THE BLOG

Hillary: Time to Step Up on the Trade Deal

04/30/2015 11:58 am ET | Updated Jun 30, 2015
ASSOCIATED PRESS

It's time for Hillary Clinton to take a position on the Trans-Pacific Partnership (TPP) agreement and the fast track authority designed to ramrod it through the Congress. Hillary has been non-committal to date, with many assuming she will eventually support the president whom she served as Secretary of State.

But now the pressure to take a stand is growing. President Obama decided to call out his opponents, turning the escalating battle over fast track and TPP into an intra-party back-alley knife fight. AFLCIO President Rich Trumka, head of the 11 million member labor federation, delivered a speech making it clear that labor consider the vote on fast track and TPP fundamental. A leader of the opposition in the Congress, populist stalwart Senator Bernie Sanders of Vermont just announced he would challenge Hillary for the nomination. Fast track has already passed the Senate Finance Committee. The debate on the floor will begin in May. It is time for Hillary to choose.

Most people assume, of course, that Hillary will support the treaty rather than break with the president whom she served. But, if she adheres to the standards that she put forth for the agreement, she might well surprise observers by joining the opposition.

The President's Corporate Offensive
The President has lined up with the Republican congressional leaders, the Chamber of Commerce and business lobby to pass "fast track" trade authority to ease the passage of the 12 nation Trans-Pacific Partnership agreement (TPP). He faces the growing opposition of the vast majority of Democratic legislators, the entire labor movement, a broad coalition of environmental, consumer and public interest groups, as well as an expanding list of normally pro-trade economists, including the likes of Paul Krugman and Joseph Stiglitz.

Hillary has chosen to remain above the fray, issuing a statement saying she was "closely watching" to see if the treaty meets the standards of protecting workers and serving our national security.

The White House assumes that Hillary stands with the president; White House deputy press secretary Eric Shultz says, "I haven't seen anything to suggest any distance." The White House even defended Hillary's dodge, with Press Secretary Josh Earnest telling reporters, "TPP is something that's still being negotiated. She, as we're encouraging everybody to do, is going to withhold judgment."

Obama's scornful attack on his opponents makes it much harder for Hillary to stay on the sidelines. Obama dismissed opponents for "not knowing what they are talking about." Most dramatically, he targeted Elizabeth Warren by name, saying that she was "just wrong" in her opposition. After she sent out an email to supporters saying the president's claims couldn't be verified because the treaty is secret, the president called such actions "dishonest," since "every single one of the critics... could walk over and see the text of the agreement." Warren then joined with Sherrod Brown to put the president to the test: if it is not secret, publish the text so that everyone can see it before the vote on fast track. (The fact is the treaty, still being negotiated, is classified an official secret. Legislators can read it under severely restricted conditions: no notes, no aides, no experts, no copies, a trade representative in the room, and no disclosure of what they see). This fight isn't going away.

AFLCIO President Rich Trumka set down labor's marker. Trumka summarized the reality facing working people: since the 1980s, the wealthiest have rigged the rules -- labor laws, trade laws, tax laws, monetary and fiscal policies -- "to push wages down and to increase corporate profits..." The result: "Since 1978, CEOs have increased their own pay by almost 1,000 percent. In the same 37 years, the wages of 90 percent of us have gone down. That is a violation of the American Promise. It's not just the poor who are falling behind, it's the middle class, too."

The debate over TPP, Trumka emphasized, is a debate over whether we will continue down that path. "The labor movement opposes fast track (and TPP). We expect those who seek to lead our nation forward to oppose Fast Track. There is no middle ground, and the time for deliberations is drawing to a close." (emphasis added)

Hillary launched her campaign saying that she wanted to be the "champion" of "everyday American" who face a "deck... still stacked in favor of those at the top." She recently celebrated Warren in Time Magazine's review of the 100 most influence people for assuming Ted Kennedy's mantle as "champion of working families and scourge of special interests," noting "she never hesitates to hold powerful people's feet to the fire: bankers, lobbyists, senior government officials, and yes, presidential aspirants."

Now, the President's attack on Warren by name and his opponents generally -- virtually the entire base of the Democratic Party -- has raised the stakes for Hillary. As the battle heats up, staying on the fence will be increasingly untenable.

Where Will Hillary Stand?

Few would be surprised if Hillary came out in support of the treaty. As Obama's former Secretary of State, she would be reluctant to break with him openly in such a heated battle. As Secretary of State, she praised TPP as the "gold standard in trade agreements to open free, transparent, fair trade." As a presidential candidate committed to raising a billion or more for her campaign, she knows that Wall Street and corporate America are lobbying hard for the treaty.

