tag:theconversation.com,2011:/us/topics/trransatlantic-free-trade-agreement-4803/articlesTrransatlantic Free Trade Agreement – The Conversation2018-02-21T11:44:30Ztag:theconversation.com,2011:article/911902018-02-21T11:44:30Z2018-02-21T11:44:30ZTrump’s protectionism continues long history of US rejection of free trade<figure><img src="https://images.theconversation.com/files/207181/original/file-20180220-116337-1hsj6v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Trump has made pushing protectionism since the campaign.</span> <span class="attribution"><span class="source">AP Photo/Chris Carlson</span></span></figcaption></figure><p>Free traders have vilified President <a href="https://economictimes.indiatimes.com/news/economy/policy/india-china-slam-trumps-protectionist-policies/articleshow/61934837.cms">Donald Trump</a> as a pernicious protectionist because of policies such as hiking <a href="https://www.cbsnews.com/news/germany-trump-tariffs-could-trigger-trade-war/">tariffs</a>, abandoning the <a href="https://www.politico.com/magazine/story/2017/03/trump-tpp-free-trade-deal-obama-renegotiate-nafta-214874">Trans-Pacific Partnership</a> and saying he’s prepared to walk away from the <a href="https://www.reuters.com/article/us-usa-trump-nafta-exclusive/exclusive-trump-says-terminating-nafta-would-yield-the-best-deal-in-renegotiations-idUSKBN1F703Y">North American Free Trade Agreement</a>. </p>
<p>They fear his policies will hurt the U.S. economy by restricting access to foreign goods. But are these policies really so radically different from past administrations? </p>
<p>Absolutely not. The fact is the U.S. has never been a truly free trade country – one with virtually no barriers to trade with other nations – <a href="https://www.worldfinance.com/infrastructure-investment/government-policy/once-the-champion-of-free-trade-the-us-is-now-taking-a-protectionist-stance">as some people seem to think</a>. The idea that the U.S. ever was is a myth. </p>
<p>This is among the topics I’ve been exploring for an upcoming book, titled “The Rise of the Guardian State.” My research shows the reason both Republicans and Democrats <a href="https://theconversation.com/free-trade-is-once-again-tearing-apart-the-republican-party-57698">have pursued protectionist policies</a> – despite their rhetoric – is part of the fabric of the American democratic political process. </p>
<h2>The ‘guardian state’</h2>
<p>Long before the U.S. became the so-called <a href="https://www.worldfinance.com/infrastructure-investment/government-policy/once-the-champion-of-free-trade-the-us-is-now-taking-a-protectionist-stance">defender of the liberal economic world order after World War II</a>, it had become a guardian of another kind. </p>
<p>U.S. policymakers’ free trade rhetoric has always been tempered by what I call a “guardian” mentality intended to shelter domestic industries and workers from the full impact of globalization and open trade. In other words, the U.S. government tends to talk a lot about free trade but then maintains a protective layer of trade barriers across the economic landscape. </p>
<p>A <a href="https://works.bepress.com/giulio_gallarotti/18/">paper I published</a> in 2000 showed how this is a natural outgrowth of democracy and the granting of suffrage to more people. As the masses gained greater political power at the turn of the 19th century, politicians faced greater pressure to protect their constituents from the vicissitudes of trade.</p>
<p>For example, at the ballot box, the issues of economic growth and unemployment have often been critical to outcomes. In fact, in every presidential election since World War II, economic issues have figured prominently if not centrally.<br>
And on a broader level, special interests such as unions and business groups brought their political weight to bear at the doors of lawmakers to protect their members. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/207168/original/file-20180220-116360-lfl5j4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/207168/original/file-20180220-116360-lfl5j4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=428&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207168/original/file-20180220-116360-lfl5j4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=428&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207168/original/file-20180220-116360-lfl5j4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=428&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207168/original/file-20180220-116360-lfl5j4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=538&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207168/original/file-20180220-116360-lfl5j4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=538&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207168/original/file-20180220-116360-lfl5j4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=538&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Trade representatives from Canada, the U.S. and Mexico discuss ongoing negotiations over NAFTA.</span>
<span class="attribution"><span class="source">AP Photo/Manuel Balce Ceneta</span></span>
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</figure>
<h2>An axis of guarded trade</h2>
