A recent New York Times headline proclaimed that Donald Trump had broken with 200 years of economic orthodoxy on trade by opposing trade agreements and by promising to revoke or not ratify them, while also threatening to raise tariffs on imports.
Meanwhile, in the Democratic camp, where support for trade liberalization is normally less enthusiastic than among the Republicans, Bernie Sanders has broadsided Hillary Clinton on trade in general and NAFTA in particular, a position that allowed him to narrowly beat Clinton in the Michigan primary.
What I find troubling about this is the failure of active political voices in the United States to question the Trump-Sanders narrative that America always loses at trade and that trade agreements pose a threat to the US economy. As a high school debater I was taught that if you grant my premise, I can win any debate. Well, this premise is wrong, and it should not be permitted to become conventional wisdom.
If Trump and Sanders are correct, how do they account for the significant and demonstrable increase in jobs and prosperity that has accompanied the growth in international trade? Listening to them, one could be excused for believing that the United States exports nothing, and that there are no US-based jobs associated with the global operations of American companies. Utter nonsense, but accepted truth for many.
The reality is that the United States (not China) is the world’s largest trading nation, with exports of US$2.3 trillion in 2013, supporting an estimated 11.3 million jobs. (And, by the way, those jobs pay 13 to 18 percent more than the US national average wage.)
The problem, of course, is that the benefits of trade are broadly distributed across the economy, while the costs are often concentrated in relatively few industries or locations. Governments have frequently done a poor job of providing adjustment assistance to workers whose jobs have been displaced because of imports, so the Trump-Sanders position resonates with many voters.
But do those same voters really understand the consequences of erecting a tariff wall? Anyone who has witnessed a Black Friday stampede to buy sale-priced electronic goods and clothing imported from China might question the eagerness of American consumers to pay Trump’s proposed 45 percent tariff. Not to mention the fact that a tariff is (children, cover your ears!) a tax — not a word Trump’s supporters dare speak.
As Canadians know full well, trade agreements have their limitations. But such agreements set the rules of the game by which countries must play. To listen to Trump and Sanders, the American government must have recruited the world’s most incompetent trade negotiators. As someone who has dealt with the US on many files, this has not been my experience (if only!). Even when they are wrong, American trade negotiators are anything but pushovers. But they also recognize that all parties to an agreement need to see a satisfactory outcome. The benefits of putting in place rules for international trade and supporting them with dispute-resolution mechanisms are as obvious as the benefits of the rule of law in society in general.
Today’s Republican candidates for the White House pay frequent homage to Ronald Reagan. But Reagan’s position on trade was the polar opposite of Trump’s. “One of the greatest contributions the United States can make to the world is to promote freedom as the key to economic growth,” the President said in his 1988 State of the Union address. “A creative, competitive America is the answer to a changing world, not trade wars that would close doors, create greater barriers, and destroy millions of jobs.”
We have come a long way from 1993, when President Bill Clinton put up Vice President Al Gore to defend NAFTA in a televised debate with Ross Perot, the Donald Trump of his day. Gore mopped the floor with Perot. But it’s 2016, and even Hillary Clinton — whose husband was, arguably, the last vigorous supporter of free trade to occupy the White House — offered little protest against Bernie Sanders’ attack on trade. Meanwhile, the Obama administration argues for ratification of the Trans-Pacific Partnership — not as a further step in America’s successful strategy of promoting global economic freedom, but as an improvement over the presumably flawed agreements of the past. Perhaps that means it is already too late to challenge the antitrade narrative.
It is risky to comment on someone else’s politics. But please, America, will someone not challenge these inaccurate and dangerous premises? Your friends, neighbours and trading partners are worried. Where is Ronald Reagan’s vision when it is needed most?
Photo credit: Joseph Sohm