Blog No. 98. Is Free Trade a Lame Duck or a Dead One?

History may record various casualties of the 2016 presidential campaign and, indeed, the very existence of the Republican Party may prove to be the most important. A lesser but still highly significant casualty may be our policy favoring free trade agreements in general and, specifically, approval of the proposed Trans-Pacific Partnership.

Almost exactly two years ago, we published Blog No. 36  “Free Trade Agreements: Good Policy–and Good Politics for Republicans.” That blog discussed two related proposals: Trade Promotion Authority (TPA) and the Trans-Pacific Partnership (TPP). The TPA provided a fast track for Congressional approval of a trade bill while the TPP referred to a giant trade agreement then under negotiation with eleven other countries.  Both were sponsored by the Obama administration, but ironically (and perhaps uniquely) both enjoyed far more support in Congress from Republicans than Democrats. Congress subsequently passed the TPA but has not acted on the TPP. The latter continues to be strongly advocated by the President and the business community, but it is opposed by each of the remaining presidential candidates: Trump, Clinton and Sanders. The TPP has become a lame duck whose continued viability may depend, ironically enough, on a lame duck session of Congress. PIC lame duck tpp 2 cropped

The TPA fast track was passed by Congress and signed by the President in June of last year. The support for the bill in Congress was, as expected, overwhelmingly Republican. (It passed the House 218-208 with only 28 Democratic votes and the Senate 60-37 with only 13 Democratic votes.) The TPA requires Congress to consider legislation implementing a free trade agreement under expedited procedures, pursuant to which it may come to the floor without action by the leadership, and can receive a guaranteed up-or-down vote with no amendments. Congress has ninety days in which to act following official submission to it by the President. After ten years of negotiation, agreement on the TPP was finally reached last fall, and it was signed by President Obama in February of this year. But the President has not yet placed it on the fast track created by the TPA by submitting it to Congress and it is not clear when he will do so.

Our 2014 blog described the TPP as good policy and good politics and we continue to believe that it is good policy. The politics, however, have become considerably more difficult. During the current Republican and Democratic campaigns, free trade agreements became a convenient scapegoat for the economic challenges and hardships experienced by the middle class. With regard to the TPP in particular, Trump described it as a “horrible deal” and Bernie Sanders has claimed that it “could cost America 448,000 more jobs.” When Hillary Clinton was Secretary of State she had praised the TPP enthusiastically as the “gold standard” of trade agreements, but as a candidate she has opposed it with increasing vigor. (The non-partisan analysts at Politifact rated her change of position a “Full Flop on our Flip-O-Meter.”) Clinton’s initial opposition to the TPP, as stated last Fall, had been somewhat tentative, allowing some, including the head of the United States Chamber of Commerce, to believe that she would change her position after the election. As the primaries wore on, however, her position has hardened enough to make such a reverse flip seem quite unlikely.

PIC Pres Candidates say no to TPP

Nevertheless, President Obama has continued to express his strong support for the TPP, arguing in a May 2 op-ed column in The Washington Post  that:

This agreement strengthens America’s economy. The TPP brings together 12 countries representing nearly 40 percent of the global economy to make sure that private firms have a fair shot at competing against state-owned enterprises. It keeps the Internet open and free. It strengthens the intellectual property protections our innovators need to take risks and create. And it levels the playing field by setting the highest enforceable standards and by removing barriers to selling our goods overseas — including the  elimination of more than 18,000 taxes that other countries put on products made in America. Simply put, once the TPP is in place, American businesses will export more of what they make. And that means supporting more higher-paying jobs.

In addition, strong backing for the TPP has come from various segments of the economy and the defense community. For example, on May 4, trade groups from Silicon Valley issued an open letter, urging approval of the TPP. The groups represented key industry leaders including Apple, Google, Facebook, Uber, and Amazon. On another front, NPR reported that “a coalition of more than 200 agricultural groups drafted an open letter urging congressional leaders to approve the TPP, saying the trade deal will help U.S. farmers stay competitive in an increasingly crowded world market.” The Wall Street Journal reported on April 28 that “Eight former secretaries of defense signed a letter asking congressional leaders to pass the Trans-Pacific Partnership, or TPP, as a way to renew American leadership in the Pacific as China flexes its economic and military muscle.”

We believe that the benefits from the TPP clearly outweigh potential risks to American workers. The estimate of job loss cited by Senator Sanders is far greater than other estimates, and it took no account of jobs that will be gained if the agreement is implemented. Admittedly, the current debate has led to recognition, even among advocates of free trade, that while free trade produces strong economic benefits, some workers are inevitably hurt.