<p>Hence what we have perceived as a partisan <a href="https://classroom.synonym.com/major-difference-opinions-between-democrats-republicans-7724.html">schizophrenia in trade policy</a> in American history between the so-called Republican free traders and Democratic economic nationalists has usually been nothing more than moderate shifts back and forth along an axis of guarded trade. </p>
<p>Even the pro-free trade Republican administrations of Presidents Ronald Reagan and George W. Bush promoted <a href="https://www.brookings.edu/wp-content/uploads/1987/01/1987a_bpea_crandall.pdf">significant barriers</a> to trade. For example, Reagan <a href="http://www.politifact.com/truth-o-meter/article/2016/jul/01/donald-trump-cites-ronald-reagan-protectionist-her/">pushed Japan</a> to unilaterally limit the number of automobiles it exported to the U.S., while Bush <a href="http://www.businessinsider.com/bush-steel-tariff-impact-2017-7">erected tariffs against foreign steel</a>.</p>
<p>And in the 2016 presidential election, there was scant fundamental difference between the two main candidates’ trade policies. Both <a href="http://nationalinterest.org/feature/donald-trump-vs-hillary-clinton-the-trade-policy-paradox-18243">Hillary Clinton and Trump</a>, notwithstanding some minor differences on trade, questioned American support of multilateral trade agreements and engaged in worker-centric and populist rhetoric on globalization. </p>
<h2>Trade’s costs and benefits</h2>
<p>But if America could get very close to a free trade policy, would that be a good thing? </p>
<p>No major country has ever been a purely free trader in modern history. <a href="https://works.bepress.com/giulio_gallarotti/2/">My research</a> for an article published in 1985 demonstrates that Great Britain came closest from 1860 to World War I, when the country eliminated virtually all tariffs. </p>
<p>Among major nations in the post-World War II period, the U.S. has been closest to the free trade pole. But as noted above, with a <a href="https://www.cbp.gov/trade/quota/guide-import-goods/commodities">plethora of tariffs and quotas on foreign goods</a>, the U.S. is still some distance away from late 19th-century Britain’s free trading ways.</p>
<p>We know trade carries <a href="https://www.economicshelp.org/trade2/benefits_free_trade/">great benefits</a>, as is clear from the fact that the most prosperous nations today embrace trade as a vehicle to greater wealth. But trade concomitantly generates costs. </p>
<p>While the benefits of freer trade are spread over society as a whole in the form of rising real incomes and access to superior products, some localities experience costs that severely plague specific groups. The “destructive” part of “<a href="http://www.nytimes.com/2000/06/10/your-money/half-a-century-later-economists-creative-destruction-theory-is.html">creative destruction</a>” – coined by political economist Joseph Schumpeter to characterize capitalist competition – is synonymous with industries failing and their workers losing jobs. </p>
<p>While in theory such dislocation can be overcome over time by people migrating to more competitive industries and wealthier regions, in the short run it is devastating for families that are <a href="https://www.theatlantic.com/business/archive/2017/10/geographic-mobility-and-housing/542439/">less mobile</a> than others. And in fact people are far less mobile than liberal theorists like to contemplate (especially older blue-collar and unskilled workers). </p>
<p>Indeed an overwhelming amount of <a href="http://wer.worldeconomicsassociation.org/files/WEA-WER2-Schumacher.pdf">research</a> suggests that theories upon which free trade are based often fail quite significantly in the face of reality.</p>
<p>And that’s where protective barriers come in. They guard these groups from the economic dislocation of unrestricted competition across national boundaries. This renders a capitalist society more tolerable. </p>
<h2>‘Nothing in excess’</h2>
<p>That being said, going too far in a protectionist direction is surely as devastating, if not more so than a world of purely free trade. As in so many other dimensions of human life, the <a href="http://hellenicantidote.blogspot.com/2007/12/nothing-in-excess.html">famous Greek aphorism</a> “nothing in excess” rings true. </p>
<p>The present article is not an attempt to paint Trump as mainstream on trade policy in any way. Indeed, he has pursued a <a href="https://theconversation.com/what-does-america-first-mean-for-american-economic-interests-71931">very aggressive protectionist agenda</a>, even when measured against the most protectionist Democratic administrations. </p>
<p>But I do wish to suggest that the debate over trade in American history is not as bipolar as most believe and that the differences between Trump’s and past administrations are more a matter of degree than kind. </p>
