Trans-Pacific Farce
I haven’t played policy wonk in a while, but I have been pondering a couple of op-ed pieces about free trade agreements. One appeared April 22 in the Wall Street Journal, “America Misses Another Asian Opportunity,” by Bernard G. Gordon, professor emeritus at the University of New Hampshire. The other is Frank Vargo’s April 19 piece in The Hill, “Free Trade Pacts Have Been Good For U.S.” Frank, who is vice president for international economic affairs at the National Association of Manufacturers, is a friend, former colleague and my one-time boss – so I am predisposed to like what he writes.
Gordon shares my doubts, and hopes, for President Obama’s infatuation with the Trans-Pacific Partnership. The United States, as much by its own inaction as the intentions of others, has been largely left out of the major economic discussions in Asia. Yes, we are a force in APEC and we sit in on some other Asian or Pacific groupings, but we are completely out to lunch when it comes to participating in Asia’s burgeoning network of trade agreements. Washington is desperate to offset China’s influence in the region, but without negotiating – and implementing new free trade agreements – we have little opportunity to do so. Congressional cave dwellers have tied the President’s hands by refusing to take action on the three negotiated FTAs that await passage (South Korea, Panama and Colombia). And the Congressional caucus against FTAs has Obama so scared that he won’t even ask the Congress if they would think about implementing the agreements. Yes, he mentions them from time to time, but what is needed is a clear and explicit request from the White House to pass the things. And, during Obama’s inaction, perhaps a result of his dithering, more than 100 members of Congress have come out to say they will oppose any future free trade agreements. This is what passes for leadership.
How Asia is organized, but where is tiny TPP?
Gordon points out, too, that Obama’s National Export Initiative, while great domestic politics, has raised fears elsewhere of a new mercantilism in America. The emphasis on doubling exports is straight from the mercantilist playbook that assumes a zero-sum game in trade. It leads other countries to assume that Washington intends to build U.S. exports at their expense – never a good way to launch a negotiation. It is a rare product that is unambiguously from a single country anymore, so the focus simply on U.S. exports is economic nonsense. Gordon quotes India’s Trade Minister, Anand Sharma: “We are worried about the U.S.“. I can’t do better than to quote Gordon’s conclusion:
“For a country that almost singlehandedly launched the General Agreement on Tariffs and Trade and then the World Trade Organization, America’s newfound support for a pitiable “Trans-Pacific Partnership” is quite a letdown. All the more so when, if the WTO’s Doha Round were completed, its “most favored nation” clause would render moot most of the preferential trade agreements that have cluttered the world trading scene during the past decade. And yet only the TPP will be pursued because that’s all the boss ordered.”
Frank Vargo is a numbers guy. If the numbers don’t support an argument, he won’t go for it. So, when Frank uses statistics, I believe what he has to say about them. And what he has to say is that during 2008 and 2009, the United States had a $50 billion trade surplus in manufactured goods traded with our partners in FTAs. That means a lot of U.S. jobs and is a good indicator that free trade agreements have been a strong net benefit for the country. The clincher is that we suffered an $820 billion deficit with the countries with which we do NOT have free trade agreements. Shouldn’t Congress insist that we negotiate FTAs with everybody? Seems only logical, but that is the problem in Washington. Logical reasoning just doesn’t cut it in the capital of populist sound bites.
