By James C. Capretta
Monday, October 24, 2016
President Obama is pressing to have the Trans-Pacific Partnership (TPP) approved by the Republican-controlled Congress — after the election. He’s right that it should be approved. But if it isn’t, and it might not be, there will be plenty of blame to go around in both parties.
The problems for the TPP — an agreement among twelve countries, including Canada, Mexico, Japan, Australia, and New Zealand, in addition to the U.S. — start with Donald Trump, Bernie Sanders, and Hillary Clinton. Trump has based much of his campaign on his view that the TPP and every other previous trade deal has been negotiated by incompetent U.S. officials. Sanders argued during his run for the Democratic nomination that basically all international trading arrangements are giveaways to the rich and corporate interests at the expense of working people. And Clinton, after supporting TPP as secretary of state, switched to opposition without ever offering any kind of detailed or clear reason for her flip-flop. The anti-trade push by these three candidates has dominated the national discussion on the issue for well over a year now.
But TPP’s problems don’t end there. As the anti-trade rhetoric has heated up, there has been almost no one on the national stage willing to push back on the misleading arguments that have been made.
The GOP candidates competing with Trump were especially feeble in this regard. They largely went silent when Trump went on his repeated anti-trade rants during the primary debates. Not one of them stepped forward in any kind of sustained and meaningful way to challenge Trump’s false claim that trade deals in general, and the North American Free Trade Agreement in particular, were damaging for the U.S. economy, despite the abundant evidence that, on balance, trade has led to stronger economic growth, more employment, and higher living standards for those in the U.S. and throughout the world. Senator Ted Cruz went so far as to reverse his support for free trade and mimic Trump’s anti-trade bluster midway through the campaign season, in the hope it would help him win the nomination. Like Clinton, he never did explain this flip-flop.
Governor John Kasich recently penned a strong op-ed for the Washington Post in support of TPP. He argued, correctly, that the failure to ratify the agreement would undermine the U.S.’s leadership position among the world’s advanced economies. But it is fair to ask where Kasich was with this argument during the GOP primaries. He did not agree with Trump on trade, but like the other candidates, he largely deflected the issue and he even echoed Trump’s broadsides about China’s role in the international trading system.
For his part, President Obama has become an advocate for the TPP and for U.S. leadership on trade liberalization, but it is a bit of a late-in-life conversion. He was far more circumspect about the benefits of trade deals before he became president. While a U.S. senator, he frequently criticized the Bush administration on trade using the same arguments made by the labor unions today against the TPP. He voted against the Central American Free Trade Agreement (CAFTA) in 2005, saying the administration had not done enough to help workers retrain to be competitive in the global economy.
Now, as president, he supports more liberalized trade without coupling it with any kind of additional retraining program. He also makes the case for trade only at the moments that are most convenient for him politically. Trade has always been a divisive issue among Democrats, and the president has not been willing to push the issue to the point of creating a break with his core supporters. Which is why his criticism of Clinton has been tepid, and why a vote on the TPP, if it occurs at all, will happen only after the election in November.
Defending trade shouldn’t be that hard. For starters, most Americans have a positive view of trade, despite the one-sidedness of the debate over the past year. Nearly 60 percent of those polled say they view trade as more of an opportunity than a threat for the U.S. economy. Further, the claim made by Trump and others that trade agreements have destroyed jobs and hurt growth is plainly false. The U.S. is already a very open economy; the main effect of trade agreements, including NAFTA, has been to open other markets to U.S.-produced goods and services, to the great benefit of U.S. workers and consumers. Global trade has increased U.S. productivity growth and GDP growth and adds substantially to the purchasing power of the American consumer.
The TPP would also boost the U.S. economy. According to estimates, approval of the agreement would increase U.S. GDP by about 0.5 percent when the agreement is fully implemented around 2030 — not a large amount, but certainly enough to make approval worthwhile. While no large change in overall employment from the agreement is expected, there would be some shifting of jobs between industries and an overall increase in average wages.
The U.S. has provided crucial leadership for more liberalized trade over the past seven decades, to the great benefit of the U.S. and world economy. Free trade increases productivity and incomes and provides consumers with choices that improve their lives. Now the world is wondering whether the U.S. is abandoning its leadership role. China and others are ready to fill the vacuum and push for global arrangements that are far less beneficial for U.S. workers.
The rules for global trade are always in a state of flux, as countries modify their approaches to changing circumstances. The world can either continue to the long-term trend toward greater liberalization of trading rules, and therefore toward stronger growth and productivity improvement, or it will drift toward more protectionism. If the U.S. waffles on the direction it wants to take and abandons its role as the leading advocate for free and fair trade, the rest of the world will surely take this as a cue that the time has come for it to move toward more protectionism as well. More global-trade restrictions would only exacerbate the slow-growth malaise now plaguing the world’s most advanced economies.
There is no good reason to oppose the TPP and every reason to support it. It is a good agreement for the U.S. economy, and an important agreement for strengthening alliances with countries that are willing to embrace fair and open markets. But if it is rejected nonetheless, the blame will lay in part at the feet of those in both political parties who know the case is strong but were too afraid to make it when it mattered most.