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Free Trade and Free Enterprise

June 01, 2015

“As conservatives, we have always believed in free trade—because free trade is essential to free enterprise.” That was part of the message from Chairman Ryan to his Republican colleagues this morning. Trade debates invariably get muddied by misinformation from those whose reflex is to oppose new trade agreements. It’s easy to lose sight of what’s really at stake. For conservatives, though, the core of the trade promotion authority (TPA) debate comes down to a fundamental issue: free enterprise.

Without TPA, there cannot be free trade agreements. Or at least not those that tear down major trade barriers and allow markets to flourish, anyway. And free trade encapsulates so many of the principles of what it means to be a free-market conservative.

Lower taxes

Perhaps the most straightforward goal of free trade agreements is to lower tariffs and duties on goods and services moving from one country to another. These tariffs are effectively taxes. So when we break down tariffs, we lower taxes on Americans buying products here, and we lower taxes on American goods moving abroad, making U.S. products more competitive. Lower barriers means lower taxes.

Markets and Competition

Customers should pick winners and losers, not governments or bureaucrats that stack the deck for particular goods or countries. Free trade is about leveling the playing field. It’s about rooting out cronyism and special treatment. It’s about tearing down the barriers to a free market. We know that American workers can compete with anyone when given the chance. Trade agreements give them that chance.

Rule of Law

Conservatives understand that markets cannot work without the rule of law. Things like enforceable contracts and property rights are what hold together a system of supply and demand. Free trade agreements raise other nations to our standards and ensure American goods and services are competing with countries that play by the rules. We know that nations like China would like to see an economic system based on cronyism and market manipulation. That’s why it’s so important that the United States write the rules of the global economy.

Upward mobility 

Nothing has done more to lift people out of poverty and into higher standards of living than free enterprise. Economic liberalization holds tremendous power to improve people lives around the world. As Chairman Ryan said in remarks earlier this year, “Only in the free-enterprise system is it true that ‘the condition of your birth does not determine the outcome of your life.’ The American Idea—that, without question, is our most valuable export.”

With free markets at the center of any trade debate, its no surprise that Democrats often find themselves in a stand-off. At the same time, this is why so many conservatives stand ready to vote for TPA. As Chairman Ryan wrote this morning. “These principles may divide our Democratic colleagues, but they unite us. We should embrace them.”