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.
Hmm. As I recall, both Bush and Clinton eagerly supported NAFTA, which was actually negotiated under Bush I. While it a large number of manufacturing jobs were created south of the border, and helped North American manufacturers make their supply chains more efficient by reducing the cost of labor, it did not do much to stop northward migration, including into Mexico. Arguing for the benefits of NAFTA to North Americans is going to be a tough sell.
TPP suffers from a bad reputation because we learned there are other issues in the way these agreements get negotiated on our behalf — in secret! First and foremost, the so-called ISDS, which allows multinational businesses to sue individual governments if the governments want to introduce some kind of regulation, such as health or environmental, which could limit the multinational’s profitability. This has nothing to do with creating jobs at all, it’s just ugly. Not surprisingly, both the Democratic and Republican parties were fully on board until this election season’s anti-establishment sentiment gave them reason to hide it. Ironically, and unfortunately, the result of years of these shady deals by “regular” politicians was to empower people like Trump.
Respectfully, I’d say that doubling down on this issue sounds like an awful strategy.
I think when you look at foreign direct investment. NAFTA actually was helpful to the United States. Obviously there were lots of jobs lost but there were many jobs gained as well…just not the same jobs. So they didn’t go to the same people or go to the same places, which helped to create a huge problem.
Most foreign deals are negotiated in secret. I’m not saying that’s a good thing but I am saying that issue is not unique to free trade deals.
Interestingly, or not interestingly. Clauses like the ISDS do not damage America as much as they damage other countries. It’s more our multinational corporations levying lawsuits or pressuring foreign governments to bend the rules than it is the other way around.
I don’t know if I’m saying it’s good political strategy, but I am saying that despite popular sentiment, free trade deals are not inherently bad. Are they pro business? Yes. But everything that’s pro business is not inherently bad for common people. I don’t think we can stop the trend toward more global trade, so I think the best thing to do is to debate these issues so that we get the most equitable deals we can and when I say equitable I mean for everyone in the world not just beneficial for Americans.
I think hiding the trade deals is awful strategy and I think rejecting them out of hand might be an even worse one.
“Clauses like the ISDS do not damage America as much as they damage other countries.”
Hmm, that doesn’t sound like “free trade” at all, then. Sorry to take it out of context, it just stood out.
Returning to the populist angle — even when the US wins in this kind of transaction, the winners are again going to be the stockholders etc, while the losers in whichever country will be taxpayers, which in any Americanized system will be primarily the middle class. And to ask multinationals to share more of the tax burden, by levying future taxes on business, is exactly the kind of thing that these agreements are designed to impede — the architects of the free-trade concept as it exists today are committed free-market purists, remember.
So I see it as not just a matter of being pro-business in the sense of stimulating economic activity. It’s the terms of the future balance of power between big business and governments. While many developed country governments are democratically accountable to their populations, businesses are not, and if they’re a public company, their management is forbidden from doing anything other than taking the maximum profit they can. This doesn’t make businesses bad, that’s not what I’m saying, but it’s a slice of the world’s action outside the reach of democratic accountability, and so we rely on governments to counterbalance that.
This balance of power aspect is the central appeal of populist movements, I’d say. What the movements actually deliver is obviously wide open to debate, but in the past, the US has done well by compromising on the grievances that threatened to put them in power, rather than letting those issues persist.
Finally, even from a business point of view – if US businesses enjoy some advantage today, the tables may turn in the future and they may come to regret it. That’s something to think about too.
I agree that there should be a great deal of debate — this is not something that should be pushed through in a lame duck legislative session with minimal media attention. Sorry to be so long-winded …