Breakingviews: U.S. economy casts a vote for free trade

Published Fri, Oct 28 20163:35 PM EDT

Breakingviews

Gina Chon

The U.S. economy just cast a vote in favor of free trade. Third-quarter GDP indicates 2.9 percent growth, the fastest rate in two years. Exports helped offset mediocre consumer spending. Both presidential candidates have vilified trade to varying degrees but this sort of data illustrates the political upside. More from Breakingviews : Exxon reserves tap into Big Oil's next crisis Anemic expansion during the first half of the year is now picking up steam. The latest figure probably will be revised, but for the time being at least it's the best performance since the third quarter of 2014, when growth reached 5 percent, according to the U.S. Bureau of Economic Analysis. The increase in the three-month period ending Sept. 30 is an especially healthy result considering the weakening of consumer spending. The component usually comprises two-thirds of economic output. Its growth halved from the second quarter to 2.1 percent. At the same time, goods and services shipped abroad grew by 10 percent, the biggest increase in nearly three years. It contributed more than 0.8 percentage point to GDP in the third quarter. It also helped reduce the trade deficit by 5.2 percent in September. A surge in soybean sales to overseas buyers led the way. The United States is the world's largest producer, and would experience a 35 percent decrease in tariffs as part of the pending Trans-Pacific Partnership deal, according to U.S. trade negotiators. Republican Donald Trump has vowed to scrap TPP while his Democratic rival Hillary Clinton wants to renegotiate it. Under Trump's protectionist policies, other countries may retaliate. China, for example, could stop buying soybeans from the United States, leaving Brazil in position to benefit. The concept of less restricted trade also is under attack globally. The IMF in October warned about a recent slowdown in exports and imports that could hurt already tepid economic growth. World trade has increased by only 3 percent a year since 2012, less than half the average rate over the previous three decades. The Obama administration is urging Congress to approve TPP before he moves out of the White House. Many lawmakers are balking in response to the populist national sentiment. Appreciation for how free trade helps the economy may be the last hope. For more independent commentary and analysis from Reuters Breakingviews, visit breakingviews.com

Shipping containers are offloaded from a cargo ship at Port Everglades in Fort Lauderdale, Florida.

Getty Images