<p>And if trade goes along the lines of Trump’s other political priorities, we may in fact see that U.S. trade practices will not change as significantly as many believe. His protectionist bark is likely <a href="https://www.salon.com/2017/03/30/president-trump-backtracks-on-trade-will-propose-only-moderate-changes-to-nafta/">bigger than his bite</a>.</p><img src="https://counter.theconversation.com/content/91190/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Giulio Gallarotti does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The idea that the US is historically a free trading country is a myth. Here’s why that’s a good thing.Giulio Gallarotti, Professor of Government, Wesleyan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/645772016-09-01T20:24:27Z2016-09-01T20:24:27ZDoes TPP’s slow death mean the world is now unsafe for trade deals?<p>It seems that the world has become unsafe for trade agreements. In particular, the <a href="https://theconversation.com/us/topics/tpp-7972">Trans-Pacific Partnership</a> (TPP), a major new trade deal among the United States and 11 other Pacific Rim nations, has become a political lightning rod for both the left and the right. </p>
<p>As if to highlight that fact once again, Senate Majority Leader Mitch McConnell <a href="http://www.rollcall.com/news/politics/mcconnell-comment-tpp-ends-obamas-chance-close-deal">said</a> recently that he would not bring the TPP to a vote until after the new president takes office in January. </p>
<p>That’s bad news for the trade agreement – and for President Barack Obama, who sees its passage as the final plank in his foreign policy legacy and who <a href="http://fortune.com/2016/08/17/obama-tpp-congress-lame-duck-trade/">is pushing hard</a> for a vote during Congress’ post-election lame duck session. </p>
<p>But the <a href="https://theconversation.com/heres-a-problem-with-the-tpp-that-hillary-clinton-ignores-at-her-peril-62818">controversial Asian pact</a> is not the only trade agreement potentially on the chopping block. Last month, the European Union’s trade commissioner, Cecilia Malmström, <a href="http://www.wsj.com/articles/eu-canada-trade-talks-falter-auguring-ill-for-bigger-deals-1472511958?mod=e2tw">decided</a> not to fast-track the EU-Canada Comprehensive Economic and Trade Agreement (CETA) due to the anti-trade climate prevailing on the continent. </p>
<p>And France’s President François Hollande <a href="https://www.theguardian.com/business/2016/aug/30/france-demands-end-to-ttip-trade-talks-matthias-fekl">just declared</a> that his country would not support moving forward with the gigantic Trans-Atlantic Trade and Investment Partnership (TTIP) being negotiated between the U.S. and the EU. His announcement came on the heels of a statement by Germany’s vice chancellor that <a href="http://www.independent.co.uk/news/world/europe/ttip-trade-deal-agreement-failed-brexit-latest-news-eu-us-germany-vice-chancellor-a7213876.html">TTIP “has failed.”</a></p>
<p>It seems that every time we get closer to the conclusion and ratification of a trade deal, a new barrier emerges to block any progress. What, then, are we to make of the tremendous obstacles confronting these three major agreements? </p>
<h2>The times they are a-changin’</h2>
<p>First and foremost, opposition to trade is a sign of the times. The Great Recession, among other events, has generated strong pushback against globalization and liberal exchange, something that seems to have caught political elites around the world off guard.</p>
<p>The Doha Round of the World Trade Organization (WTO) had already <a href="https://theconversation.com/why-the-wto-still-matters-34624">come apart</a> well before the recession. Its failure meant that a multilateral deal, one that would have committed nearly all of the world’s countries to the same trade agenda, was no longer possible. </p>
<p>At the heart of Doha’s collapse were the interests of the newly rising BRICS – Brazil, Russia, India, China and South Africa – which could not be reconciled with those of the U.S. and the EU. The failure of the WTO, in its turn, gave new impetus to regional agreements such as TTIP and TPP.</p>
<p>Initially, these regional agreements, along with their more modest bilateral cousins (deals between only two nations), were treated with <a href="http://www.cfr.org/world/termites-trading-system/p15840">suspicion</a> by free traders, who feared that they would carve up the global trading system into inefficient blocs. But, in time, such agreements presented themselves as the best, and only, way forward in a more complex, multipolar economic environment. </p>
<p>Still, TTIP and TPP are more than just victims of the general skepticism for globalization that has arisen in the past few years. They are also the collateral damage from political events in the world’s major trading countries. </p>
<h2>Illiberalism on the rise</h2>
<p>First among these is the <a href="https://theconversation.com/us/topics/brexit-9976">U.K.’s Brexit vote</a>, which is likely to result in the country’s withdrawal from the EU. Brexit, which is itself the fruit of growing illiberalism in England and Wales, has distracted European leaders to such a degree that TTIP and CETA have moved onto the back burner. </p>
<p>Moreover, in the United States, the <a href="https://theconversation.com/can-free-trade-and-tpp-survive-rise-of-the-new-right-56241">success of Donald Trump</a> in mobilizing the anti-globalization working class has made Republicans in Congress, who typically support trade as good for business, <a href="https://theconversation.com/free-trade-is-once-again-tearing-apart-the-republican-party-57698">wary of trade deals</a>. It has also led Hillary Clinton to distance herself from previous statements supporting TPP made during her tenure at secretary of state.</p>
