On “Free Trade” Agreements

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The free trade [sic] agreement between Peru and the US was signed recently. There’s no doubt that some trade will be increased, sure. But this is far from free. It’s managed trade. It’s not unrestricted trade between any willing buyer and any willing seller. Indeed, you can read the text of the agreement here and draw your own conclusion.

The agreement consists of several sections filled with legalese. Take, for instance, the 43-page section about textiles and apparel which is filled with “free trade” language such as this:

At the request of an interested entity, the United States shall, within 30 business days of receiving the request, add a fabric, fiber, or yarn in an unrestricted or restricted quantity to the list in Annex 3-B, if the United States determines, based on information supplied by interested entities, that the fabric, fiber, or yarn is not available in commercial quantities in a timely manner in the territory of any Party, or if no interested entity objects to the request.

That sure sounds like freedom to me.Further down, we see references to more managed trade:

If the United States determines before the date of entry into force of this Agreement that any fabrics or yarns not listed in Annex 3-B are not available in commercial quantities in the United States pursuant to section 112(b)(5)(B) of the African Growth and Opportunity Act (19 U.S.C. § 3721(b)), section 204(b)(3)(B)(ii) of the
Andean Trade Preference Act (19 U.S.C. § 3203(b)(3)(B)(ii)), or section
213(b)(2)(A)(v)(II) of the Caribbean Basin Economic Recovery Act (19 U.S.C. § 2703(b)(2)(A)(v)(II)), the United States may, after consultation with the Parties, add such fabrics or yarns in an unrestricted quantity to the list in Annex 3-B.

A truly free trade agreement would consist of one page and it would eliminate all tariffs and quotas and everything else. Let buyers and sellers come to mutual terms. That’s it. These so-called free trade agreements give a bad name to the idea of truly free trade as they are often bathed in rampant protectionism.

8:28 am on May 31, 2008