THE BLOG

Why President Obama Is Wrong on Trade

04/26/2015 09:12 am ET | Updated Jun 26, 2015
Pool via Getty Images

International Trade Law was surely not among the courses that President Obama taught as a law professor at the University of Chicago. In fact, I suspect he never took it as a student at Harvard Law School either. For, if he had, he couldn't have lashed out in the way he did at progressive opponents of the Trans-Pacific Partnership (TPP), the massive new trade agreement currently being considered for "fast track" treatment by Congress.

This Thursday, criticizing Senators Elizabeth Warren, Bernie Sanders, and others, the president compared their opposition to the trade deal to Sarah Palin's scaremongering about the "death panels" of Obamacare. He also complained that the constant calls from Congressional representatives and civil society groups to make public the now-classified draft agreement were getting on his "nerves."

Judging from the tenor and substance of his comments, the president apparently thinks there is a clear and correct answer on trade policy -- such that opposing the TPP is either mendacious or very badly informed. And if you start from the familiar economic argument on behalf of free trade, that may seem plausible. But today's trade deals aren't about "trade" so much as about domestic regulation: how national laws concerning consumer safety, environmental protection, and labor rights will fare in the global marketplace. On these issues, at least, there aren't any easy answers.

The economic argument on behalf of free trade is straightforward -- and has been reiterated time and again since its first formulation by early political economists, Adam Smith and David Ricardo. It says, in effect, that eliminating obstacles to the free movement of goods and services across borders allows gains from trade that make both parties better off, allowing each country to exploit its comparative advantage. While this assessment ignores distributional concerns within each country -- who gets how much as the national economies integrate -- the general view is that the winners will gain enough to be able to compensate the losers, at least in theory.

Historically, the most obvious obstacles to free trade have been tariffs -- that is, taxes on imports -- along with export subsidies. These policy instruments have been the traditional target of international trade agreements, which sought to bring them down reciprocally. And across many decades of gradual, post-war economic integration, under the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), tariffs have been brought down -- in many sectors, almost eliminated.

It's that familiar idea of why free trade is valuable and how trade agreements work that the president presumably has in mind when he criticizes the TPP's opponents as irresponsible. But the problem with the president's view is that tariffs are already at unprecedented lows -- indeed, in most industrial sectors, negligible. Today's trade agreements aren't really about reducing tariffs but something much more complex and consequential: harmonizing different national regulatory regimes, often to the advantage of powerful interests.

For example, from what we have seen in leaked draft chapters of the TPP, U.S. negotiators have been pushing for stronger intellectual property laws -- to the benefit of U.S. corporations -- in ways that activists say would restrict free speech on the Internet by beefing up copyright protections. In fact, the text of the TPP Chapter on Intellectual Property repeats language borrowed from an earlier initiative, the Anti-Counterfeiting Trade Act, which was defeated after public opposition. Health experts have also expressed concern that stronger patent protections in the TPP would curtail access to essential medicines.

It's true that there may be some good things in the TPP, and the president assures us that it is "the most progressive trade agreement in our history." But, on environmental issues for instance, according to the leaked TPP Chapter on the Environment, U.S. negotiators were apparently alone in the 12-nation bloc in trying to push for enforceable commitments -- and it is not known whether they succeeded.

More generally, the draft text suggests that environmental measures should avoid "the creation of unnecessary barriers to trade." And here's the rub: who is to decide whether limits on pesticide residue in food or laws protecting biodiversity constitute "unnecessary barriers"? From what we have seen in leaked chapters of the TPP, it may be specially convened arbitral panels -- small groups of outside experts -- rather the normal judicial channels used in each country. The justification for these special panels will be that no national government can be trusted not to rule in its own favor when its regulatory laws come into conflict with its obligations under the TPP. But that justification should come as a warning -- that the ordinary democratic process will also be up for grabs.

Can reasonable people disagree about these issues? Absolutely. The president is wrong to suggest that his supporters in Congress and beyond are irresponsible when they question these agreements -- particularly given that his administration continues to keep them classified as a "national security" matter. The president's testiness on this issue likely comes because the TPP -- and its sister agreement with Europe, the Trans-Atlantic Trade and Investment Partnership (TTIP) -- represent not just the culmination of several years of negotiations with foreign allies, but also what may be the president's last chance to pass significant new legislation before his second term ends.

None of this should matter, however, if the TPP is a bad deal for consumer safety, the environment, labor, or the democratic process. And at this point, we simply don't know what the negotiated text will contain -- even though the president is demanding that Congress provide him fast track authority to ensure an up or down vote on the agreement later this year. All we have now is the president's assurance that the TPP is "progressive" -- and his irritability and condescension toward those who wish to know more.

But even without the negotiated texts, we do know something. The TPP simply can't be the kind of simple, lift-all-boats agreement that the president implies when defending the deal. Trade agreements simply aren't like that anymore -- and they haven't been for almost two decades. They concern who wins and who loses, at home and abroad, when national regulatory regimes are put under pressure by economic globalization.

The members of Congress now balking at fast track understand that the TPP will be about much more than trade. The president shouldn't insult them for pointing it out.

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David Singh Grewal is an Associate Professor at Yale Law School, where he teaches international trade law.