As The Economist put it succinctly, “Free trade still deserves full-throated support, even if greater care needs to be taken of those it hurts.”  The editorial went on to explain:

More could be done to help workers who lose jobs to find new ones, through job exchanges and courses to add to skills. In America’s panoramic jobs market, there may be a case for providing relocation grants for workers hurt by trade. A big gripe of displaced workers is that an alternative job in the service sector does not pay as well or come with the same health-care or pension benefits that big manufacturers used to provide. That is a strong argument for a system of portable benefits that go with workers when they change jobs. A system of wage insurance might have merit.

Similar suggestions were offered by William A. Galston writing in The Wall Street Journal on May 10 under “Rethinking In the Politics of Trade.”

We support thorough consideration of measures to mitigate the hardships arising from free trade agreements. It is unlikely, however, that such measures can be developed, evaluated and approved by the end of this year. And, given the positions of Trump and Clinton, it appears that if the TPP is not approved in the Obama administration, it may well be lost for good. A May 5 column in Fortune debunked any notion that either Hillary Clinton or Donald “Art of the Deal” Trump could readily improve the terms of the TPP:

The bottom line: The next president of the United States is not going to send the current agreement to Congress in its current form. It might take years to get to a new agreement, were that even possible, and that would be a long shot.

The question then is whether the agreement can be approved before the end of the year. At one point, President Obama had indicated that the TPP would be submitted to Congress after the Democratic primary season. More recently, it has appeared that the likely target is the lame duck session after the November election. Indeed, Hillary Clinton recently went out of her way to say specifically that she would oppose consideration of the agreement in that period. If Donald Trump should be the President-elect, he would doubtless take the same position but say it more loudly. Trump is hardly a slave of consistency, but his open disdain for free trade agreements has been central to his campaign.

Finally, we note that, apart from losing the important economic benefits of the TPP, a rejection scrapping years of negotiations will produce serious collateral damage: lasting harm to the reputation of the United States as a reliable negotiating partner.

3 thoughts on “Blog No. 98. Is Free Trade a Lame Duck or a Dead One?

  • Is this an issue on which Rinocrats and rational democrats can come together? While there is no reason to cavil with the premise that there are net benefits, that leaves the question whether the suffering of many is simply to be written off as collateral damage that they should silently accept. Similar challenges arise with miners that are victims of an economically necessary move away from coal that threatens the future of our children and grandchildren. If we come together on real programs for new training and roles for the adversely affected- rather than wait and see or unemployment benefits-maybe we can escape the retreat from free trade. The net benefits must be shared by investing them in the future and favoring the displaced workers not with handouts.

    Responsible democrats and republicans must find ways to govern in a rational way. We must find ways to do deals. We also must listen to the hurt and anger in the white working class who are so vulnerable to change and no longer have union protection. The failure of either party to be creative and compromising is responsible for the popularity of Trump and Sanders. It behooves the educated and the 1% to recognize that the anger will continue to grow if Congress continues to focus on partisan purity.

  • Great post Doug. Free trade agreements, including the TPP, are clearly in the best interest of all Americans as well as iourvtrading partners throughout the world. My guess is that Obama will urge congrssional approval of the TPP before the end of his presidency. Yet it may face a very difficult time in the EU since several member countries, including Gerrnany, are supposedly against it, and all EU members must approve before it goes into effect. Hopefully, if elected, Clinton will flip again and throw her support in favor, then use America’s influence to bring Europe on board. The notion that free trade kills US jobs is ridiculous. One study done by our government calculated that failure to adopt the TPP would cost the average US household over $6,000 a year. Trade barriers are bad, period. Trump, Sanders and, to a lesser extent, Clinton rail against free trade to pander to ignorant working class voters, using it as a convenient scapegoat for our ecomomic problems and prejudices. Unfortunately many of these voters are impetvious to facts. Sanders is the worst pandeter of the bunch. Lets keep our fingers crossed that he drops out soon and that Trump — the man who wants to build a wall, deport millions of undicumented immigrats, and ban Muslims from emigrating to our country, including doctors, scientists and other highly accomplished people — goes down in flames in November. Clinton will come around, esp. with Bill as First Man.

  • That same Economist piece cited very persuasive data for the net benefits the US has received from the NAFTA agreement, despite the job losses that were caused by that agreement and the bad press that agreement has had from Trump, Clinton and Sanders. Their suggestion of new programs to help those hurt by free trade, although hard to establish in the current political environment, seems a much better step than to reject free trade.

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