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.
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