Trading Free

The GATT and US Trade Policy

Patrick Low
Release Date: June 1, 1993

A generation ago, the teaching of macroeconomics in many American classrooms did not involve any analysis of international flows of goods and services. The reasoning behind this approach was straightforward: the amounts involved were statistically trivial compared to the immense gross domestic product of the United States. Although Americans had the largest part of the total global commerce, it was relatively unimportant to the prosperity of the United States.

Today, student of our economy are obsessed with America’s place in global commerce. Indeed, in what is still by far the world’s largest economy, concern and even anger about international competition is becoming an increasingly powerful political force. One would be hard put to find in Congress the optimistic consensus that animated the largely American-designed postwar economic order, the Bretton Woods system. Then, of course, the American giant–sole possessor of the atomic bomb and production of 40 percent of the world’s wealth–believed that free trade and Western-style business, under American leadership, would modernize the world.

This belief in the blessings that would come from American economic supremacy has been shaken as international competitors claim ever-larger slices of the global economic pie. Even the apparent demise of communism has failed to restore American confidence in its economic future. As international competition has increased, so too has the debate in this country between free traders and protectionists. The possibility of a global paradise seems as far away as ever. And it may take stronger trade relations and organizations in the future for America to maintain some economic stability among her world competitors.

In Trading Free, Patrick Low, makes a strong case against too much emphasis on trade negotiations as a zero-sum game, with winners and losers and the future of the GATT. He believes that the reductions in barriers to trade that have been accomplished since World War II have contributed to the high standard of living in this county and to desirable economic progress among our allies. In this thoughtful and provocative study, he sets out the background and clarifies the issues that will be debated by policymakers today, and classes tomorrow