Speech
before the Los Angeles World Affairs Council on 20th September, 2000:
Steve
Forbes
President
and CEO, Forbes Inc.
The
key to growth and stability-economic and otherwise-is free international trade
Free
and open markets expand choice and lower cost.
Increased competition enhances what is good in a market and diminishes
what is bad free trade is nothing less than a tool to improve the quality of
life.
It
does so efficiently, effectively, more seamlessly than any other way we know;
and at the will and the speed of those who choose to participate.
Its success does not depend on coerced participation; it does not rob
Peter to pay Paul.
Its
benefits do not rely on the questionable intentions of a merry band of
self-important experts. Free trade
is the economic expression of moral freedom-and, reciprocally, it is one of the
most important pillars supporting that freedom.
Free
trade is a policy open to any country that chooses to follow it.
And the evidence is clear:
Let
me put all that another way: I really, really like free trade.
Free
trade associations are always a sound idea.
Today, I am focusing on Britain, Ireland and the European Union.
Presidential candidate Bush proposes to expand NAFTA and I support that.
But the EU is at the proverbial crossroads and therefore it is timely to
examine what it is becoming and where it is going.
Will it be primarily a free trade association or will it ultimately be a
"ruled from the top" political union? More immediately for us, will it be increasingly
protectionist against the U.S. To have the EU take a positive trade path is
obviously essential. If the EU does
it right we can expect it to be a positive model to businesses in the Americas
and in Asia.
The
EU as an entity aimed solely at increasing trade has any number of positives-the
textbook advantages we know that free trade brings.
The EU would reduce trade barriers and border obstacles, invigorate
competition, lower the cost of interaction, and the list goes on.
But
there is a major political element here, too, going well beyond matters of
trade. The EU has grown into an
overtly and explicitly statist exercise whose goal is to create a new, political
super-state or union.
London
and Dublin are being drawn-or are moving under their own power, depending on the
issue-deeper and deeper into the statist aspects of the European Union.
And
it is easy to see why. From certain
casual points of view, the political elements of the EU are attractive
opportunities, and they have become stealthy as they have been mixed UP into the
basic elements of the original premise of a free trade association.
The typical man on the street does not immediately appreciate the vast
difference between lowering trade barriers and the surrender of national and,
ultimately, individual-sovereignty that comes with a united currency, common
monetary policy, and coordinated economic efforts.
And all this surrender is made to seem even more benign-and the outcomes
even more attractive-by the powerfully appealing possibility of overcoming
historic differences in order to create a united-and peaceful federation of
peoples.
Whether
or not the United Kingdom goes along with the more political parts of the EU
remains to be seen. Regardless of
the outcome, Britain is still going to suffer under the influence of the
Ireland
and Great Britain should have free European trade. Free trade associations are always good.
But this should not preclude or defeat a drive to create a co-existent
North Atlantic Free Trade Zone.
This
is an alliance for the U.K. that also complements that country's economic
policies, its historic interests, its foreign policy concerns, and its domestic
priorities. In addition, such an
alliance would provides a counterweight to the statism of Brussels.
I
propose a North Atlantic Free Trade Zone-an expanded version of NAFTA-that joins
the United States with Great Britain and the Republic of Ireland. Instead of
shoe-homing the U.K.'s capitalist economy into the largely statist, socialist
economies of Europe, the sensible choice is for Great Britain and Ireland to join
nations with similar economies. Moreover,
we already know that other countries poised to join the EU want deeper ties to
the West. With increased North
Atlantic trade, Britain would have an even greater built-in advantage with these
nations.
THE VALUE OF AN ATLANTIC ALLIANCE
Strengthening
the alliance between the United States, Great Britain, and Ireland-and expanding
the economic and political cooperation between our countries-must be a top
priority for the next U.S. Administration.
Simply
put: If Britain is strong, secure, and sovereign, America benefits. If Britain is weakened economically or militarily, then
American interests suffer.
Likewise,
if the U.S. is strong, secure and sovereigns the U.K. and the rest of the world
will benefit enormously. But if the
U.S. is weakened or withdraws from the world stage, then the U.K. and the rest
of the world are in serious trouble.
