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Free Trade

The CEA has been traveling around the country highlighting the benefits of free trade. You can follow the tour on the CEA blog.

If you’re interested in trade and how it will fare in the next administration, the Wall Street Journal is running an online back-and-forth between McCain and Obama’s trade advisors.

Free trade is not only threatened by protectionist political forces, but from the rising costs of oil, as the New York Times documents:

Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex …

To avoid having to ship all its products from abroad, the Swedish furniture manufacturer Ikea opened its first factory in theUnited Statesin May. Some electronics companies that leftMexicoin recent years for the lower wages inChinaare now returning toMexico, because they can lower costs by trucking their output overland to American consumers.

One of the big questions heading into the next few years is whether the run-up in oil prices is indicative of a larger, more urgent and irreversible supply crunch (so-called “peak oil”) or just a cyclical supply/demand issue.