<p>Another problem facing TPP and TTIP is their <a href="https://theconversation.com/pacific-trade-deals-outlook-clouded-by-patent-disputes-elections-as-talks-enter-final-stage-45812">unprecedented scope</a>. Not only do these agreements create free trade blocs that encompass much of the world’s economic output, but <a href="https://ustr.gov/tpp/">they also touch on a variety of issues</a> from internet freedom to generic drug prices to the right of private investors to sue states for compensation. Many of the most controversial elements of the agreements relate to these issues rather than to the traditional components of trade protection.</p>
<h2>What happens next?</h2>
<p>What would be the consequences if these agreements fail? </p>
<p>Economically, the U.S. is already tightly linked with both <a href="https://ustr.gov/trade-agreements/other-initiatives/asia-pacific-economic-cooperation-apec/us-apec-trade-facts">Asia</a> and <a href="https://ustr.gov/countries-regions/europe-middle-east/europe/european-union">Europe</a>. The TPP agreement would essentially expand the Pacific trade bloc beyond NAFTA to include nine additional countries, most significantly Japan. Similarly, TTIP would deepen the already significant economic interdependence that traverses the Atlantic.</p>
<p>The loss of these agreements would certainly have negative economic effects on all sides, as least in the aggregate (since some jobs would be saved by the reduced competition). Agreements this large cannot be jettisoned <a href="http://bookstore.piie.com/book-store/6642.html">without consequences</a>.</p>
<p>That said, given the deep connections that already exist among Asia, North America and Europe, the purely economic results of killing the agreements are likely to be important, but not enormous. More serious would be the geostrategic implications. </p>
<p>A rejection of TTIP by either side could signal a reduced U.S. presence in Europe, a particular concern in the face of increasing Russian assertiveness. </p>
<p>Meanwhile, an end to TPP could encourage a number of Asian countries, unsure of America’s future in the region, to <a href="https://theconversation.com/china-will-be-the-winner-if-us-backs-out-of-the-tpp-63328">move into China’s growing sphere of influence</a>. It is no surprise that this last argument is the one <a href="https://www.washingtonpost.com/opinions/president-obama-the-tpp-would-let-america-not-china-lead-the-way-on-global-trade/2016/05/02/680540e4-0fd0-11e6-93ae-50921721165d_story.html?utm_term=.d44962edcefc">being made</a> most aggressively by the Obama administration.</p>
<h2>Long live free trade?</h2>
<p>If TTIP and TPP are not likely to be approved any time soon, does this mean that they are already dead?</p>
<p>A President Trump would certainly kill the agreements. If, however, Hillary Clinton becomes the next president, as the <a href="http://www.realclearpolitics.com/epolls/2016/president/us/general_election_trump_vs_clinton-5491.html">polls seem to indicate</a>, their future is <a href="https://theconversation.com/why-progressives-should-rescue-the-tpp-trade-deal-60304">harder to predict</a>. Clinton seems to be, at heart, a believer in open markets, but the current political situation <a href="http://www.nbcnews.com/politics/2016-election/awkward-trade-fight-coming-hillary-clinton-n637586">makes it hard</a> for her to say so directly. </p>
<p>If elected, Clinton’s statements during the campaign would make it difficult for her to support TPP out of the gate, especially with strong opposition from Bernie Sanders supporters. As envisioned by Cato trade analyst <a href="http://nationalinterest.org/feature/how-president-hillary-could-reverse-course-tpp-17476">Simon Lester</a>, she may well try to renegotiate a portion of the agreement as political cover and then resubmit it to Congress for approval. </p>
<p>By this point, if Trumpism has been defeated, Republicans may have a greater appetite for foreign trade. The question, of course, is whether the other TPP signatory countries will be willing to reopen portions of the agreement that have already been concluded.</p>
<p>Similarly, in Europe, it seems unlikely that much progress will be made until the Brexit issue is resolved and growth starts to pick up. </p>
<p>Despite all the obstacles, however, I believe that it is important to keep moving forward on free trade. The rejection of these important agreements could risk becoming merely the first step in a gradual erosion of support for the global economic architecture. </p>
