WASHINGTON — Michael Froman received from a Harvard Law School classmate, Barack Obama, a job that validates the axiom that the unlikelihood of any negotiation reaching agreement grows by the square of the number of parties involved. In trade negotiations, even one’s own country is troublesome, as the catfish conundrum illustrates. And the degree of difficulty in achieving a free trade pact is proportional to the number of Democrats in Congress.
As U.S. trade representative, Froman’s goal is completion and ratification of the Trans-Pacific Partnership involving the United States and 11 Asia-Pacific nations, from Chile to South Korea, who generate 37 percent of the world’s economic product. The TPP aims not just to liberalize trade but to reform some of these nations’ domestic policies, particularly concerning labor and environmental issues, partly to entice certain Democratic constituencies to soften their opposition to free trade.
Some developing nations, such as Vietnam, welcome some compulsory rationality — being required by trading rules to limit subsidies to sclerotic state-owned enterprises. But beware of ostensibly altruistic protectionism — protectionism with moral pretensions. Sometimes poorer nations want higher standards forced on them. Other times rich nations use higher standards to raise production costs in, and thereby lower the competitiveness of, poorer countries.
Negotiation and ratification of TPP will be easier if Congress gives Obama what prior presidents have received — “fast track” authority guaranteeing an up-or-down vote on the agreement without amendments. But Obama’s aggressive aggrandizement of executive power through unilateral actions (regarding the Affordable Care Act, immigration, etc.) has been unprecedented in its sweep and undisguised in its disdain for Congress. This has produced the much-praised but elusive joy of bipartisanship: Conservative Republicans, eager to express separation of powers rectitude, are joining liberal Democrats, eager to derail any agreement, in opposing fast track.
Immersed in this political equivalent of three-dimensional chess, the administration is serenely confident that there will be enough Democratic votes to join with large majorities of Republicans to ratify what is negotiated, even without fast track. And even if Republicans representing Southern catfish farmers must be mollified by restricting imports of Asian catfish that are processed in American plants in blue states.
The two largest achievements during Bill Clinton’s presidency occurred in spite of Democrats. Welfare reform was forced upon him by a Republican-controlled Congress (he vetoed it twice before relenting), and the North American Free Trade Agreement was ratified in spite of congressional Democrats (a majority of whom voted against it). Now, TPP — potentially the best result of the Obama years — depends on Republicans.
Democrats are plucking up the protectionist banner unfurled by 19th-century Republicans, who were tireless defenders of the strong (manufacturers) against consumers. Today, many Democrats agree with Connecticut’s Rep. Rosa DeLauro, who says America “has lost 5 million manufacturing jobs since NAFTA.” Notice the slippery language (”since NAFTA”) and remember the post hoc ergo propter hoc fallacy: The rooster crows and then the sun rises, therefore the crowing caused the sunrise. Manufacturing jobs have been declining as a share of total employment since 1950 and in actual number since 1979. But because of productivity improvements, manufacturing production and exports are near all-time highs.
Granted, Froman says, some imports substitute for domestic products. But many imports are “intermediate goods” that go into the production of domestic goods, some of which are exported. And, he says, 50 percent of imports from Canada and Mexico, our first and third largest trading partners, are used as inputs in the manufacturing of American products. Furthermore, Froman says, free trade is progressive in the sense that lower-income Americans spend a larger portion of their disposable income than more affluent Americans spend on such imports such as food and clothing.
You who are reading this column probably have a chronic, indeed incurable trade deficit with your barber or hair dresser. You regularly buy what he or she sells yet he or she never buys anything from you. But things somehow work out. As they do between nations, because as the late Robert Bartley, editor of the Wall Street Journal’s editorial page, once wrote, “International transactions are always in balance, by definition.”
“Protectionism,” said Clinton during the NAFTA debate, “is just a fancy word for giving up; we want to compete and win.” But now, even more than then, Democrats are the party of an America in a defensive crouch, flinching from globalization’s challenges. Besides, progressivism’s constant agenda is to expand the role of government and contract the role of markets in allocating wealth and opportunity. Republicans rescuing Obama’s best idea would be an interesting coda to his presidency.
