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July 06, 2005

The "Hold Your Nose and Vote for CAFTA" Caucus

Bruce Bartlett and Tyler Cowen are the "hold your nose and support CAFTA" caucus:

Bruce Bartlett: ...the Central American Free Trade Agreement. The White House is putting heavy pressure on Congress to support this agreement, which it should. But one cannot help feeling that the Bush administration’s own missteps on trade are what have gotten it to the point.... The problem for many free traders, like myself, is that the Bush administration has played politics with trade since day one. This has done serious damage to the fragile alliance that still supports free trade. The administration imposed utterly unjustified tariffs on steel, torpedoed the Doha round of multilateral trade talks by supporting a huge increase in agriculture subsidies, and has never missed an opportunity to demagogue China for all our trade woes.

Having destroyed the prospects for a multilateral trade agreement, which was primarily to be about eliminating agriculture subsidies, the Bush administration has tried to salvage some semblance of a free-trade agenda by pursuing bilateral trade agreements... the results are not very great.... Jagdish Bhagwati, America’s leading trade economist, has gone so far as to call [bilateral] free trade agreements “a sham” that are actually undermining the world trading system.... A 2003 study by the Congressional Budget Office found that the economic potential of bilateral agreements is very limited....

Indeed, it would appear that foreign policy is the best reason to support CAFTA. It is clearly in this country’s interest to encourage economic growth and reform in Central America even if the economic benefit for us is minimal. It also keeps alive the principle of free trade, which this administration has done so much to undermine....

Free traders have no choice but to support CAFTA. Its failure would be seen as a victory for protectionism and would crush the hopes of economic reformers throughout Latin America. I agree with economist Tyler Cowen: “This is probably a treaty we should pass, but it is not a treaty we should be proud of.”...

Posted by DeLong at July 6, 2005 03:11 PM