<p>This <a href="http://press.princeton.edu/titles/1322.html">architecture</a>, so carefully created and maintained by the United States after 1945, has contributed mightily to international prosperity and peace. Maintaining it is of critical importance.</p><img src="https://counter.theconversation.com/content/64577/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Hankla does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Most Western trade agreements – past and present – appear to be in doubt amid an anti-globalization backlash.Charles Hankla, Associate Professor of Political Science, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/351382015-01-05T10:54:59Z2015-01-05T10:54:59ZUpdating ‘fast-track’ is key to getting a trade deal in 2015<p>With the resounding Republican victory in November’s midterm elections, most pundits are despairing that Congress and President Barack Obama will find any areas for cooperation in the coming two years. If there is a potential bright spot of mutual interest, though, <a href="http://www.wsj.com/articles/charles-boustany-and-robert-b-zoellick-a-trade-opportunity-for-obama-and-the-new-congress-1419811308">many believe</a> it must be in international trade. </p>
<p>Despite the reluctance of Democrats in Congress, the president is in the process of negotiating two sweeping trade deals, one with Europe and another with Asia. Perhaps, the thinking goes, Obama’s <a href="http://www.nytimes.com/2014/01/30/opinion/obamas-free-trade-conundrum.html?_r=0">support</a> for open trade will find a partner in a Congress controlled by free-market Republicans, allowing America’s trade agenda to move forward at a rapid clip.</p>
<p>However, while bipartisan agreement does appear more likely in trade than in more contested policy areas such as immigration, the road will not be easy. Significant impediments remain to a deal between the White House and Republicans, and it’s not clear these can be ironed out to open the way for progress.</p>
<h2>A fast track on trade</h2>
<p>The current trade impasse took form last January, when President Obama formally asked Congress to grant him <a href="http://www.brookings.edu/research/papers/2001/12/globaleconomics-brainard">Trade Promotion Authority</a> (TPA), also known as “fast-track.” In essence, fast-track allows the White House to negotiate a trade deal and then get an up-or-down vote in Congress. This delegation of power has been a tool used by most presidents since its creation in 1974, and the White House considered it critical to moving forward with ongoing trade negotiations. </p>
<p>The first of these negotiations, to create the <a href="http://www.ustr.gov/tpp">Transpacific Partnership</a> (TPP), is set to eliminate key trade barriers between the United States and 11 Asian countries, including Japan. The second, called the <a href="http://www.ustr.gov/ttip">Transatlantic Trade and Investment Partnership</a> (TTIP), could be of even greater significance. It would merge the world’s two largest economies, the United States and the European Union, into a more deeply interdependent trading zone. </p>
<p>No sooner had the president asked Congress for TPA, however, than opposition began to build, putting both TTIP and TPP in jeopardy. Perhaps the most influential naysayer was President Obama loyalist Harry Reid, Democrat and outgoing majority leader of the Senate, who undoubtedly feared that fast-track approval would <a href="http://www.nytimes.com/2014/01/31/business/reid-pushes-back-on-fast-track-trade-authority.html?_r=0">hamper his party’s chances at the polls</a>. A bipartisan bill to extend fast track was introduced but quickly foundered on a lack of enthusiasm from all sides.</p>
<h2>Reasons for optimism</h2>
<p>Now that the midterms are over and Republicans have retaken control of the Senate, might the way be open for an agreement on trade? There is at least one reason to be optimistic: trade is among the few areas where one can still find some agreement across the aisle.</p>
<p>Republicans, who tend to represent corporate and financial interests, are already more amenable to free trade, while labor-backed Democrats are more likely to oppose it. But these party-based differences are not the whole story, and that’s where there could be common ground. </p>
<p>The relative weakness of America’s political parties means that members of Congress must cater to the interests of their constituents, and these can vary dramatically depending on their district. A Republican from the textile belt of North Carolina may be a trade skeptic, while a Democrat representing an export competitive high-tech region may back open markets. </p>
<p>Another reason to remain hopeful is that both major trade accords have significant security implications that may attract bipartisan support. The TTIP is meant to reaffirm transatlantic ties at a time when Europe is being severely tested, while the TPP is about building a pro-American economic zone in China’s backyard. </p>
<p>All of this suggests that a bipartisan trade bill, backed predominately by Republicans but also by many Democrats, is a distinct possibility. Perhaps trade is an area where, at long last, gridlock can be avoided and something can get done.</p>
<h2>Let’s not get carried away</h2>
<p>But we should pause before we get carried away. Many members of Congress on both sides of the aisle remain skeptical about the trade pacts and, even more fundamentally, about fast-track authority itself – without which it would be very difficult to negotiate a deal.</p>
<p>Many on the left view free-trade agreements as detrimental to the environment, labor standards, and the safety of imports, making Democrats afraid that support for trade will incur the anger of their base. Republicans, meanwhile, may back free trade philosophically but could be reluctant to hand President Obama any policy victory. </p>
