Clean Up
December 20, 2019
The holidays are upon us, and I imagine the last thing people want to read about is trade policy, but I’m going to crank something out anyway. It’s a bit early for next week, and the following week’s column will be late because of the new year, but things continue to happen. As you all know, trade policy is a target-rich environment these days.First up is the House passage of the United States-Mexico-Canada Agreement (USMCA) implementing bill. The vote was anti-climactic in the wake of the agreement between House Democrats and Ambassador Lighthizer, but the margin was significant—385-41, with hefty majorities in both parties. Clearly, Lighthizer succeeded in building his bipartisan coalition, and he deserves a lot of credit for that—as do the House Democrats for their willingness to put election politics aside and get to “yes” on an issue that was important to many of their constituents as well as those in Republican districts. Of course, this success opens a new debate: will it be the new normal or was it a one-off event that will not be repeated? It’s much too soon to say, of course, particularly since we don’t know when another agreement might appear or whom it might involve. However, one can argue that it does suggest Democrats are beginning to come to terms with the reality that much of their base, particularly young people and people on both coasts, is pro-trade, and they need to pay attention to that along with their traditional ties to organized labor. In addition, the next agreement up might be with the United Kingdom, where labor is less likely to be an issue, which would make it easier to continue this trend of Democratic support. And, since these are Trump deals, you can count on Republicans supporting them. That may not add up to a permanent shift in trade politics, but it certainly opens the door to it.
Second, I was primed to write about what the Democrats had to say about trade in their debate Thursday night, but once again my hopes were dashed. At least this time there was a question about it—whether they would support USMCA. The responses were predictable—Senator Bernie Sanders (I-VT) said “no,” and Senator Amy Klobuchar (D-MN) said “yes” befitting her generally moderate positions. Sanders complained it did nothing to stop offshoring, which is not correct if one looks at the new auto rules of origin. They are intended to bring production back to the United States, and our study from last spring concluded they will do that, although with the cost of making the industry less globally competitive. Klobuchar trotted out the same cliché I have used frequently—don’t let the perfect become the enemy of the good—a popular trope that separates the centrists from the extremes in both parties. The House vote reflected that as well, and I expect the Senate to follow suit once it gets to the bill.
There were other questions about China, not specifically focused on trade, which gave several candidates the opportunity to make the usual “I’m going to be tough on China” statements that are now essentially mandatory for any campaign. You’re not going to find much disagreement on that general point, although they may ultimately divide on what specifically they would do that is different from what the president is doing.
As far as what those changes might look like, a month ago I laid out what I thought should be a Democratic trade policy. Of course, no one paid much attention, so I’m going to do it again (remember this is the season for reruns). What follows is a slightly shorter version of what I said following the previous debate.
First, the candidates should acknowledge globalization’s inevitability. The world has retreated from globalization twice in history: after the end of the Roman Empire and after 1913 because of two world wars and a global depression—and most people would not support creating conditions that would lead to that happening again.
Second, they should embrace multilateralism, the political foundation for economic integration. That means not only building the coalitions that Trump has avoided but supporting the multilateral institutions that Trump has neglected, including the World Trade Organization, where the administration is blocking progress on reforming the Appellate Body.
Third, they should acknowledge the damage trade has done to some Americans and should commit themselves not only to policies that avoid further harm but also to specific programs that will correct the damage and at the same time better prepare workers for the rapid changes occurring in the U.S. economy.
Fourth, they should lay out a plan for future negotiations, including:
- Repairing the damage the current administration has done;
- Supporting the completion of pending negotiations, including the Environmental Goods Agreement, the Trade in Services Agreement, the proposed e-commerce negotiation, and others that may launch between now and the next presidential inauguration;
- Pursuing other agreements, plurilateral or bilateral, they see in the U.S. interest;
- Returning to the Transpacific Partnership (TPP) or its successor and restarting talks with the European Union without preconditions in order to develop the rule-of-law-based structures we collectively need to meet the Chinese challenge;
I suspect not all the candidates could get behind all of that, but I believe it is consistent with where most voters would like to go and certainly where the country needs to go if it is to thrive and lead in the next decade.
And finally, best wishes for the holidays and for a happy and prosperous New Year.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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