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Douglas Holtz-Eakin Headshot

America's Young Need Trade Agreements

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Imagine that, in 1800, the 17 states comprising the United States decided that the new territories expanding on their western borders represented an existential economic threat. Those territories were providing competing employment opportunities, threatening established markets, and luring away the entrepreneurial. Why should the established 17 states permit cheaper products to flood its markets, take advantage of the infrastructure the East had paid for, or let the eastern banks finance such competition. Why not build a trade barrier to preserve what had been accomplished by shedding British rule?

Of course, that's not what happened. A century of westward expansion was viewed -- correctly -- as an opportunity. The ability to sell the manufactured wares of the East for the cheaper agricultural products in the West proved an economic boon to both sides. The competition of immigrants, both to the U.S. and into the new West, was not hampered, and powered economic growth in both areas. Ultimately, upstarts like California and Texas grew into economic powers in their own right, while eastern stalwarts like New York prospered simultaneously.

This is an important lesson for the decisions facing the United States today. The President is pushing trade agreements with the Pacific basin and Europe alike. To seal the deal effectively, the Congress must bestow the President the ability to negotiate a deal that will be voted on, but not modified by the Congress known as Trade Promotion Authority (TPA). The fearful are skeptical, arguing that lowering trade barriers will further damage the wobbly U.S. labor market.

Our labor market is certainly not on sound footing. The broadest measure of unemployment remains in double digits, while real wage and income growth has been dismal. But as was true in 1800, this decision should be viewed through the lens of decades or centuries. Where will the markets of 2114 be? No one can know for sure, but with 95 percent of the world's customers outside the U.S. borders, they certainly are not likely to be disproportionately in red or blue states.

The U.S. Trade Representative estimates that every $1 billion in goods and services exported from the U.S. supports nearly 5,000 jobs. Jobs supported by these exports pay 13 to 18 percent more than the national average. With youth unemployment in the double digits, the jobs created and strengthened by free trade agreements are vital to ensuring the success of America's young.

Enacting trade agreements is part of meeting the generation challenge -- the obligation of every generation to leave to the next a country that is more affluent and more secure than it inherited -- to be at the table as the next rounds of trade agreements are settled. Why sit on the sidelines and assure that our young and their children get saddled with an unfair deal? Why sit idly by while other aspiring powers parcel out the future purchasing power of the developed, developing and underdeveloped world? Instead, we should heed the lesson of history and take advantage of this opportunity to shape the economic playing field to the favor of children's children.

In doing so, they are likely to be more secure as well. Over the postwar era, the GATT (General Agreement on Trade and Tariffs) and WTO (World Trade Organization) processes knitted together a western alliance against the hegemonic aspirations of the Soviet Union. Looking again to the roots of the United States, it is far from the case that the various geographies of our country had entirely common interests; yet the potential for economic gain helped to hold us together while the U.S.S.R. could not compete with the western alliance.

Why not have greater global economic bonds, especially with democratic countries that share our values?

It is easy to frame trade and TPA decisions by the local politics of the moment. It is better to realize that they are part of the global intergenerational politics of the future. They are part of the quest to do right by America's young.