It's
just that simple.
The
key to the prosperity of our nations is free
trade, and the expansion of free markets. This empowers consumers and businesses with immensely greater
freedom, choices and opportunities.
Free
markets create jobs and wealth for working families. Every time the U.S. increases our exports by $1 billion, we
create 20,000 good, high-paying jobs.
Wages go up.
Unemployment
goes down. Working families, small
businesses, and high-tech entrepreneurs are better off.
THE
EUROPEAN WAY IS NOT THE BRITISH WAY
On
the other hand, Europe makes a poor economic match for Great Britain.
Subsuming the British and Irish economic systems into a unified system
directed largely by Germany and France could doom prosperity in the United
Kingdom.
France
and Germany subsidize employment, and create disincentives to work via taxes and
benefits.
And
let's not mince words. The notion
of the so-called "Third Way" of Europe is socialism on a slower
timetable-and it won't work.
Statism
is a guarantee of stagnation. There
is simply no example in the world of a socialist government that has succeeded
in the long run - or even one that has succeeded in the short run-without taking
away fundamental economic choices of the citizens.
The
"Third Way" is no more than industrial policy with a populist face on
it-putting the government in charge of picking winners and losers. Government divides the business
The
Microsoft case is an example of this technique: attack the leader, win the
support of its rivals, go in for the kill, accept the accolades.
But
that's never the end of the story.
When
government picks winners and losers, it's as if Godfather Vito Corleone has done
you a favor. And he doesn't want
any payback today, but someday....
This
may be the Clinton-Gore way... it may be the new approach in the world to
implementing statism... it may be the "Third Way"... but it is not the
British way.
Centralization
may be the fashion in Brussels, but London and Dublin know better.
The United Kingdom is the bearer of a tradition that rightly elevates
autonomy and the rule of law over the sweeping plans and bruising interventions
of the elite.
Great
Britain is the bearer of the tradition of common law, going back to the Magna
Carta. The British tradition is not the top down, bureaucratic European
tradition. This is not to say that other European nations are not-or cannot
be-democracies, but their governments are more centralized and more regulatory. By folding itself into the EU, Great Britain is beginning to
cede its position as the world's repository for the common law tradition.
The
idea of having a supra-national entity headed by Brussels is antithetical to the
very essence of the United Kingdom.
Britain
Ireland the U.S., Canada, Australia and New Zealand-we share a commonwealth, as
Churchill said, of ideas. We are in
danger of losing the keystone of that system to bureaucratically minded
politicians and their allies
BRITAIN
AND THE U.S. MAKE AN EXCELLENT MATCH
Contrast
the connection between Britain and the rest of Europe with the obvious match
between Britain and the U.S.
Historically,
we have shared strong common interests. We
share a common basis of our law. Our
goals are similar for the same reasons our economics are similar: we share a
language and cultural elements.
We
hold the same things dear: a commitment to human rights, to liberty, to the
fight for freedom around the world, to the autonomy of men and women and their
right to make decisions for themselves and their families.
And
for over two hundred years, with only the briefest of unpleasant engagements, we
have occupied the same side of history, most recently and notably as our two
countries helped lead the world into the decline of communism and the rise of
democracy during the Reagan-Thatcher
THE
U.S-U.K. NUMBERS
Consider
for a moment the nuts and bolts of the U.S.-U.K. economic relationship. Deep
commercial ties between our two countries are already in place.
And the numbers are overwhelming.
The
U.S. is the U.K.'s single largest trading partner.
In
1998, the U.K. imported more than $ 1
00 billion in goods and services from the U.S.,
Canada, and Mexico. And the
U.K. exported about $65 billion to North America.
The
U.S. accounts for about 90 percent of the U.K.'s trade with North America.
Together,
we are the world's largest providers of foreign direct investment, and the
largest receivers of foreign direct EWMW investment.
We
are also each other's largest source of foreign investment. And consider the
benefits of a North Atlantic NAFTA.
