to-steal-canadas-water-resource-wealth—the-traitors-within.html

    It is arguable that insiders with successive Canadian governments have been aprt of an ongoing conspiracy to violate US Anti Trust – fair trade laws—water-war-crimes—were-us-anti-trust-laws-broken-by-canadian-premiers-assisting-to-create-a-monopoly.html

  • I am tired of people whining negatively about unions. Unions are a working class agent that protects workers from taxation without representation sometimes called inflation derived from Federal Reserve Monetary Policy. The Federal Reserve is America’s number one jobs destroyer as well as destroyer of family values. No worker, union or non-union should have his standard of living deliberately stripped away by inflation so that the banking system can create artificial profits or artificially manipulate the economy using leverage. On another note, if America had a fair and dynamic tax code, working Americans would be more invested in trade policies that keep jobs in America. On another note, what is your heritage worth if lobbyists can pay off a politician to export your job overseas? On another note, what is the basis of family values if you have to work three jobs and never have the time to invest in or manage your family? The rules of capitalism are arbitrary and are politically tainted to benefit those who have bought political power.

  • CNG_Oklahoma

    Buy American and get off foreign oil. Support HR#1380 the Nat Gas Act and use AMERICAN domestic natural gas to power our cars at 1/3 rd the price of refined gasoline!!! Natural gas requires no refining. It can be used almost exactly how it comes out of the ground as Methane

  • TRBO

    How can you compete with slave labor in China? Free trade does NOT work!

    • @TRBO

      Have you Been to China? I have, traveling there for mor than seven years and its not slave labor building the products, its a highly educated and skilled labor force. China graduates more honors students from universities each year than we have students total. the factories I deal with have machinists with engineering degrees, etc.

      Please get your facts straight before pontificating and showing your lack of knowledge.

      Free trade works when you get rid of the unions that destroyed this country.

      the union slogan should be, ” keeping bad paople in good jobs”.

      • Samus

        Because communism is the way to go. @tired of whiny babies @TRBO

  • CDSJ

    We are the hottest night club on the strip…….Are you telling me that we shouldn’t charge a cover? Tariffs help keep jobs in America, and encourage other countries to move factories over here. Free trade is just a race to the bottom for Americans. Dr. Paul I love ya, but you have this one wrong.

    • asdljfasdflkj

      @CDSJ Tariffs reduce our ability to take full advantage of our comparative advantage and move beyond our production possibilities curve. For example, we can’t build the same consumer electronics that China can because they have a huge supply of the previous metals required the make them. Let them do that and we’ll trade them new hearts or something.

  • Citizenelect

    BTW-Love the way nice names are used for these Death policies huh? Free trade = slave trade these times if you think of the opposite to a word the mainstream media use you are pretty well on the ball LOL

  • Citizenelect

    Free trade ultimately, kills nations, Jobs lost, farmers destroyed, free trade only serves the Oligarchies reign of destroying. Nations sovereignty if Ron Paul supports the founding fathers. Free trade must be abolished! Replaced with Fair Trade. Only then can we have a better world, with All Nations. Eliminating poverty.

  • bobbob

    Unless Ron come to see “this” he won’t get my vote … nor the vote of many other people. As a kid, I was raised to work hard and it would pay off. No, as one gets older, companies don’t want to pay you for your experience anymore and turn to a younger workforce who thought the same BS I did when I was 30. The so called “free market” may work in theory; however, in reality, it doesn’t. It lead to those who have the power exploiting those who don’t. Need an example? On the day of 9-11 “capitalist” were selling water on the streets of NY for $5.00 a bottle. There response when questioned was “hey, I’m not forcing you to buy it”. This is the mindset that free trade will exploit to the hilt.

  • bobbob

    Free trade sound great; however, the ones with money will always go where the cheap labor is … and that is NOT “here”. I was once told by an employer that “you go to Walmart to look for a better deal on a tv; why can’t I look for a better deal than you”. This IS how corporate America sees the American Worker; namely, he/she can always be replaced with someone (something, i.e. robot) cheaper.

    I’ve like Ron Paul and still do. However, “this” is a deal breaker for me. Allowing corporate America to “free trade” will only hurt the American Worker. Walmart is a case in-point. For those with jobs, Walmart is great because the prices are cheap. However, those cheap prices come at the expense of their neighbors who now have no job because the company that makes lawn chairs has gone to China; the company that makes washing machines has now gone to Mexico, the car company has gone to Korea, etc. This is leaving us with a divided country where those who DO have a job see no problems at all with out current economy because they can buy stuff cheap … and those who do NOT have a job being left up the creek without a paddle.

    • Samus

      Except Korean cars actually work unlike American cars that take up too much fuel. @bobbob

  • Wonkbro

    Calling someone “moderately retarded” tells me that you are “completely idiotic”.

  • Wonkbro

    When technology (automated machines and such) replaces jobs that at one time employed people, nobody calls for the removal of these technologies.

  • MatthewOStroben

    Smooth-Hawley tariffs did not extend the Great Depression. Many economists hate tariffs and Smoot-Hawley is a great stick with which to beat the living daylights out of protectionists. This is from

    Economists aren’t lying when they casually refer to Smoot-Hawley playing an important role in the Depression. (Most economists who have studied the issue know that it didn’t.) They think, vaguely: Tariffs Being Bad + Highest Tariff Rates Ever = Big Impact. Problem is that reasoning mixes micro with macro. Economists hate tariffs because they interfere with the pursuit of comparative advantage, misallocate resources, and, in that sense, lead to lower incomes … in the long run. The macro of tariffs is murkier, though. The American on the street’s argument for protectionism goes like this: “Raise tariffs on imports so people will buy more things made in the USA. Then U.S. companies will produce more and hire more people.” The thing is, as a story about the short run, that reasoning may well be correct. Oh sure, foreign retaliation for tariff increases may slam domestic exports and there can be price level effects and exchange rate effects that have a contractionary impact, and so on. That’s why the macro of tariffs is murky. But, at any rate, it’s at least conceivable that Smoot-Hawley, rather than causing the Great Depression, actually caused U.S. production and employment in the early 1930s to expand. Not by much, mind you, because foreign trade was a tiny part of the U.S. economy at that time. But expand rather than contract.