Free trade is once again in the headlines and it is worth repeating why such agreements are useful. To start with, there is the guaranteed access for poor countries to the large markets of the rich, more wealth creation, along with the jobs, environmental improvements, and growing wages that result over time. In addition, there is one other advantage to free trade that is often overlooked: successful trade agreements - when adhered to - liberate taxpayers in rich and poor countries alike from subsidy-loving politicians and corporations.

Worldwide, governments routinely throw vast sums of money at business and justify the tax dollars because of the subsidies other countries provide. One chronic example is the aerospace industry. Brazil has provided an interest subsidy of between $2.3 million and $5.3 million per regional jet sold by Embraer. Six years and a thousand jets later, Brazil's taxpayers have pumped as much as $5.3 billion into their aerospace industry under just one subsidy program, this in a country with per capita income that is one-third that of Canadians. In Canada, Bombardier has received $396 million in research and development subsidies from Canada's taxpayers since 1986.

The World Trade Organization has repeatedly ruled that Brazil's subsidies are illegal and also slapped Canada on this issue. The result has been a reduction in subsidies in both countries though not their complete elimination as of yet. (Bombardier argues their subsidies ended in 1996 and that they will repay at least what they have received. Still, companies that take subsidies early on are hardly the best advocates for a subsidy-free world. Meanwhile, Brazil continues to skirt the WTO where possible.) Imperfect as existing free trade bodies may be, their existence is preferable to a world where countries would engage in all-out subsidy wars at taxpayers' expense.

For example, as large as aerospace subsidies are, they pale in comparison to business subsidies in general that are not yet banned by international free trade agreements. The United States alone spends $100 billion annually on corporate welfare while Canada's federal and provincial governments allocate $4.9 billion every year. While no global figure is available for the European Union, that continent's governments have long subsidized multiple industries at the expense of taxpayers. In 1997, the EU committed to pour $3.1 billion worth of subsidies into Europe's shipbuilding industry. Between 1989 and 1996, the EU's automotive industry received $9.1 billion in subsidies while railways took in $233 billion in taxpayer cash in the early 1990s.

And then there is the mother of all subsidized trade: agriculture. According to the OECD and the Fraser Institute, total taxpayer and consumer transfers in just 1999 totalled $143 billion in the United States, $7.3 billion in Canada, and $187 billion in the European Union. The total for the 24 richest OECD nations equalled $484 billion. The per capita EU breakdown was $499 compared to $520 in the United States and $242 per person in Canada.

While taxpayer pork is always politically attractive for politicians and one industry in the short-term, an end to taxpayer subsidies across the world is crucial. This is especially necessary given that corporate welfare is proportionally more expensive for poorer countries and outright risky for lightly populated countries such as Canada, which would be thrashed by an all-out subsidy war on a number of fronts all at once.

Besides the unfairness of transfers from one set of taxpayers to their potential competitors, the simple fact is that we don't have enough taxpayers to finance a multi-front subsidy war, as the history of continually losing the agricultural subsidy battle to the Americans and the European Union amply demonstrates.
Free trade is not only good sense for the poor and for economic growth; it also makes sense for taxpayers.