Her past record has been mixed. Hillary initially joined her husband in supporting NAFTA, the WTO, and permanent most favored nation status for China. As Senator of New York, she witnessed the devastation upstate communities suffered from the closing of plants shipping jobs abroad. She became more critical of NAFTA, voted against CAFTA, its Central American equivalent. As Secretary of State, she championed the Columbia and South Korean trade deals. Like many Democrats, she has been more skeptical about trade accords when facing voters, than when safely in office.

But to support TPP now, Hillary will not only have to turn her back on the base of the Democratic Party, she will have to abandon the standards that she has argued the agreement must meet. Her spokesman, Nick Merrill, stated:

"We should be willing to walk away from any outcome that falls short of these tests," Merrill said in a statement. "The goal is greater prosperity and security for American families, not trade for trade's sake."

What were the tests? "First, it should put us in a position to protect American workers, raise wages and create more good jobs at home. Second, it must also strengthen our national security."

Of the current debate over the TPP, Merrill said of Clinton: "She will be watching closely to see what is being done to crack down on currency manipulation, improve labor rights, protect the environment and health, promote transparency and open new opportunities for our small businesses to export overseas." (emphasis added)

Since the TPP remains classified, secret to the public, we still don't know what the details are. But what we do know makes it clear the treaty will not meet Hillary's standards.

We know that the treaty will not include provisions to deal with currency manipulation. Treasury Secretary Jack Lew has stated flatly that the subject will not be raised in the negotiations. Currency manipulation by mercantilist nations like China, Japan and East Asian countries have been central to the massive trade deficits that the US has run up over the last decades. Last year, America's trade deficit was about 3 percent of GDP, or over $500 billion. These deficits simply cannot be sustained.

Traditional free trade advocates like C Fred Bergsten now insist that the TPP must include protections against currency manipulation. The Commission for Inclusive Prosperity, chaired by Larry Summers, which was festooned with Hillary advisors, also argued that currency manipulation should be part of trade negotiations.

Without dealing with currency manipulation and our trade deficits, it is hard to imagine how the TPP can meet Hillary's core standard: "raise wages and create more good jobs at home." More exports do create jobs, but more imports cost jobs. Large annual deficits mean our trade policies are costing jobs. The annual deficit of $500 billion (and rising) is the equivalent of Americans spending $500 billion abroad instead of at home. As economist Dean Baker writes, it is virtually impossible to replace that demand and move to a full employment economy where wages can rise. The only times we've done it in the past were with speculative bubbles -- the dot.coms, the housing bubble -- that soon blew up.

Secondly, we know -- since the provisions of the chapter have been leaked -- that the TPP will include the Investor-State Dispute Settlement provisions. Elizabeth Warren has forcefully exposed the implications of creating a private arbitration system for multinationals. It is hard to imagine a more perverse stacking of the deck for foreign corporations and against citizens.

Obama has scorned Warren's concerns as exaggerated, but Hillary clearly doesn't agree. In Hard Choices, Clinton's memoir of her State Department days, she argued that in negotiating the TPP, "we should avoid some of the provisions sought by business interests, including our own, like giving them or their investors the power to sue foreign governments to weaken their environmental and public health rules, as Philip Morris is already trying to do in Australia."

Hillary has also insisted that any agreement must strengthen our national security. The president has argued that TPP is needed as part of his pivot to Asia, so "China doesn't write the rules." But in this time of extreme inequality and a sinking middle class, our national security imperative is to strengthen our economy and our middle class at home. Ironically, the same trade deficits that undermine wage and jobs here have also allowed China to amass trillions in reserves. The Chinese will write their own rules because they have the money. When the Chinese set up their Asian Development Bank, America's allies rushed to join, despite the opposition of the Obama administration. If we want to rebuild America's middle class at home and strengthen our influence abroad, we have to change our global strategy and move to more balanced trade. And that requires challenging currency manipulation and reforming our distorted global tax policies. TPP seems far more likely to dig the hole we are in deeper than to help us out of it.

The central question of our time is whether the leader of either party is prepared to mobilize people to take on the rigged game, challenge the entrenched interests and the corruptions of our politics, and give working people a fair shake. The debate over TPP and fast track is the first clear test of that.

Hillary announced her campaign saying she wanted to be a "champion of everyday people." When the battle is joined and the fighting is fierce, champions do not stand on the sidelines. They aren't "closing watching" to see who wins. They are leading, lifting spirits, pointing the way. The president has raised the furies around fast track. It is time for Hillary to take a stand.