The Last, Best Hope for a Good Trade Deal
Both Hillary Clinton and Donald Trump say they oppose the Trans-Pacific Partnership, a trade deal among 12 countries. The second-place finisher in each party’s presidential primaries -- Bernie Sanders and Ted Cruz -- opposed it, too. These facts would seem to doom the Obama administration’s goal of getting Congress to approve the agreement between the election and the inauguration of the new president.
Michael Froman, the U.S. trade representative, is keeping hope alive. “We have to be careful not to overinterpret this election,” he tells me.
He’s right about that. For one thing, a lot of Clinton supporters seem to favor the trade deal, too: In an August Pew poll, 55 percent of them backed it while only 24 percent opposed it. And congressmen have plenty of reasons to support it.
First: The agreement is expected to expand our economy. The U.S. International Trade Commission estimates that it will make the economy $57 billion bigger each year. The Peterson Institute for International Economics pegs the number at $78 billion. Either number is a small percentage of our $17 trillion economy, but it’s still a lot of money -- and there are not a lot of bipartisan ideas before Congress that are more promising.
Second: Agreeing to the TPP will increase American influence in Asia. Our allies there want Congress to approve it. The alternative is that the other countries in the partnership start making deals with one another, and with countries outside the TPP, such as China. These deals would divert some trade that would otherwise benefit us. They would be less favorable to us in other ways, too. The TPP, for example, restricts the ability of state-owned enterprises to undercut American companies. To the extent we do not participate in setting the rules that govern international trade, those rules will not reflect U.S. preferences.
Third: Polling suggests lukewarm support for the deal from the public, not the bitter opposition you might expect listening to the presidential campaign rhetoric. Pew found that 40 percent of Americans thought the TPP would be good for the country, while 35 percent thought it would be bad. A September poll by the Chicago Council on Global Affairs found 60 percent support for the deal. The large number of people with no opinion about TPP might also be swayable after the election, when pro-trade voices should be able to get more of a hearing.
Fourth: There’s a broad coalition behind the deal. Groups that have opposed many trade agreements in the past, like the National Council of Textile Organizations, are supporting it. Domestic footwear manufacturers and footwear importers are united in backing it. The tech industry and content providers are often at odds, but both are behind the TPP.
Fifth: Clinton, who used to say that the Trans-Pacific Partnership set the “gold standard” for trade agreements, may still privately hold that opinion. If she wins the election, she might well want congressional Democrats to help get the agreement passed before she takes office. She could signal her preferences by saying that she respects congressmen on both sides of the debate and that if the TPP goes into effect she will make sure its protections for American workers are strictly enforced.
Republican leaders may pose a bigger obstacle to the TPP, even though for decades their party has been more enthusiastic about free trade than the Democrats. House Speaker Paul Ryan is likely to have a smaller Republican majority if he has one at all. A few House Republicans oppose him because he is pro-immigration, has criticized Donald Trump and has generally been less hard line than they wish. Helping Barack Obama get a trade agreement through Congress in the president’s last weeks in office may increase the ranks of those opponents just enough to topple him.
But the best chance for the TPP would be action under Obama, since he is openly for it. If, as seems likely, the Trans-Pacific Partnership doesn’t pass in the next few weeks, it will represent the triumph of a vocal minority over the national interest.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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