Ron Paul's Texas Straight Talk - A weekly Column

March 22, 1999

Free trade rhetoric often obscures agenda
"Fair," protected and subsidized trade harms consumer, economy

Forces of protectionism won a victory recently; a victory over the American consumer and the principle of free trade. Of course, as with so many issues in Washington, DC, it is almost impossible to understand who are the free-traders, fair-traders and protectionists without a scorecard; and even then, of course, none of those words actually mean anything in debates on the House floor.
Claiming to be watching out for the interests of everyone, Congress passed legislation that reduces the ability of Americans to purchase steel from foreign producers. The only interests being served, though, are the labor unions.
Proponents of the legislation claimed foreign companies were "dumping" steel on our market. The word "dumping" is used to conjure up images of foreigners sneaking across the border under cover of darkness and selling low-quality steel in back alleys. Reality is far different from rhetoric; Americans are buying the foreign steel because it is a better value.
So rather than re-examine the market (which is unwilling to pay the high-prices brought on by government regulations and union-imposed wages), the advocates of big government and forced unionism demand that Congress close down what remains of the free market.
The true free market is a threat to entrenched interests and lazy minds. The free market rewards those who are willing to work hard, produce that which people demand, and at a price they are willing to pay.
It is no longer politically fashionable to ask for "protection" from foreign competition. Instead, they demand that supreme "virtue" of American politics: fairness.
"Fair trade!" has become the rallying cry. Sadly, though, there is little "fair" about these policies, and even less about their outcome. This "fairness" means gouging consumers for higher prices using the force of government to protect the rackets of organizations unwilling to work within the system of voluntary exchange.
This "fairness" extends to other arenas. Take, for example, the situation with Cuba. For three decades national policy has forbade trade with Cuba, on the grounds that we are trying to force Castro from power. To date, that policy has not only been unsuccessful, it has backfired. But, in the name of "fairness" and "security," Cuba's poor do not have access to American inexpensive food and medicine.
I have introduced HR1181, which will allow Americans to enter the Cuban market, but prevents federal tax dollars from being used to subsidize the Castro regime.
For while many in Washington call themselves "free-traders," but there is nothing free about their agendas. The so-called "free-trader" in Congress is often one who believes in subsidizing trade; that is, using taxpayer dollars to prop-up foreign governments on the condition that those governments then use the money to purchase goods from certain American companies (which in turn lobby for "protections," creating a vicious cycle).
The others who misuse the "free-trade" label are the managed trade proponents. These are the ones responsible for empowering the international regulatory bureaucracies of NAFTA, GATT and the World Trade Organization, all of which have as much in common with free trade as protectionism does.
In the end, it is the American taxpayer that foots the bill. The cost comes in higher prices, higher taxes, or both.
True free trade involves neither protectionism nor subsidization. Free trade recognizes that market forces, not government regulations or spending packages, will best allocate resources; even across political borders.