Should U.S. Sign Free Trade Agreement with Colombia?

There are currently three trade agreements that have been pending in Congress:  Colombia, Panama and South Korea.  Many people concerned about the results of our free trade policies – our enormous trade deficit – have come out in opposition to all three agreements. 

The blind application of “free trade” as a trade policy is just as dumb as an over-aggressive application of protectionism.  An intelligent trade policy employs both in those cases where one or the other is warranted.  The determining factor is population density.  Free trade works well when dealing with nations that are not significantly more densely populated than our own.  But when dealing with badly overpopulated nations, it’s tantamount to economic suicide.

So, while only a fool would sign a free trade agreement with South Korea (or, for that matter, any kind of agreement that doesn’t assure a balance of trade), a nation almost 15 times as densely populated as the U.S., trade with Colombia is an entirely different story.  Here’s a graph depicting our balance of trade with Colombia, broken into several major categories:

trade-with-colombia

Colombia’s population density is almost the same as our own.  My theory predicts an approximate balance of trade in manufactured goods with a nation like Colombia and that’s nearly what we have.  (The U.S. actually has a small trade surplus in that category.)  No American worker has anything to fear from free trade with Colombia. 

Of course, there may be other political reasons why we want to withhold such an agreement as leverage to encourage progress on some other issue.  In the case of Colombia, there’s concern about workers’ rights to organize and violence toward union activists.  But if those issues are resolved, free trade would represent a win-win for both nations. 

There are a relatively few cases where the application of tariffs is the only mechanism that can restore a balance of trade.  But if the use of such protectionist measures is the exception instead of the rule – if we implement free trade agreements with the majority of nations where it makes sense – then a global trade war can be averted while putting America back on a sound financial footing.  Colombia is one of those cases.

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One Response to Should U.S. Sign Free Trade Agreement with Colombia?

  1. […] "Five Short Blasts" Forum added an interesting post today on Should U.S. Sign Free Trade Agreement with Colombia?Here’s a small readingThere are currently three trade agreements that have been pending in Congress:  Colombia, Panama and South Korea.  Many people concerned about the results of our free trade policies – our enormous trade deficit – have come out in opposition to all three agreements.  The blind application of “free trade” as a trade policy is just as dumb as an over-aggressive application of protectionism.  An intelligent trade policy employs both in those cases where one or the other is warranted.  The determin […]

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