<p>Perhaps the most serious challenge to movement on trade lies in the fast-track system itself. The Constitution gives authority over trade to Congress, and for well over 100 years that body would simply vote a tariff bill every few years. But since the 1930’s, the international trading system has been based on negotiations where countries exchange concessions over market access. The Trade Act of 1974, which created the fast-track system, recognized that under these circumstances the executive branch would need to be a key player in trade. It represented a voluntary but very real delegation of congressional power to the president.</p>
<p>The problem now is that trends in international trade are increasing the need for executive leadership even as they create new incentives for Congressional involvement. The introduction of issues such as intellectual property, environmental, health, and labor regulation, and domestic subsidies into trade negotiations makes it all the harder for Congress to set out clear guidelines to the president prior to negotiations. </p>
<p>So, what are the <a href="http://www.reuters.com/article/2014/12/03/us-usa-trade-obama-idUSKCN0JH24220141203">chances that a deal</a> between the President and Congress can be struck, and what might that deal look like? An adjusted, narrower form of fast-track could work, specifying which countries and on which issues the authority applies. Or Congress could extend the traditional 90-day fast-track window to provide more room for debate. Or it could even demand more regular consultations during the negotiations.</p>
<p>One thing is certain: if the TPP and TTIP negotiations are to be success, some form of congressional delegation must occur. Without it, our negotiating partners will never trust in the president’s ability to make concessions and will fear Congress’s power to change unilaterally the terms of any bargain that is struck. The days of complete legislative dominance in trade policy are definitely at an end.</p>
<p>It’s notoriously hard to predict the future, and trade may still get moved to the back burner as another victim of Washington gridlock. But there is reason to hope that a modified system of fast track, more appropriate to the present century, could emerge to form the basis of a new era of trade cooperation.</p><img src="https://counter.theconversation.com/content/35138/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Hankla does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With the resounding Republican victory in November’s midterm elections, most pundits are despairing that Congress and President Barack Obama will find any areas for cooperation in the coming two years…Charles Hankla, Associate Professor of Political Science, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/205252013-11-20T06:18:48Z2013-11-20T06:18:48ZDodgy economics of the transatlantic free trade deal<figure><img src="https://images.theconversation.com/files/35621/original/9xvgdnp6-1384887366.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Fewer trade hurdles won't necessarily help Britain's economy.</span> <span class="attribution"><span class="source">Martin Rickett/PA</span></span></figcaption></figure><p>The Conservative Party’s 2010 <a href="http://media.conservatives.s3.amazonaws.com/manifesto/cpmanifesto2010_lowres.pdf">general election manifesto</a> could not have been clearer: “A sustainable recovery must be driven by growth in exports”. As George Osborne <a href="http://www.totalpolitics.com/print/speeches/35193/george-osborne-mais-lecture-a-new-economic-model.thtml">specified</a>, the target was “net exports”. Rising exports had to go alongside falling imports, as Britain once again became a nation of “makers”, rather than consumers.</p>
<p>Yet the data on Britain’s trading position since the coalition government took office is equally clear: the trade deficit is getting worse rather than better. The proposed free trade agreement between the US and the EU, known as Transatlantic Trade and Investment Partnership (<a href="http://www.parliament.uk/briefing-papers/sn06688/the-transatlantic-trade-and-investment-partnership-(ttip)">TTIP</a> is being sold in the UK as part of the solution to this deficit. However, the notion that TTIP will lead to a rebalancing towards export-led growth is somewhat fanciful.</p>
<p>Since 1984, the UK has run a current account deficit every single year. Last year the deficit was <a href="http://www.ons.gov.uk/ons/rel/bop/balance-of-payments/q2-2013/index.html">more than £59 billion</a>, almost 4% of GDP, the <a href="http://www.theguardian.com/business/2013/mar/27/britain-current-account-deficit-worst-since-1989">largest since 1989</a>. </p>
<p>The trade balance has improved slightly in 2013, as exports increased. However, the increase was largely in line with overall economic growth, with exports accounting for no greater a portion of GDP than in the past few years. This limited improvement has been assisted by the pound falling in value, so our exports are cheaper – but this trend is actually quite worrying, as it is driven by a decrease in foreign investment into the British economy.</p>
<h2>Is free trade the answer?</h2>
