In less than two months, the vote for the next president of the United States will take place. Throughout the presidential election cycle, current U.S. trade policies have taken a beating. Yet, a couple of questions remain: 1) What does President Barack Obama’s trade policy record look like? 2) How do the results of his policies compare to the previous administration’s? It is time to get beyond the vitriolic rhetoric and examine the facts.
Obama inherited a trade agenda that was already under political attack. Much opposition emerged out of concern about the costs of international trade for U.S. workers. Three trade agreements that had been signed with Colombia, Panama, and South Korea lingered in the U.S. Congress without a vote before President George W. Bush left office in 2008. The trade deficit at the end of the Bush administration reached $709 billion, a 174 percent increase from eight years earlier, according to U.S. Census Bureau data. With this reality, the trade policies and practices of the Obama administration have had mixed results in their efforts to boost U.S. exports and enhance competitiveness in the global economy.
National Export Initiative
In January 2009, President Obama introduced the National Export Initiative (NEI). The goal of the NEI was to double U.S. exports over a five-year period and create new jobs. The NEI was a success in the sense that U.S. exports of goods and services increased from $1.6 trillion at the end of 2009 to $2.4 trillion by the beginning of 2015. However, the goal of doubling exports fell short. U.S. exports increased by 50 percent.
Within the first year of the NEI, the trade deficit had decreased dramatically from $709 billion to $384 billion. However, over the five-year NEI timetable, the trade deficit increased by 28 percent to $490 billion.
Fast Track Authority
President Obama’s ability to win fast track authority following much opposition, mainly from his own political party, was a signature victory. Fast track authority does the following:
1. Gives the U.S. Congress the power to create the guidelines that the Executive branch must follow when pursuing trade agreements;
2. Allows the Administration to enter and negotiate trade deals;
3. Provides U.S. Congress with the ability to only vote up or down on trade agreements; and
4. Takes away U.S. Congress’ ability to amend trade deals after they have been signed.
Trade Agreements
Despite significant opposition, President Obama successfully encouraged the U.S. Congress to approve trade deals with Colombia, Panama and South Korea. Simultaneously, Congress voted in favor of the Trade Adjustment Assistance program, which provides support to workers and firms negatively affected by import competition. Nevertheless, this success did little to quell challenges to President Obama’s two signature trade deals—the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (T-TIP) agreements.
After eight years of negotiations, the TPP, which promotes trade between the United States and 11 other countries throughout the Asia-Pacific region, was signed in February 2016. Yet, the TPP is still awaiting ratification. Senator Bernie Sanders, a former presidential candidate, has been openly critical of the TPP. Democratic presidential nominee Hillary Clinton, who supported the TPP as Secretary of State, and Republican nominee Donald Trump oppose the deal. At the same time, the President’s Export Council expressed its support for passage of the TPP before he leaves office. President Obama’s ability to get the agreement approved in the U.S. Congress remains to be seen.
The T-TIP, which would increase access to the European Union, collapsed at the end of August after three years of talks. According to news reports, Germany’s Economy Minister and Vice Chancellor Sigmar Gabriel said, “The negotiations with the USA have de facto failed because we Europeans did not want to subject ourselves to American demands.” This month, thousands of protesters from labor unions, environmental groups and other organizations protested the T-TIP in Germany.
Another agreement, which has received far less attention in the U.S. media but was the focus of the European protests, is the Trade in International Services Agreement (TISA). Talks for TISA began in 2012 between 23 parties, including the United States and the European Union. TISA will further liberalize trade in services. Nevertheless, as a CNN Money article calls TISA in its title, it is “America’s $38 trillion global trade deal you’ve never heard of.” TISA is another large historic deal that represents 70 percent of global trade in services, an area for which the United States enjoys a surplus.
Trade agreements are important to U.S. export growth and competitiveness. Last year, the United States exported 47 percent of its goods to countries with which it has signed a trade deal valued at $710 billion with a $12 billion surplus, according to the International Trade Administration.
Enforcement of International Trade Rules
Finally, enforcement of trade rules under the World Trade Organization (WTO) has been a key issue throughout the 2016 presidential election cycle. Since Obama took office, the United States has brought 23 trade dispute cases before the WTO, 14 of which were against China. All cases that were decided favored the United States. For instance, last year, the United States filed a case challenging India’s ban on U.S. poultry, eggs and live pigs out of concern for the spreading of the avian flu. The WTO found that India’s ban violated its rules due to the lack of scientific evidence.
In sum, President Obama’s foreign trade legacy so far can be characterized by the increase in U.S. exports and decline in the trade deficit when compared to the previous administration. However, the export growth falls short of the original goal, and it remains to be seen the final record on the TPP and T-TIP before the end of the year. Hopefully, the next U.S. president resists growing calls for global economic isolationism, builds upon the current administration’s legacy, and implements necessary changes to make U.S. trade policy even more effective across different communities such as labor, environment, consumer and business.
Sarita D. Jackson, Ph.D. is president and CEO of the Global Research Institute of International Trade. Her book, It’s Not Just the Economy, Stupid! Trade Competitiveness in the 21st Century, was published in 2016.