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"If we increase the number of H-1B visas that are available to U.S. companies, employment of U.S. nationals would likely grow as well. For instance, Microsoft has found that for every H-1B hire we make, we add on average four additional employees to support them in various capacities."
Bill Gates,
Testimony before the Committee on Science and Technology, US House of Representatives,
March 12, 2008.

June 19, 2006

Trade Policy Analysis no. 33

Leading the Way: How U.S.Trade Policy Can Overcome Doha's Failings

by Daniel J. Ikenson

Daniel Ikenson is associate director of the Center for Trade Policy Studies.
He is coauthor of
Antidumping Exposed: The Devilish Details of Unfair Trade Law (Cato Institute, 2003).

Executive Summary

The relationship between openness to trade and economic growth is today well documented. Study after study has shown that countries that are more open to trade grow faster than those that are relatively closed. But four and a half years after the launch of the World Trade Organization's Doha Development Agenda, with its goals of further reducing barriers to trade in goods and services, prospects for an auspicious outcome look remote.

But increased trade does not require new trade agreements. Through unilateral liberalization, policymakers can achieve the U.S. objectives of the Doha Round: better opportunities for American businesses,more affordable products for consumers, improved prospects for farmers and producers in developing countries, alleviation of poverty, and greater international receptivity to U.S. policies.

At 1.4 percent in 2005, the average applied tariff rate in the United States is relatively low. But that average obscures the fact that duty rates on many products are in double-digit percentages, which discourages importation of those products and keeps domestic prices higher than they would be otherwise. Most of the products subject to high U.S. tariffs are necessities such as clothing, footwear, and food, all products to which lower-income families devote a larger proportion of their budgets than do higher-income families. Those are also the products that developing countries are likely to produce and export.

U.S. tariffs and quotas are not assets to be relinquished only in exchange for better access abroad. In fact, they are liabilities that raise the costs of production for U.S. producers and the cost of living for American consumers.

Convincing a Congress that is growing more skeptical about trade of the merits of unilateral liberalization will require some new thinking. But on moral grounds alone, there should be every reason to expect bipartisan support for a plan that would cut the most regressive U.S. taxes, reduce wasteful government spending, boost economic prospects for U.S. firms, and give the developing world a better chance to share in the benefits of the global economy.


Text of Trade Policy Analysis No. 33 (PDF, 24 pgs, 260 kb)



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