What's the Deal with Trade?

Perfectly illustrated by NAFTA in 1994, free trade inspires supporters and opponents on both sides of the aisle.  George H.W. Bush attempted to reach an agreement before the end of his presidency, but Clinton was required to reach the finish line.  The vote was split evenly between parties, with nearly equal numbers of Republicans and Democrats in favor.  Now, we find ourselves in a similar predicament with the Trans-Pacific Partnership. 

The TPP is a trade agreement between the United States and 10 nations in the Pacific and North America.  The initial talks began during George W. Bush’s waning days.  Yet, the agreement has floundered in the wake of the global financial crisis and Democratic opposition.  Obama recently reemphasized the agreement as “important,” but his rolodex of supporters continues to vanish, leaving the TPP’s passage in question.

Conservatives have found fault in the secretive nature of the talks and Obama’s plea for “fast-track” approval – a deal that seeks a simple yes or no vote without the possibility of congressional amendments.  This request is not unusual for trade agreements, given the complex interests of the parties involved.  However, some Tea Party Republicans, such as Representative Louie Gohmert, claim that the president has crossed the constitutional line one too many times to be given the authority to unilaterally strike such an important deal.

Criticism from the left comes from the usual suspects.  Nobel Prize-winning economist and globalization critic, Joseph Stiglitz wrote a series of articles against the TPP.  He says the agreement will benefit the “wealthiest sliver” of Americans, while the middle-class suffers.  More beneficial when tariffs were universally high, trade agreements today focus on nontariff barriers, namely regulation.  “Huge multinational corporations complain that inconsistent regulations make business costly,” but employees benefit from these rules.  Stiglitz ultimately posits that there is a correlation between trade expansion and income inequality.  

So, what to believe?  From a purely theoretical lens, trade has winners and losers.  It may send jobs overseas, but in the long-term many of these lost jobs are not competitive in a global economy.  Free trade increases resources to create new jobs in efficient industries, boosting wages and improving living standards.  

We live in a world where democratic nations want to protect their citizens, but the rules vary across borders.  Growing more pervasive, multinational corporations find it increasingly challenging to navigate this environment – with costs amounting to millions and millions of dollars.  Consistent regulations would encourage growth, promote innovation, increase efficiencies, and give us a say in the rulemaking.

Conservative think tanks have shown qualified support for the TPP.  It’s challenging to be outwardly vocal about an agreement so shrouded in mystery, but in principal, a free trade agreement with Asian-Pacific nations is, “a game-changer, economically and diplomatically … The U.S. should … implement a high-quality agreement as soon as possible,” according to the Heritage Foundation.  The American Enterprise Institute commended the Bush White House for their initial leadership: “When the full history of the TPP is written, a prominent place will be reserved for former US trade representative Susan Schwab,” who, “forced the TPP onto the trade agenda by throwing a trade policy dart to the incoming Obama administration.”

The White House recently released a statement, emphasizing its commitment to the TPP.  “But we also should recognize that 95 percent of our potential customers live outside our borders. Exports support more than 11 million jobs -- and exporters tend to pay their workers higher wages. Failing to seize new opportunities would be devastating not just for our businesses, but for our workers too.”

Who should support the TPP?  Who shouldn’t?  Republican skepticism is understandable; Democratic contempt is expected.  Not knowing specific provisions, it’s difficult to predict how the TPP will play out and what the ultimate effects will be.  But geo-politically, this agreement makes sense as a bulwark against China.  And by strengthening relationships with other nations in the region, America could reassert itself as the economic leader at a time when its foreign policy credentials have been under scrutiny.

Perfectly illustrated by NAFTA in 1994, free trade inspires supporters and opponents on both sides of the aisle.  George H.W. Bush attempted to reach an agreement before the end of his presidency, but Clinton was required to reach the finish line.  The vote was split evenly between parties, with nearly equal numbers of Republicans and Democrats in favor.  Now, we find ourselves in a similar predicament with the Trans-Pacific Partnership. 

The TPP is a trade agreement between the United States and 10 nations in the Pacific and North America.  The initial talks began during George W. Bush’s waning days.  Yet, the agreement has floundered in the wake of the global financial crisis and Democratic opposition.  Obama recently reemphasized the agreement as “important,” but his rolodex of supporters continues to vanish, leaving the TPP’s passage in question.

Conservatives have found fault in the secretive nature of the talks and Obama’s plea for “fast-track” approval – a deal that seeks a simple yes or no vote without the possibility of congressional amendments.  This request is not unusual for trade agreements, given the complex interests of the parties involved.  However, some Tea Party Republicans, such as Representative Louie Gohmert, claim that the president has crossed the constitutional line one too many times to be given the authority to unilaterally strike such an important deal.

Criticism from the left comes from the usual suspects.  Nobel Prize-winning economist and globalization critic, Joseph Stiglitz wrote a series of articles against the TPP.  He says the agreement will benefit the “wealthiest sliver” of Americans, while the middle-class suffers.  More beneficial when tariffs were universally high, trade agreements today focus on nontariff barriers, namely regulation.  “Huge multinational corporations complain that inconsistent regulations make business costly,” but employees benefit from these rules.  Stiglitz ultimately posits that there is a correlation between trade expansion and income inequality.  

So, what to believe?  From a purely theoretical lens, trade has winners and losers.  It may send jobs overseas, but in the long-term many of these lost jobs are not competitive in a global economy.  Free trade increases resources to create new jobs in efficient industries, boosting wages and improving living standards.  

We live in a world where democratic nations want to protect their citizens, but the rules vary across borders.  Growing more pervasive, multinational corporations find it increasingly challenging to navigate this environment – with costs amounting to millions and millions of dollars.  Consistent regulations would encourage growth, promote innovation, increase efficiencies, and give us a say in the rulemaking.

Conservative think tanks have shown qualified support for the TPP.  It’s challenging to be outwardly vocal about an agreement so shrouded in mystery, but in principal, a free trade agreement with Asian-Pacific nations is, “a game-changer, economically and diplomatically … The U.S. should … implement a high-quality agreement as soon as possible,” according to the Heritage Foundation.  The American Enterprise Institute commended the Bush White House for their initial leadership: “When the full history of the TPP is written, a prominent place will be reserved for former US trade representative Susan Schwab,” who, “forced the TPP onto the trade agenda by throwing a trade policy dart to the incoming Obama administration.”

The White House recently released a statement, emphasizing its commitment to the TPP.  “But we also should recognize that 95 percent of our potential customers live outside our borders. Exports support more than 11 million jobs -- and exporters tend to pay their workers higher wages. Failing to seize new opportunities would be devastating not just for our businesses, but for our workers too.”

Who should support the TPP?  Who shouldn’t?  Republican skepticism is understandable; Democratic contempt is expected.  Not knowing specific provisions, it’s difficult to predict how the TPP will play out and what the ultimate effects will be.  But geo-politically, this agreement makes sense as a bulwark against China.  And by strengthening relationships with other nations in the region, America could reassert itself as the economic leader at a time when its foreign policy credentials have been under scrutiny.