Where’s the Trade?

by on April 10, 2008 · 6 comments

At Matthew Yglesias’s suggestion, I’m perusing the terms of the US-Colombia trade deal. As Matt points out, a lot of this stuff has little or nothing to do with trade. I’ve already pointed out the problems with including provisions in “free trade” agreements dictating changes in Colombia’s copyright and patent laws. But it seems to me that’s far from the only non-trade-related provision in the agreement. For example:

An Open and Competitive Telecommunications Market: Users of Colombian telecom networks are guaranteed reasonable and nondiscriminatory access to the network. This prevents local firms from having preferential or “first right” of access to telecom networks. U.S. phone companies obtained the right to interconnect with Colombian dominant suppliers’ fixed networks at nondiscriminatory and cost-based rates.

Now, it seems to me that when we force American telecommunications companies to provide “the right to interconnect” with competitors “at nondiscriminatory and cost-based rates,” many libertarians denounce it, with good reason, as “infrastructure socialism.” I don’t know anything about Colombia’s telecommunications market. Perhaps they’ve got a less competitive telecommunications market than we do, or maybe I’m misreading the details of the proposal. But the broader point is that this has absolutely nothing to do with trade, free or otherwise. Whether or not mandatory interconnection is good policy, a trade agreement seems like a lousy forum for deciding on it. At most, the rules should say that any interconnection policies Colombia might enact should apply equally to domestic and foreign firms, but it sounds like they’re going considerably beyond that.

There’s lots of other stuff in here that has nothing to do with free trade. There are the now-obligatory environmental and labor standards. There’s “Trade Capacity Building,” which appears to involve giving US taxpayer dollars to Colombian businesses. Even the stuff I’m inclined to think are good ideas on the merits, such as “Fair and Open Government Procurement,” don’t seem to have any obvious relationship to the standard arguments for free trade. If the Colombian government wants to squander Colombian taxpayer money on inefficient domestic contractors, that’s not a good thing but it’s also not a trade barrier.

Of course, there are some genuine trade liberalizations in there, and they may be significant. But as special interests pile more and more unrelated provisions into these agreements, I think it becomes harder and harder to expect people to support them simply based on fundamental arguments about comparative advantage. Whatever arguments might be made in favor of “state-of-the-art protections for digital products such as U.S. software, music, text, and videos” or “programs for small and medium-sized enterprises and farmers, and programs for improvements in transportation infrastructure and telecommunications,” they certainly have little to do with anything David Ricardo wrote.

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