News reports often make dubious claims about trade and international commerce.

Here’s one example from the Associated Press: “A narrower trade gap boosts growth because it means U.S. companies are earning more from overseas sales while U.S. consumers and businesses are spending less on foreign products.”

This widely reported explanation is easy to disprove. “In recent years, our economy has performed better when the trade gap increases than when it narrows,” Heritage Foundation expert Bryan Riley explains.

In fact, he continues: Continue Reading »

There has been no boost in trade freedom over the last year, according to the forthcoming 2013 Index of Economic Freedom.

The global level of economic freedom rose steadily for 15 years, according to the Index, which Heritage publishes annually with the Wall Street Journal. Since 2011, however, economic freedom has stalled at a score of 74.5 out of 100. The United States recently fell from the ranks of free countries and is now classified as “mostly free.”

The Heritage Foundation’s Bryan Riley and Ambassador Terry Miller explain that increased economic freedom improves prosperity. Continue Reading »

Our nation’s unemployment rate is an important focus for the upcoming Presidential election. It’s also been a potent campaign tool, as both parties have accused the other of “outsourcing” and “sending jobs overseas.”

“Outsourcing” continues to make headlines. But an important question goes unaddressed: what are its real consequences?

According to The Heritage Foundation’s Amy Payne, outsourcing opponents fail to understand “the reality of jobs in America, and the ways to bring even more jobs to the home front.” Continue Reading »

“Government interference in the sugar market hurts consumers and food manufacturers” and should therefore be repealed, The Heritage Foundation’s Bryan Riley explains.

The federal government artificially inflates sugar prices, putting a limit to how much food manufacturers and consumers within the U.S. can purchase from outside the country. Raw sugar imported beyond the quota is penalized by a  prohibitive tariff of 15.36 cents per pound.

This meddling hurts “by driving up the price of sugar, threatening competitive farmers and ranchers by jeopardizing export growth, and weakening the U.S. economy by diverting resources from more competitive uses.”

Continue Reading »

Photo: Flickr/msun523

Opponents of free trade–including those who opposed to the important trade deals that passed last week–often argue that “unfair” foreign competition has the potential to harm local businesses and destroy jobs.

But a new Heritage Foundation study reveals a very different picture. Heritage’s Bryan Riley and Terry Miller illustrate the benefits of free trade:

Special interest groups often complain that “unfair” foreign competition destroys jobs, but countries with the highest trade barriers have nearly twice the unemployment rate of countries with the most trade freedom. In the United States, the trade deficit and the unemployment rate usually have an inverse relationship. When the trade deficit increases, the unemployment rate decreases, and vice versa. For example, in 2009, the U.S. trade deficit shrank by 46 percent, and the unemployment rate increased by 60 percent.

The report also notes that trade opponents claim free trade agreements only benefit the rich and corporations. But this ignores the fact that poverty rates are lower in countries with low trade barriers–meaning everyone benefits from access to goods from abroad.

In the face of America’s massive deficit, the government should not sacrifice the potential for economic growth through tariffs and trade regulations. Jobs will be generated, but only if the market is fueled by the freedom and opportunity that free trade provides.

What do you think? Should America engage in more free trade?