[Congressional Record Volume 147, Number 52 (Tuesday, April 24, 2001)]
[Extensions of Remarks]
[Pages E619-E620]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               FREE TRADE

                                 ______
                                 

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                        Tuesday, April 24, 2001

  Mr. PAUL. Mr. Speaker, I commend to the attention of members an 
editorial appearing in today's Wall Street Journal which is headlined 
``Free Trade Doesn't Require Treaties''. The column is authored by 
Pierre Lemieux, a professor of economics at the University of Quebec.
  Professor Lemieux seems to grasp quite well what few in Congress have 
come to understand--that is, ``The primary rationale for free trade is 
not that exporters should gain larger markets, but that consumers 
should have more choice--even if the former is a consequence of the 
latter.'' Mr. Lemieux went on to point out that the leaders of the 34 
participating states in the recent Quebec summit ``are much keener on 
managed trade than on free trade and more interested in income 
redistribution and regulation than in the rooting out of trade 
restrictions.''
  The professor's comments are not unlike those of the late economist 
Murray N. Rothbard, devotee of the methodologically-superior Austrian 
school, who, with respect to NAFTA, had the following to say:


       [G]enuine free trade doesn't require a treaty (or its 
     deformed cousin, a `trade agreement'; NAFTA is called an 
     agreement so it can avoid the constitutional requirement of 
     approval by two-thirds of the Senate). If the establishment 
     truly wants free trade, all it has to do is to repeal our 
     numerous tariffs, import quotas, anti-dumping laws, and other 
     American-imposed restrictions of free trade. No foreign 
     policy or foreign maneuvering in necessary.


  In truth, the bipartisan establishment's fanfare of ``free trade'' 
(and the impending request for fast track authority) fosters the 
opposite of genuine freedom of exchange. Whereas genuine free traders 
examine free markets from the perspective of the consumer (each 
individual), the mercantilist examines trade from the perspective of 
the power elite; in other words, from the perspective of the big 
business in concert with big government. Genuine free traders consider 
exports a means of paying for imports, in the same way that goods in 
general are produced in order to be sold to consumers. But the 
mercantilists want to privilege the government business elite at the 
expense of all consumers, be they domestic or foreign.
  Mr. Speaker, again I commend Mr. Lemieux's column and encourage the 
recognition ``that free trade is but the individual's liberty to 
exchange across political borders.''


             [From the Wall Street Journal, Apr. 24, 2001]

                  Free Trade Doesn't Require Treaties

                          (By Pierre Lemieux)

       Montreal.--Three-quarters of a century before the Summit of 
     the Americas convened in Quebec City last weekend, John 
     Maynard Keynes marveled at globalization. ``[T]he inhabitant 
     of London could order by telephone, sipping his morning tea 
     in bed, the various products of the whole earth. . . .'' 
     Keynes wrote. ``[H]e could at the same time and by the same 
     means adventure his wealth in the natural resources and new 
     enterprise of any quarter of the world. . . . [H]e could 
     secure forthwith, if he wished, cheap and comfortable means 
     of transit to any country or climate without passport or 
     other formality.''
       The decades preceding World War I were a period of 
     globalization that was at least as extensive as today's. To 
     the extent that the proposed Free Trade Area of the Americas 
     (FTAA) moves this continent to ward freer trade, it would 
     help recover the lost promise of the pre-1914 world. But the 
     Quebec summit sent conflicting messages, none of them 
     revolutionary.
       The leaders of the 34 participating states showed that they 
     are much keener on managed trade than on free trade, and more 
     interested in income redistribution and regulation than in 
     the rooting out of trade restrictions. ``The creation of a 
     free trade area is not an end in itself,'' said Canadian 
     Prime Minister Jean Chretien.
       With excruciating political correctness, he added: ``We 
     have focused on a global action plan of co-operation to 
     reduce poverty, protect the environment, promote the adoption 
     of labor standards and encourage corporate

[[Page E620]]

     responsibility.'' The participants' ``Plan of Action'' 
     contained measures that range from tobacco regulation and gun 
     control to the monitoring of financial transactions.
       What of the ``no passport'' world celebrated by Keynes? In 
     Quebec, as at other international trade meetings, state 
     representatives behaved as agents of their country's 
     exporters. You give us this ``concession,'' they intone, and 
     we will allow your exporters to enter our markets in return. 
     Yet this misrepresents grossly the nature of trade and a free 
     economy.
       The primary rationale for free trade is not that exporters 
     should gain larger markets, but that consumers should have 
     more choice--even if the former is a consequence of the 
     latter. By presenting themselves as members of an exporters' 
     club, trade negotiators lay themselves open to attack by 
     those who claim that free trade only works to the benefit of 
     corporations.
       Economists have known for centuries that free trade can be 
     promoted without free-trade agreements. A country's 
     inhabitants would obtain many of the advantages of free trade 
     if only their own government would stop imposing restrictions 
     on imports. Behind the veil of financial transactions, 
     products are ultimately exchanged against products, so that 
     the more imports that come into a country, the more will 
     foreign demand grow for its exports. Or else, foreign 
     exporters will have to invest in the country, thereby 
     creating a trade deficit; nothing wrong with that either.
       In other words, if you want free trade, just trade. Much of 
     the pre-World War I free trade was, indeed, due to Britain's 
     unilateral free-trade policies.
       Trade agreements are only helpful to the extent that they 
     help tame domestic producers' interests, support the primacy 
     of consumers, and lock-in the gains from trade. Such treaties 
     should not aim at reducing competition by pursuing other 
     goals, of the sort embraced by the heads of state at Quebec. 
     That would amount to no more than managed trade, the pursuit 
     of which, paradoxically, might be said to unite both the 
     leaders present and the mobs demonstrating against them.
       William Watson, a Canadian economist, has noted in the 
     Financial Post that the demonstrators who don't trust 
     governments to negotiate free trade come, contradictorily, 
     from political constituencies generally known for their blind 
     faith in government. As for the small group of anarchists, 
     they apparently do not realize that closed borders, and the 
     prohibition of capitalist acts between consenting adults, 
     actually increase state power.
       On one stretch of Saturday's march, demonstrators wore 
     large bar codes taped to their mouths, as if free trade meant 
     turning them into speechless numbers. How droll! These 
     demonstrators were certainly, and perhaps proudly, carrying 
     in their wallets government-imposed Social Security numbers, 
     drivers' licenses and Medicare cards, which, surely, have 
     made them numbered state cattle. Another fabulous irony: 
     American would-be demonstrators complained about being denied 
     entry into Canada, while their entire message is predicated 
     on tighter borders.
       Once we realize that free trade is but the individual's 
     liberty to exchange across political borders, it is easy to 
     see that forbidding it requires punishment or threats of 
     punishment. You have to fine or jail the importer who doesn't 
     abide by trade restrictions. In FTAA debates as in other 
     trade issues, a source of much confusion is the failure to 
     realize that free trade is a consequence of individual 
     sovereignty.

     

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