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VI. Ignite a New Era of Global Economic Growth through Free Markets and Free Trade

A. Summary of National Security Strategy 2002

Promoting free and fair trade has long been a bedrock tenet of American foreign policy. Greater economic freedom is ultimately inseparable from political liberty. Economic freedom empowers individuals, and empowered individuals increasingly demand greater political freedom. Greater economic freedom also leads to greater economic opportunity and prosperity for everyone. History has judged the market economy as the single most effective economic system and the greatest antidote to poverty. To expand economic liberty and prosperity, the United States promotes free and fair trade, open markets, a stable financial system, the integration of the global economy, and secure, clean energy development.

B. Current Context: Successes and Challenges

The global economy is more open and free, and many people around the world have seen their lives improve as prosperity and economic integration have increased. The Administration has accomplished much of the economic freedom agenda it set out in 2002:

Seizing the global initiative.  We have worked to open markets and integrate the global economy through launching the Doha Development Agenda negotiations of the World Trade Organization (WTO). The United States put forward bold and historic proposals to reform global agricultural trade, to eliminate farm export subsidies and reduce trade-distorting support programs, to eliminate all tariffs on consumer and industrial goods, and to open global services markets. When negotiations stalled in 2003, the United States took the initiative to put Doha back on track, culminating in a successful framework agreement reached in Geneva in 2004. As talks proceed, the United States continues to lead the world in advancing bold proposals for economic freedom through open markets. We also have led the way in helping the accessions of new WTO members such as Armenia, Cambodia, Macedonia, and Saudi Arabia.

Pressing regional and bilateral trade initiatives. We have used FTAs to open markets, support economic reform and the rule of law, and create new opportunities for American farmers and workers. Since 2001, we have:

Pressing for open markets, financial stability, and deeper integration of the world economy. We have partnered with Europe, Japan, and other major economies to promote structural reforms that encourage growth, stability, and opportunity across the globe. The United States has:

Enhancing energy security and clean development. The Administration has worked with trading partners and energy producers to expand the types and sources of energy, to open markets and strengthen the rule of law, and to foster private investment that can help develop the energy needed to meet global demand. In addition, we have:

Several challenges remain:

C. The Way Ahead

Economic freedom is a moral imperative. The liberty to create and build or to buy, sell, and own property is fundamental to human nature and foundational to a free society. Economic freedom also reinforces political freedom. It creates diversified centers of power and authority that limit the reach of government. It expands the free flow of ideas; with increased trade and foreign investment comes exposure to new ways of thinking and living which give citizens more control over their own lives.

To continue extending liberty and prosperity, and to meet the challenges that remain, our strategy going forward involves:

1. Opening markets and integrating developing countries.

While most of the world affirms in principle the appeal of economic liberty, in practice too many nations hold fast to the false comforts of subsidies and trade barriers. Such distortions of the market stifle growth in developed countries, and slow the escape from poverty in developing countries. Against these short-sighted impulses, the United States promotes the enduring vision of a global economy that welcomes all participants and encourages the voluntary exchange of goods and services based on mutual benefit, not favoritism.

We will continue to advance this agenda through the WTO and through bilateral and regional FTAs.

2. Opening, integrating, and diversifying energy markets to ensure energy independence.

Most of the energy that drives the global economy comes from fossil fuels, especially petroleum. The United States is the world’s third largest oil producer, but we rely on international sources to supply more than 50 percent of our needs. Only a small number of countries make major contributions to the world’s oil supply.

The world’s dependence on these few suppliers is neither responsible nor sustainable over the long term. The key to ensuring our energy security is diversity in the regions from which energy resources come and in the types of energy resources on which we rely.

Our comprehensive energy strategy puts a priority on reducing our reliance on foreign energy sources. Diversification of energy sources also will help alleviate the “petroleum curse” – the tendency for oil revenues to foster corruption and prevent economic growth and political reform in some oil-producing states. In too many such nations, ruling elites enrich themselves while denying the people the benefits of their countries’ natural wealth. In the worst cases, oil revenues fund activities that destabilize their regions or advance violent ideologies. Diversifying the suppliers within and across regions reduces opportunities for corruption and diminishes the leverage of irresponsible rulers.

3. Reforming the International Financial System to Ensure Stability and Growth

In our interconnected world, stable and open financial markets are an essential feature of a prosperous global economy. We will work to improve the stability and openness of markets by:

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