<p>Clearly, the recovery is not being led by exports. This helps to explain the government’s enthusiasm for TTIP (which has received virtually no mainstream media attention). Britain’s exports more to the US than anywhere else, and indeed the US is also our second biggest source of imports (just behind Germany, and just ahead of China and the Netherlands).</p>
<p>The deal will virtually eliminate trade tariffs between the US and the EU. But most of the benefits lie in eliminating “non-tariff barriers”, that is, the rules and regulations by which those wishing to sell to or invest in other countries must abide. Depending on the extent of the final agreement, government-commissioned research claims the deal could lead to an increase in between <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/198115/bis-13-869-economic-impact-on-uk-of-tranatlantic-trade-and-investment-partnership-between-eu-and-us.pdf">0.3% and 0.7% of GDP</a> for the UK.</p>
<p>However, such an increase is unlikely and, even if it did come about, it would not represent re-balancing towards export-led growth.</p>
<p>TTIP has attracted a little controversy recently due to the implications of seeking to harmonise regulatory practices across different jurisdictions. The deal would not only require national governments to alter legislation to conform to the agreement; they would also have to compensate any company which successfully argued its ability to operate freely in other countries was being impeded by excessive regulation.</p>
<p>Compensation would be agreed by investor-state dispute settlement mechanisms: shadowy, quasi-judicial bodies which meet in secret and are not led by an independent judiciary. Such mechanisms are already a feature of many trade deals between developed and developing countries. George Monbiot, writing in the Guardian, understandably labelled this aspect of the deal “<a href="http://www.theguardian.com/commentisfree/2013/nov/04/us-trade-deal-full-frontal-assault-on-democracy">a full-frontal assault on democracy</a>”.</p>
<h2>Dodgy economics, dodgy deal</h2>
<p>But the faulty economics of the agreement are just as interesting. Firstly, Britain already has a very liberal regime in terms of openness to American firms. This is why our European partners stand to benefit much more than we will. The same government research <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/198115/bis-13-869-economic-impact-on-uk-of-tranatlantic-trade-and-investment-partnership-between-eu-and-us.pdf">already acknowledges</a> that harmonisation between the US and continental Europe will actually divert trade away from Britain.</p>
<p>Secondly, the estimated benefit to UK GDP appears to take no account of the negative economic impact of additional imports from the US. Trade works both ways: it will be easier for Britain to export to the US, but it will also be easier for the US to export to Britain. Clearly, there will be a short-term economic benefit arising from cheaper American imports; but there may also be a longer-term impact on skills and investment in Britain if our producers suffer as a result.</p>
<p>Thirdly, and I believe most importantly, estimates of the cost of non-tariff barriers is based largely on asking firms about the extent of these expenses. Hardly the most rigorous research method - when asked, firms will invariably <a href="http://www.sheffield.ac.uk/management/research/seminarseries/abstracts/30-05-2013">exaggerate the cost</a> of regulatory compliance.</p>
<p>Finally, cabinet minister Ken Clarke’s <a href="http://www.theguardian.com/commentisfree/2013/nov/11/eu-us-trade-deal-transatlantic-trade-and-investment-partnership-democracy">response</a> to Monbiot suggests that TTIP is actually quite progressive, as it helps small firms more than large firms as smaller firms don’t have the resources to comply with different regulations in different areas.</p>
<p>But TTIP is more concerned with enabling overseas firms to establish a physical presence in other countries than with encouraging arms-length trade. Few small firms have the capacity to operate across borders, regardless of tariffs and regulations, and as such, TTIP will almost certainly benefit the largest corporations more than smaller firms.</p>
<p>Increased investment in new technology and the UK manufacturing base is the surest path to export-led growth. Deregulation will, at best, provide a temporary boost before exacerbating long-term structural defects in the British economy.</p>
<hr>
<p><em>A version of this article first appeared on <a href="http://speri.dept.shef.ac.uk/2013/11/19/export-led-growth-failure-economic-rebalancing/">SPERI Comment</a> - part of the Sheffield Political Economy Research Insitute’s website</em></p><img src="https://counter.theconversation.com/content/20525/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Berry does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Conservative Party’s 2010 general election manifesto could not have been clearer: “A sustainable recovery must be driven by growth in exports”. As George Osborne specified, the target was “net exports…Craig Berry, Research Associate, Sheffield Political Economy Research Institute (SPERI), University of SheffieldLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/121972013-02-14T00:22:16Z2013-02-14T00:22:16ZThe two treaties: Obama, trade, and the State of the Union<figure><img src="https://images.theconversation.com/files/20240/original/bfsc5h8c-1360795629.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Obama has unveilled two key trade treaties designed to reaffirm America's place as the world's leading nation - but many aspects of the treaties run counter to its social development stances.</span> </figcaption></figure><p>US President Barack Obama’s State of the Union plan to boost American exports and grow American jobs centres around two key regional trade agreements: the <a href="http://www.ustr.gov/tpp">Trans-Pacific Partnership</a> (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA). </p>
