We should be talking about the Trans Pacific Partnership
I’m dismayed that the subject of free trade is apparently off limits in this year’s election season. I’m old enough to remember when Bill Clinton fought to get the North American Free Trade Agreement (NAFTA). As a young kid I couldn’t really understand all the policy particulars but I did understand enough to oppose it, because I could at least figure out that if you open other countries to corporations, they will make more profit by exploiting cheaper labor moving jobs from here to there. So originally I was against free trade agreements. What I didn’t understand then was the great opportunities that those same free trade agreements opened up for other people in the world while at the same time lowering the cost of products for American consumers. In response people may say well if a person is unemployed then it doesn’t matter how cheap a product is. This is true but what we’re not taking into account is America actually moved from a manufacturing economy to a service economy in the 90s and 00s. This means that while many American manufacturing jobs moved from here to other countries, new jobs opened up in the service sector. In addition, foreign direct investment created more jobs in America. Unfortunately, because of situations such as wage stagnation and the Great Recession, the impression is that free trade agreements have moved too many jobs from America to other countries. Unlike many subjects in society there is bipartisan agreement on this, but it is simply not true. When Bill Clinton signed NAFTA unemployment was around 4.5% and it stayed that way until he left office. Unemployment was low when George Bush took office and only climbed to alarming rates after collapse. Again this was not due to NAFTA or the Central American Free Trade Agreement (CAFTA), this was due to reckless economic practices. Even now with NAFTA and CAFTA still being in effect President Obama has been able to reduce the unemployment rate to around 5.5%.
So it isn’t free trade agreements which are affecting jobs. The reality is that technology has made it incredibly efficient to produce goods no matter where you produce them. Technological advancements and changes in the economy mean that many of those manufacturing jobs won’t come back.
There are some very detrimental effects of free trade agreements which have nothing to do with American jobs. Globalization allows corporations to seek the lowest price for labor anywhere in the world. As a result corporations will set up shop in one country and produce cheap products to ship around the world. But as they become more successful, the wages in the country that is producing the products begin to go up. At a certain point they go up so much that the corporation can find more profit if they move their business to another developing country. So corporations hop from country to country and destroy the economies of developing countries all over the world. However, one place those jobs will not come back to is America. The wages here are already too high and that ship has already sailed.
These may seem like reasons we should oppose the Trans Pacific Partnership (TPP) but it should be debated vigorously. President Obama is fighting hard for it because trade partnerships give America a way to influence the rules of trade around the world and in general when America is involved in trade agreements, the trade rules are freer and fairer for everyone.
If we oppose free trade agreements what we are doing is coming dangerously close to an isolationist mindset which withdraws us from world affairs and allows countries like China and Russia to control more of the world economy than they should. It loosens America’s ability to participate in global trade, thereby diminishing America’s economy and negatively impacting American jobs. Opposition to free trade agreements will actually cause Americans to lose jobs, not gain them. Without free trade agreements we will have less ability to influence the global economy. We would be less able to track world financial dealings and less able to impose meaningful sanctions on countries. How can we sanction a country we’re not doing any trade with or whose trade dealings don’t intersect with ours in some way? Trade agreements are a lever of power, which allow us to use means other than force when other diplomatic strategies fail.
The absence of free trade as a part of our political discourse signals the danger that can occur when there is only one functioning political party. The advantages of free trade agreements have always been a blind spot for Progressives. They have always opposed them, what is different from the past is that usually the Republicans as the “pro business” party have been in favor of them. Republicans position has been to push for free trade deals to open the global markets and Democrats traditional position has been to oppose them or to promote debate such that the negative aspects of free trade agreements are curbed. However, the chaos in the Republican Party has caused an anti-trade position which has allowed Democrats a free hand in opposing free trade. Ironically the only person on the political scene who is forcefully championing free trade is the outgoing President Barack Obama.
The reality is free trade agreements such as the Trans Pacific Partnership are good for America and good for the world. They create jobs and boost economies everywhere. We should not be taking free trade agreements off the table, we should be having spirited debates about how we can minimize the negative effects of free trade and maximize opportunity for everyone. Instead we are withdrawing ourselves from the world and diminishing our future trade prospects.