The perils of a trade-first US foreign policy

Abstract

The end of the Cold War, the advent of globalisation, and new horizons in trade theory, all seem to point out to the need for a new American economic strategy. Indeed, for many they beg for the implementation of economism as the new US foreign policy doctrine. The managed trade policy (1993-1996) of forcibly opening foreign markets for the benefit of corporate America showed much of what is wrong with a trade-first agenda in foreign affairs: it accomplished nothing in terms of economic gain while creating dangerous spillovers into other foreign policy areas--such as political and security bilateral relationships--thus endangering the broader goals of US foreign policy. A foreign policy that puts trade at the top of the agenda is unwarranted, probably unsustainable, and ultimately counterproductive. Moreover, it is hardly the most important tool by which the economic wellbeing of most Americans can be enhanced. The return of low productivity figures and a slowing American economy may well rekindle calls for a policy of managed trade. Such calls must be rejected and the lessons of the recent past must be heeded.