In Memoriam: Free Trade

by Sep 15, 2016Economy, Headlines0 comments

As the 2016 election heads into its final stretch, it’s still unclear which candidate will emerge victorious.  Hillary Clinton currently holds a clear lead over Donald Trump, though polls appear to be tightening.  Regardless of who wins in November-however, one thing seems destined to lose in 2016: America’s commitment to free trade.  

Major parties have historically promoted free trade– global commerce has appealed to pro-business republicans, and Bill Clinton signed the North American Free Trade Agreement into law.  This election season, however, the political system has be inundated with anti-trade rhetoric.  Voters, particularly those in blue-collar communities, have seen a decades long reduction in manufacturing and serious damage from the Great Recession.  This, combined with disillusion with Washington politics, has led to the rise of populist candidates Bernie Sanders and Donald Trump.  Both made trade a signature part of their appeal, attacking free trade agreements.  In particular, the two took aim at the Trans-Pacific Partnership agreement– collectively referred to as the TPP.  The deal is one President Obama spearheaded and hopes to make part of his foreign policy legacy.  If ratified, the treaty would lay out trade guidelines for 12 Pacific nations– and nearly 40% of global trade.  The President has argued that the deal sets high standards for international commerce and would prevent China from writing unfair rules for the global market.  

Sanders and Trump disagree with Obama’s assessment, claiming the TPP will hurt American workers and suck jobs out of the United States.  Trump, now the GOP nominee, has hammered the treaty throughout his campaign.  His campaign has made clear he is determined to stop the deal no matter what.  Even if the Senate approved the TPP, any president would effectively have the power to end it unilaterally.   The technicalities of the TPP stipulate that the deal can only take effect if 85% of the total GDP involved is committed to the deal.  Since the United States has by far the largest economy of the group, any administration could simply choose not to submit ratification paperwork, thus killing the deal.  The campaign has stated that this is one of the many ways Trump could sabotage a TPP that had already been approved by congress.  

In the Democratic primary, Sanders used his anti-trade rhetoric to bring in new voters and excite the most liberal wing of the party.  Faced with mounting pressure from this progressive surge and criticism of her husband’s trade policy, Hillary Clinton was put in a difficult position.  Her initial position of the TPP was delicate– she claimed she needed to see the details of the deal before she came to any conclusion.  Eventually, however, Clinton denounced the pact, echoing Sander’s claims that it is bad for workers.  

While worker’s rights has been the primary reason for opposing trade deals in 2016, it is important to understand that this view is somewhat simplistic in nature.  American manufacturing began declining long before NAFTA or the TPP– in large part due to an increase in automation and the rise of cheap labor in emerging markets.  An increasingly globalized economy has only exacerbated the problem.  

The effects of trade deals have been far from negative.  While agreements did kill some jobs in the United States, they bolstered high-skill labor and decreased prices across the board.  Additionally, there is evidence to show that the effects of NAFTA have been overstated by some groups.  

Perhaps Clinton realizes this and has chose to oppose the deal purely for the sake of political expediency.  It’s what many skeptical liberals believe, claiming that the former Secretary of State flip-flopped.  Their claim is not without merit.  As the nation’s top diplomat, Clinton helped negotiate the deal and once called it the “gold-standard” for free trade agreements.  The anger from Sanders supporters only increased after Virginia governor and close Clinton friend Terry McAuliffe told an interviewer that he suspected Clinton still privately supported the deal. The Clinton campaign denied the claim, asserting that the candidate unequivocally opposed the treaty.  

This ambiguity may give hope to free-traders that the democratic nominee could reverse her position in the White House, breathing new life into the TPP.  The odds seem stacked against free trade this year, however.  Facing a large portion of the party adamantly against trade, Clinton will most likely continue to appease them.  On the legislative side, Senate Majority Leader Mitch McConnell has stated he does not intend to schedule a vote of the pact during the 114th session of Congress.  At least for now, trade seems poised to the be first casualty of the new political discourse.  

photo credit: Stockholm-146 via photopin (license)