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Tech Industry

Protectionism never works

Instead of erecting new trade barriers, CEA chief Gary Shapiro says it's time to retreat from the rhetoric of protectionism and fear.

The story of American trade in the Digital Age is one of stunning success.

Our national commitment to the principles of openness and competitiveness has generated tens of thousands of high-paying jobs in a technology sector that is the envy of the free world. At the 2008 International CES (Consumer Electronics Show) in Las Vegas, we're witnessing first hand the amazing fruits of that commitment.

How then, in the face of this well-documented and ongoing success, are protectionists gaining so much traction by criticizing trade and calling for a return to a utopian, isolationist past that never was?

As it turns out, they're part of a long, if not proud, tradition.

Protectionists throughout history have had great success exciting passions by appealing to fear: fear of lost jobs, fear of cultural dilution, and fear of the other. Protectionist rhetoric is a proven vote getter, so it's no surprise to see it dusted off and trotted out like clockwork every election cycle.

What protectionists don't have is a track record of being right.

In all of the passionate antitrade polemic spewed forth in the coming months, you won't hear about the many instances of great historical successes in protectionism. Why?

Because managing trade and picking winners and losers is rarely the path to prosperity. One need look no further than the atrophied economy of North Korea for an extreme modern example of this failed economic ideology. Closer to home, our own forays into protectionist policies--most famously the Smoot-Hawley Tariff Act of 1930--have exacerbated some of our most crushing economic downturns. That dynamic remains very much in place today, and is supported by the most up-to-date economic evidence.

In its World Development Indicators 2007 report, the World Bank found countries that did the "worst" job of opening their borders to international trade witnessed substantial drops in gross domestic product, while countries that performed the "best" experienced sizable economic growth.

In real terms, what that means to Americans is that a free trade environment provides American innovators with a global market for their ideas and products. It also ensures that American companies can continue creating the high-paying, highly skilled jobs that are most desirable to American workers. In 2005, the consumer electronics industry alone helped add 30,000 American jobs.

Free trade means that working Americans have access to life-changing technologies at affordable prices. In 1975, the average American household had one consumer electronics device. Today, that number has grown to 25. These are our computers, our mobile phones, our music players, DVD players, and televisions. Three-quarters of all American households with Internet access at home now subscribe to broadband Internet service--bringing the world into their homes at lightning speed. Imagine the impact on our quality of life and productivity if we were denied access to these devices or limited to only one.

From a global standpoint, trade--particularly in the high-tech sector--means development, access to information, spreading democratic ideals, and forging ties of friendship and commerce with developing nations. In a networked world, cell phones and Internet devices have become a prerequisite for informed global citizenship. Trade helps people in developing countries get the tools they need to participate and thrive and these tools are coming to life in Las Vegas.

Appearing this week at the International CES is a new approach to wireless networking--making it both affordable and simple to deploy wireless broadband access across neighborhoods and villages and an SMS-based information system that allows farmers to check the price of their goods--enabling millions of producers to know the true market value of their crops.

In the coming months and years, Congress and the American people will have a choice to make. Either we build on the progress we have made in the global marketplace by ratifying new bilateral trade agreements with Colombia, Panama, the Republic of Korea, and others, and seeking to reauthorize Trade Promotion Authority; or we turn back the clock, walling off America from the rest of the world and from the global markets that have fueled our success.

Some 140,000 people, including over 25,000 from 140 countries, will pass through the halls of the International CES this week, marveling at the latest technological advances, meeting colleagues, sharing ideas and striking deals. In many ways, it is a tiny microcosm of the global trading environment it represents. Just as Las Vegas benefits from being at the nexus of that environment, so too has the United States benefited from its leadership role in international trade.

The competitive global marketplace is not always pretty, or easy to navigate, but it is our best and only hope for retaining the global innovation leadership that has been such a boon for our country and its citizens. America is a great nation, and a great nation should not shy away from the necessary challenge of adapting and excelling in an increasingly interconnected world.

We should consider very carefully what abandoning that role would mean, before our hard-won gains are swept away by the rhetoric of protectionism and fear.