TRADE WINDS-It’s rather poignant to watch President Obama fight to uphold the legacy of Bill Clinton while Hillary Clinton coyly refuses to join in, lest she offend the very same regressive forces within her party that the Clintons were once eager to confront and vanquish.
Obama is spending a good amount of his remaining political capital selling the nation on an ambitious free trade deal that would bind together a dozen Pacific nations in the Americas and East Asia. This so-called Trans-Pacific Partnership (TPP) would represent 40 percent of the world’s GDP and a potentially valuable counterweight to Chinese influence in Asia. (China is not a party to the proposed agreement.)
In pushing so passionately for this deal, Obama is following Bill Clinton’s 1990s playbook. Clinton, who faced down the Democratic Party’s organized labor constituency to adopt the North American Free Trade Area and help establish the World Trade Organization, embraced the notion that the outside world offers the United States more of an opportunity than a threat.
Presidential candidates (including Barack Obama in 2008) courting narrow constituencies tend to make anti-trade talk. But America hasn’t had a truly protectionist president since Herbert Hoover and the Great Depression. That’s no accident. When it comes to the nation’s overall welfare, the economic case in favor of expanding trade is simply too overwhelming to ignore if you sit in the Oval Office. And then there is the national security imperative: It is hard to lead the world if you are afraid to trade with it.
But in our political realm, trade has become to many on the left what immigration is to the right: the convenient foreign scapegoat for everything people uncomfortable with change are upset about. This is mostly about feelings, and mostly our feelings about those people. Call it bipartisan xenophobia: Conservative Republicans unfairly demonize foreigners in this country; liberal Democrats unfairly demonize foreigners in other countries.
Those opposing the trade deal disingenuously accuse the administration of shrouding its pernicious giveaway to corporations and foreigners in unprecedented secrecy. Never mind that sensitive treaty negotiations between nations are always conducted behind closed doors, and that presidents have been granted congressional authority to negotiate such deals and refer them to Congress for a straight up-or-down vote since the 1930s.
Headline writers at The Economist penned an Onion-esque headline for a story on the pushback on trade Obama is facing from his usual allies on the left: “Fighting the Secret Plot to Make the World Richer.”
But Obama is understandably more exasperated than amused, snapping that Massachusetts Sen. Elizabeth Warren, a leading critic of the trade deal, is simply “wrong on this,” and that his fellow Democrats need to “dig into the facts” on the subject.
The president has correctly noted that the TPP would level the playing field for American exporters, like U.S. automakers, providing them better access to countries like Japan, whose own exports already have good access to our domestic market. He’s also right in arguing that critics of globalization tend to overstate the extent to which trade agreements are responsible for the disruptive power of broader market forces.
Much of the manufacturing outsourcing and the surge of Chinese imports over the past two decades had little to do with any specific trade deal. For that matter, people tend to overstate the impact of globalization on wages and employment, while understating the impact of technology (and its productivity dividends). Better to blame foreigners than our cool new devices for whatever ails us.
One of the arguments for the TPP, and for greater economic engagement with Asia, is that there is no setting back the clock on globalization. The United States can either choose to remain a close partner to Asia and the prime architect of the world’s economy and trading system, or step aside and allow China to take the lead on both fronts.
TPP critics are also attacking efforts to harmonize standards—environmental regulations, foreign investment limits, property rights—across borders. They’re accusing Obama of doing the bidding of large multinational corporations. However, as we understood in the Clinton era, we don’t live in a populist zero-sum dystopia. Sometimes, what’s good for big business can also be good for the rest of us, too. The European Union is the classic example of how efforts to harmonize and regulate standards across borders can dramatically shore up the rule of law in many nations, both for citizens and business.
Closer to home, Clinton’s much-maligned North American Free Trade Agreement led to an explosion in trade within North America. Mexico is now the second-largest buyer of American goods on earth, importing more U.S. goods than all of the once-heralded “BRIC” countries (Brazil, Russia, India, and China) combined.
Democrats in Congress who oppose their president on TPP, and a similar proposed deal with the European Union, should all read a recent Wall Street Journal story on how Mexico became the fourth-largest exporter of cars in the world. Mexico has attracted more than $20 billion in new investments by automakers and parts suppliers in recent years. The American South has also been successful in attracting foreign automakers’ investment, but most of their recent investment decisions, including by companies deciding whether to expand existing U.S. or Mexico operations, have gone Mexico’s way.
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The reason cited for Mexico’s edge wasn’t the old story about labor costs. It was the fact that Mexico has something precious the U.S. does not have: free trade agreements, beyond NAFTA, with many of the world’s largest economies, including the European Union. The lead example in the story was Audi’s decision to build its Q5 for all markets in Mexico instead of the U.S., because the company doesn’t want to pay the costly tariffs it would need to bring a U.S.-made car back into Europe.
The current TPP fight, like many of our other debates around trade, is stuck in a caricature-ish and outdated view of a global economy neatly divided between north and south, one in which it is unreasonable (so goes the labor unions’ argument) to ask us affluent folks in the global north to compete with those striving underpaid poor people in the global south.
The fact is that by 2030, an estimated two-thirds of middle-class consumers in the world will live in Asia. It would be self-defeating for the United States to retreat from its free-trading agenda just when the purchasing power of consumers elsewhere reaches new highs—and overshadows our own. There has never been a better time to invest in high-paying export jobs.
Both corporate America and the public seem to get this, even as the political debate would suggest a vast divide between them. A recent Gallup survey shows 58 percent of Americans see increased trade as an opportunity, with only 33 percent seeing it as a threat. But Obama, who enjoys rare GOP backing on this issue, needs to bring along a face-saving number of Democrats to close the deal. Hillary Clinton advocated for the TPP as Secretary of State, but now ducks whenever asked about it, worried as she is about being outflanked on the left.
Which leaves her husband. My free trader’s dream consists of Bill getting a hall pass from his wife’s campaign (or maybe slipping his security detail?) to speak out, on behalf of his own legacy.
(Andrés Martinez is the editorial director of Zócalo Public Square … where this piece was first posted … and a professor at the Walter Cronkite School of Journalism at Arizona State University.)-cw
CityWatch
Vol 13 Issue 39
Pub: May 12, 2015
