For example, much of the antagonism in U.S.-China trade relations has been over intellectual property protection. However, such antagonism is symptomatic of a more fundamental misperception, which undermines the basis of more productive trade relations, with China and other nations. Questions pertaining to intellectual property protection are about the definition and enforcement of property rights, whereas questions pertaining to international trade are about the exchange of goods and services over which property rights are already well established. As Bhagwati puts it, “Intellectual property protection has to do with collecting royalties, not with trade.” The point here is not to argue whether or not intellectual property rights should be enforced, but simply to establish that these are distinct issues, evidenced by the fact that another international organization, the World Intellectual Property Organization (WIPO), was established precisely to deal with legal matters regarding intellectual property. Moreover, it is also to make clear that the issue of intellectual property protection, which is often tied up with free trade, is actually a symptom of corporations using trade relations as a Trojan horse to rent-seek, namely by lobbying to sneak in trade-unrelated agendas in the name “free trade.” For example, pharmaceutical companies in the United States and other developed countries have lobbied for intellectual property protection, which protects their ability to charge higher prices in poorer countries. This, according to Irwin, “opens the door to many interests to use the threat of trade sanctions to achieve their own non-trade objectives, and thus puts the WTO in the business of enforcing behavior only tangentially related to trade.” Such preoccupation over the definition and enforcement of intellectual property undermines the WTO’s original purpose, which is to focus on the reduction of trade barriers. Moreover, clarifying this distinction between the enforcement of intellectual property rights and free trade, and separating these policy issues between the WIPO and the WTO, respectively, would make current trade negotiations with China far more productive. Thus, the proliferation of PTAs in the name of “free trade” have only undermined the American tradition of multilateralism in trade policy due to crony capitalism, which jeopardizes the Biden agenda of reopening the economy onto the road of recovery.
The case for a U.S. policy of multilateral free trade is not just about economic growth for the least advantaged in society or reestablishing America’s political credibility in the international community. Perhaps most importantly, such a policy is in the best interest of the United States as a whole, since it provides the instrument necessary for international peace and decreasing the likelihood of a shooting war, not just a trade war, with China—or any other country for that matter. This principle has been known since the Enlightenment as the “doux-commerce thesis.” As Montesquieu states in The Spirit of the Laws: “Commerce is a cure for the most destructive prejudices; for it is almost a general rule that wherever we find agreeable manners, there commerce flourishes; and that wherever there is commerce, there we meet with agreeable manners.” It is therefore no coincidence that the shooting war that took place internationally in the 1940s was preceded by an international trade war during the 1930s, which hastened the closure of the global economy as countries retaliated against each other with tariffs in an effort to shield themselves from the Great Depression. Moreover, it is easy for Americans to forget that, in the aftermath of World War II, what is known today as the European Union emerged out of the European Coal and Steel Community, established in 1950 between France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg. The purpose of this community, as stated by one of its architects, Robert Schuman, was declared in what is now known as the “Schuman Declaration” of May 9, 1950: “The solidarity in production thus established will make it plain that any war between France and Germany becomes not merely unthinkable, but materially impossible.” Thus, the benefits of free trade are not only economic and political but also social.
Having made the policy case for multilateral free trade, how can the United States reclaim this lost tradition in trade policy? The answer requires restoring the constitutional basis for free trade. There are at least three ways in which to find the case for international free trade in the U.S. Constitution. One way, according to economists Milton and Rose Friedman in their book Free to Choose, is to modify Article I, Section 10, which currently specifies the following:
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress.
Since the economic benefits of free trade apply to individual states, which were free and independent prior to the Union, and did not change after their political relationship changed, then it stands to reason that this economic principle still applies to individuals in Michigan or New York when they trade with individuals in Italy or China. Hence, the Friedmans proposed the following amendment: “Congress shall not lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws.”