Signs of Life in Trade Policy?

It has been fashionable in trade circles to lament the administration’s lack of a trade policy. (For my part, I don’t think they lack a policy; they lack the right policy.) That lament, in turn, has led to way too much discussion about why there is no policy. I will touch on that today, but the more important point is that there may be some admittedly small signs of movement toward a more traditional approach on trade, at least on the Republican side. And, since the Republicans now control the House, their movements now matter more than they used to.

On the Democratic side, aside from occasional snorts of frustration, there is little sign of change. Some elected Democrats have from time to time suggested that we can walk and chew gum at the same time, so we ought to be able to negotiate market access along with Biden’s priorities at the same time, but they do not appear to be getting much traction. There are two reasons for that: philosophy and politics.

Philosophically, the trade decisionmakers in the administration believe that past trade agreements have not served our workers well, and they are determined to pursue agreements that help workers, which has turned out to mean not negotiating tariffs or market access.

Politically, those same decisionmakers are survivors of the intraparty battle over the Trans-Pacific Partnership (TPP) in 2016, and they have decided they don’t want to go through that again. The result is that they have outsourced their trade policy to their left wing, which means no trade agreements with market access or tariff concessions, since those are viewed as costing U.S. jobs.

You get to choose which to believe, but I suspect both are true, and both explain the absence of a traditional trade policy that focuses on comprehensive free trade agreements. There are also other factors, notably the conflation of trade with national security, that have forced the administration to look at trade from the standpoint of resilience and vulnerability.

On the Republican side, things appear to be getting more interesting. From its beginning, the party has flip-flopped on trade. Originally a party that represented northern manufacturers, it was a party of trade protection and high tariffs. Between 1861 and 1933, the only periods of lower tariffs were during the terms of the only two Democratic presidents—Grover Cleveland and Woodrow Wilson. Republican presidents supported high tariffs, culminating in the Smoot-Hawley tariff bill in 1930.

After World War II, however, the party’s views flipped, thanks in significant part to Senator Robert Taft, and it became the party of internationalists that supported trade. The fact that other developed economies had been devastated by the war, and our manufacturers were now the most globally competitive in the world no doubt played a role in that, along with Republicans’ desire to counter Soviet aggression in multiple corners of the world.

Republican trade policy for the next 50 years continued to be pro-international engagement and pro-trade, just as the Democrats, originally a free trade party, were slipping into protectionism at the behest of their organized labor supporters.

That changed again when Donald Trump came along as an outspoken trade skeptic and portrayed the United States as a victim of evil foreigners destroying our economy because of his feckless predecessors who failed to do anything about it. Scores of Republican politicians followed him, and Republican support for trade and trade agreements dropped precipitously in public polls starting in 2015.

Now, however, it appears that modest change may be in the air, and, as with the Democrats, there are two reasons for it. First, as Trump—unwillingly but inevitably—fades off into the sunset, there are some modest signs Republicans are returning to their twentieth-century pro-trade roots, encouraged by the U.S. Chamber of Commerce and other business groups whose views on trade never changed. The private sector Republican voices have been there all along but have been drowned out by Trump and his allies. As that noise subsides, a return to a more traditional approach is likely.

As with the Democrats, the second reason is political—some Republicans see advantages in attacking the Biden administration for passing up opportunities on trade and not having a policy. This also makes political sense for the many Republicans representing agricultural areas, where market access is a big issue for farmers. That includes both the chairman of the full Ways and Means Committee and the chairman of the Trade Subcommittee.

The bottom line is that trade may prove to be a more exciting issue than it was last year as Republicans attack the administration for what they see as its lack of accomplishments and missed opportunities. That could also mean considering new trade negotiating authority. That is unlikely to make it to the finish line, since it would take an active, positive, engaged executive branch, but taking it up would provide a good opportunity for Republicans to dust off their free trade credentials while taking a shot at the administration. And, most important of all, it will keep Scott Miller and I—the Trade Guys—in business for another year.

William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.