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Nelson W. Cunningham

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It Takes Two to Trade

Posted: 11/05/2012 12:12 pm

Global Trade

It takes two to trade.

Two parties, that is.

Once upon a time, expanded trade had true bipartisan support, as long as we protected workers left behind.

But over the last twenty years, free market thinking on steroids has eroded that consensus. Today supporters of trade fall into two camps. The first sees trade agreements as cold free market mechanisms that benefit the most competitive, without need for a safety net for the weakest. These supporters are almost entirely Republicans. The second approach - embraced by many Democrats and also Republicans -- understands that trade liberalization is essential, but can harm workers and businesses who need help adjusting to a quickly globalizing world.

The first, narrow approach is Mitt Romney's. He will push for free-market agreements passed by Republican majorities. The second, balanced approach is President Obama's. Given a second term, Obama can continue to bring Democrats and Republicans together to help renew the old bipartisan consensus -- and perhaps put this divisive issue to rest once and for all.

Back in 1993, Bill Clinton inherited a NAFTA agreement from George H.W. Bush that he feared would not pass the Congress. Clinton negotiated side letters with Mexico to strengthen environmental and labor protections, softening the downsides of globalization and (importantly) making it easier for Democrats to support. And it worked. NAFTA garnered 102 House Democratic votes, along with substantial numbers of Republicans. The next year, Clinton pushed for the acceptance of GATT revisions that created the WTO, and won 167 Democratic votes.

NAFTA success became a free trade template. Clinton negotiated a free trade agreement with Jordan that, for the first time, brought the force of powerful trade sanctions to bear to enforce key labor and environmental protections. That agreement passed on a voice vote without a single objection from anyone, Democrat or Republican. Clinton then started negotiations with Chile and Singapore based on that same bipartisan framework.

It seemed that at last a durable approach to trade had been found. But George W. Bush went backward, refusing to support Clinton's environmental and labor reforms. He refused to enforce Clinton's trade sanctions with Jordan. He pressed forward with the Chile and Singapore talks but excluded labor and environment from enforceable trade sanction protections. Likewise with the Central American Free Trade Agreement (CAFTA) and a flurry of trade agreements with Peru, Australia, Panama, Colombia and South Korea. The result was a dramatic erosion of Democratic congressional support - CAFTA only received 15 Democratic House votes, and the Panama, Colombia and South Korea FTAs never even had a vote under Bush.

Why did Bush reverse Clinton's trade framework? Partly, ideology -- a commitment to free market principles that viewed labor and environmental protections as impediments to trade. But also - politics. Trade became a useful wedge issue, and if Democrats could be painted as anti-trade, that would help push moderates, independents and perhaps even business-minded Democrats toward the GOP. Clinton's efforts to knit the parties together on trade were replaced with an effort to divide the parties instead.

President Obama understood when he took office that moving a responsible trade agenda forward meant buy-in from both parties and from a diverse set of affected constituencies. He immediately supported the Panama, Colombia, and South Korea trade agreements but went back to the negotiating table to strengthen the agreements with concessions that helped US industry and brought more Democrats on board. He insisted on extending Trade Adjustment Assistance (TAA) to retrain and assist workers in industries harmed by trade agreements. Despite nearly 40 years of support for TAA, Congressional Republicans reversed their longstanding support and, on ideological grounds, rejected an extension. After months of delay they finally relented and as part of a bipartisan package the three trade agreements and TAA went ahead to easy passage.

Looking forward, President Obama has embraced three long-term negotiations that could dramatically open world trade and expand opportunities for American firms abroad. The Trans-Pacific Partnership (TPP) talks will link most of the important Pacific trade powers in a liberalized framework. Talks that he commenced with the European Union, the world's single largest economy, could pave the way for a world-beating US-EU Free Trade Agreement. Lastly, broad-ranging plurilateral negotiations on services could open up opportunities abroad for a sector that represents fully 75% of our economy. Obama has undertaken these talks with careful bipartisan Congressional consultation, and with a due regard for those who can be sidelined by pell-mell globalization.

Obama will advance this second-term trade agenda in bipartisan fashion. He will seek trade negotiating authority when he needs it, and not as a political cudgel. Workers and environmental concerns will be considered, even while he appreciates and embraces the opportunities for economic growth that trade can bring. And he will continue to work toward a durable bipartisan consensus that favors careful and constructive trade liberalization.

Mitt Romney, however, promises to take us backwards on trade to a one-party framework. His advisors are the same who implemented George W. Bush's narrow approach to trade and stand ready to go back down that unproductive path. He talks often on the stump about free trade but never about retraining and helping workers. In fact, he called the TAA program "ill-considered" and "ineffective" and opposed its extension. He has said he would not link TAA extension, so important for those workers and for Democrats, to a request for trade negotiating authority - possibly dooming both. He talks about a global "Reagan Economic Zone" of trading nations, blind to the one-party (and perhaps one-nation) message implied. If that is America's 2013 free trade agenda, it's D.O.A. on Capitol Hill and in many American communities.

Barack Obama, building on Bill Clinton's legacy, has shown that it's possible to advance a trade agenda that expands opportunities for American firms and workers, without throwing the weakest to the wolves. That it's possible for the US to lead, as it has since the Second World War, in ensuring open markets around the world, without alienating pockets of Americans. And that it is possible, even in this hyper-polarized capital, to find common ground on divisive issues like trade.

The next four years provide dramatic opportunities for trade liberalization across the Pacific and the Atlantic. Barack Obama will use those opportunities to build a durable bipartisan consensus on trade. Mitt Romney won't.

 
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