According
to the U.S. International Trade Commission, such an alliance would increase
imports from the Britain and Ireland to the U.S. by anywhere from 7 to 12
percent.
It
would increase exports from the U.S. to the U.K. by 11 to 16 percent.
It
would diminish government spending in the U.K.-in comparison to the spending
mandated by the EU.
It
would enhance existing ties and build new ones between our complementary
societies.
And
it would support the spread of democracy.
THE
UNDENIABLE FORCES OF CULTURE
Change
must go to the root if it is to last, and support for such change simply does
not exist in Britain and Ireland. Polling
shows that the British people hold profound skepticism about the EU and the
future of the euro.
Polling
also shows that most in Britain see the U.S. as their most reliable ally.
Can
governments change? Of course they
can. Can people change? Definitely.
But
change required subsuming themselves politically into the EU will be an enormous
burden for the British people.
History
is at work here, and we should recognize it. Progress is in the direction of
liberty, not central guidance from government.
Yet
for Great Britain and Ireland to fully participate in the EU, this is just the
direction they would move in - more government and bureaucratic control - the
antithesis of their current, successful system of market capitalism.
The
risk is simply too great for the United Kingdom.
Statist tendencies in many of these countries are reactions to a history
of instability that is not a part of the British experience.
For Britain to accept the crutches and casts of the EU-and most
immediately, EU economics-is rather like an individual in good health assenting
to not exercise, to put on excess weight and to take up smoking.
THE PROBLEMS OF UNION FOR BRITISH POLICY
Clearly,
the EU is about far more than breaking down trade barriers.
It's about politics.
EU linkage would mean an ongoing reduction in
sovereignty-EU directives and European Court decisions erode sovereignty.
Great
Britain and Ireland would be subsumed into European power under the direction of
Brussels and Strasbourg. Decisions
would be made with London's interests considered secondarily to European
interest. Look at how adversely
Brussels has reacted to Ireland's low businesses taxes - intense hostility.
That's what all of the talk of "tax harmony" is all about -
taking more money from the people.
The
European Union wants to "harmonize" economic policy throughout the
region. What that really means is
forcing sovereign people to accept higher taxes, more regulations, more
bureaucracy, top-down social policy, massive redistribution of income, and the
end of the British pound, one of the great and enduring currencies in world
history.
Don't
get me wrong, it is fine for these other nations to give up their currencies.
There are advantages to paring down from eleven currencies to one.
But that doesn't mean Britain has to be a part of it.
The most important quality of currency is its stability, and Britain has
nothing to gain by sacrificing its own currency's stability for some sort of
continental esthetic purity.
RAMIFICATIONS
FOR FOREIGN POLICY
In
the matter of foreign policy, it is worth noting that Britain is the only major
European country recognized as having a consistent foreign policy.
It should also be noted that if the EU had been empowered at the time of
the Gulf War, it likely would have voted against military action there.
It is just as likely that Britain would have had a great deal of
difficulty finding support-or, to put it another way, permission-to prosecute
the Falklands campaign.
There
are four possible outcomes for European security under the EU, and here I cite
Conrad Black. As many of you know,
Conrad Black is Chairman and CEO of Hollinger International, and an author and
commentator of some renown.
First,
the EU could assume its fair share in defending the world.
Second,
EU policy could be ineffectual.
Third,
EU policy could obstruct the ability of the U.S. to defend Europe.
And
fourth, the EU could diminish U.S. power and weaken NATO, making Europe
vulnerable to attack and reducing the U.S. ability to respond.
One
is tempted to say that there is
a fifth possibility-that things will stay the same.
But considering the nature of the union, this is simply not going to
happen. The EU is a linkage that
demands fundamental shifts in priorities economic and otherwise-by the
participating nations. It is an
economic union on the road to political union.
Therefore,
the means of security for Europe becomes an issue that's on the table-dangerous
enough in itself. But is also
brings us back around to economic ramifications.
If Europe shoulders more of the burden of its own security, that costs
money. If the U.S. is hindered in
its defense of Europe, Europe is in danger.
So is America. And so is the
world-no one need remind Europe of their geographic convenience for the work of
war.
The
picture is further complicated by another fact that we ought to recognize: a lot
of EU enthusiasm is driven by resentment of United States dominance-resentment
that is not nearly as strong in the U.K. as it is in France and Germany which,
not coincidentally, comprises the current axis of power of the EU.
FRIEE
TRADE: EXPANDING AND POWERFUL
Having
said all that, I want also to say that there are certain limited elements of the
EU that can prove positive for Great Britain and Ireland.
After all, the EU was begun as a project of free
market advocates to enhance trade in the region and around the world.
This is the sort of move we are seeing all over the world, and it's a
very good thing.
There's
Mercosur in South America, which includes Brazil, Argentina, Paraguay and
Uraguay. There's the Andean group,
which includes Bolivia, Venezuela, Colombia, Ecuador, and Peru.
These nations could and should be a part of a larger version of NAFTA.
Chile should be a part of NAFTA, too-this should have happened years ago.
Let's trade with South America, Central America, and Latin America.
Let's reach out to Australia and Japan.
And
there's already a very good notion in play today-a building block that fits in
exactly with the idea I'm proposing to you-to establish a Free Trade of the
Americas region, extending from Alaska to Argentina.
Free
market and rule-of-law nations should stick together.
Our common economies reflect common goals and interests. And the expansion and extension of capitalist ideas is a
building block in the spread of democracy.
The
establishment of an Atlantic free trade zonewould be a flanking move around the
WTO. It would obliterate obstacles
to trade, doing more business with each other.
Unless
the nations of Europe act to enhance trade-and move toward free-market
principles-they are in danger of becoming someday soon, an economic backwater.
CREATING THE ALLIANCE
The
smartest course for Great Britain and Ireland is to opt in only for specific EU
policies that make sense for them as individual nations.
Let the United Kingdom participate in Europe without being submerged in
Europe.
To
begin this process, I suggest that Great Britain make use of her veto right in
the EU, and leverage her account deficit with EU to negotiate reciprocal access.
And, naturally, I suggest that Great Britain and Ireland withdraw from EU
political and judicial institutions.
Where
the EU is becoming a political union, NAFTA is a free-trade association only.
By joining NAFTA, Britain wouldn't give up sovereignty any more than the
U.S. does. 45 percent of Canada's GDP is trade with the U.S. and it does not
suffer any of the interference with sovereignty that Great Britain and Ireland
endure under the EU.
NAFTA
operates on the cooperation of governments, and employs not a single bureaucrat.
Consider
the lever that this union would give Great Britain and Ireland to change, reject
or set aside the interventionism of the EU. Just a whiff of the notion that Great Britain was considering
such a union would enhance their position at the EU bargaining table.
Dublin
and London are not yet completely
FREE
TRADE ACROSS THE ATLANTIC... NOW
The
barrier that lies before us is not the Atlantic Ocean.
It's big government. It's an
ocean of taxes, tariffs and fees that prevents working families and consumers
from enjoying the full benefits of economic freedom.
We
would be wise and forward-looking if we built a bridge of economic freedom that
spans the Atlantic Ocean. A bridge
that links London with Los Angeles... Dublin with Detroit... Edinburgh with
Pittsburgh... a toll-free bridge that brings new benefits to both sides of the
Atlantic. Lower taxes and higher
wages... fewer gatekeepers and faster growth... less government and more freedom
for farmers and families and a new generation of savers and investors.
Together,
we can tear down the barriers that divide us, and build a bridge to unite us...
and our united strength will help strengthen the
It
is time to show the world that the ReaganThatcher model offers true economic
liberation for those who languish in poverty and economic stagnation-be they in
Russia, Asia, Africa, Latin America, the Middle East, and even on the continent
of Europe.
Other
countries may propose limits. Let
us pursue growth.
Others
may empower big government bureaucracies. Let
us empower the individual and the family.
Free
markets, free elections, free trade-these are the tools of free people.
They are the hallmarks of authentic freedom, and they are the
cornerstones of our nations.
It
is time for a Northern Atlantic Free Trade