<p>The TPP has been under way for some time, with the next round scheduled for next month in Singapore and expected to conclude in October.</p>
<p>Obama also announced the US will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union. Supporters of TAFTA, like <a href="http://www.huffingtonpost.com/dan-hamilton/create-a-new-transatlanti_b_2669700.html">Professor Dan Hamilton</a>, have argued that such an agreement should cover not just matters of trade, but also issues of de-regulation and investment.</p>
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<figcaption><span class="caption">The State of the Union Address 2013.</span></figcaption>
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<p>Both treaties will be mutually reinforcing. The United States Trade Representative will use the twin treaties to play participants and regions off against one another, and push for higher standards and obligations.</p>
<p>But the twin trade agreements are controversial - particularly because the discussions have lacked transparency, openness and due process. Moreover, there has been a concern that the TPP and TAFTA will be in conflict with Obama’s policy agenda on labour rights, public health, and the protection of the environment.</p>
<p><strong>Made in America: labour rights, manufacturing, and trade</strong></p>
<p>In his address, Obama emphasised that his first priority would be to make America “a magnet” for new jobs and manufacturing, emphasising how after 10 years of shedding jobs, manufacturers such as Caterpillar, Ford, Intel, and Apple were bringing production jobs back in the US. </p>
<p>Showing enthusiasm for <a href="https://theconversation.com/topics/3d-printing">3D printing</a>, Obama also spoke of creating a first manufacturing innovation institute: “A once-shuttered warehouse (in Youngstown, Ohio) is now a state-of-the art lab where new workers are mastering the 3D printing that has the potential to revolutionise the way we make almost everything.” He envisaged that establishment of a network of fifteen of such hubs to “guarantee that the next revolution in manufacturing is Made in America”.</p>
<p>However, the twin trade agreements may serve to undermine labour rights, working conditions, and employment.</p>
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<figcaption><span class="caption">Will the Pacific Trade Deal Protect Workers?</span></figcaption>
</figure>
<p>The umbrella federation representing US unions, <a href="http://www.aflcio.org/Issues/Trade/Trans-Pacific-Free-Trade-Agreement">AFL-CIO</a> observed of the TPP: “Negotiations must include provisions that will benefit US workers, not simply the largest global corporations.” </p>
<p>AFL-CIO argued the Obama administration must “improve the US trade positions so they work for the 99%, not just the 1%.” The union body lamented: “Unfortunately, for years the global corporate agenda has infused trade policy with its demands for deregulation, privatisation, tax breaks and other financial advantages for Big Business, while shrinking the social safety net in the name of ‘labour flexibility’”.</p>
<p>Public advocacy group, Public Citizen have argued that <a href="http://www.citizen.org/pressroom/pressroomredirect.cfm?ID=3732">Obama’s trade policies create incentives to send jobs offshore</a>. <a href="http://www.huffingtonpost.com/lori-wallach/sotu-tpp-tafta-wtf_b_2678523.html">Lori Wallach</a> observed: </p>
<blockquote>
<p>“Since the implementation of our existing FTAs, more than 60,000 US manufacturing facilities have been shuttered and we have lost five million manufacturing jobs - fully one quarter of America’s manufacturing jobs prior to the agreements’ implementation.”</p>
</blockquote>
<p><strong>Intellectual property, innovation, and access to essential medicines</strong></p>
<p>Evoking <a href="http://t.co/EHPqS60e">past technological marvels and wonders</a>, Obama spoke glowingly of <a href="http://www.ip-watch.org/2013/02/13/president-obama-calls-for-dramatic-increase-in-rd-major-trade-deals/">the need to continue to invest in research and development</a>.</p>
<p>Obama also talked about an agenda promoting development goals that included eradicating poverty in the next 20 years, connecting more people to the global economy, empowering women, reducing the number of preventable deaths of children and realising the promise of an AIDS free generation.</p>
<p>However, the trade agreements have not been driven by the objective of promoting such development goals. In fact, there has been much concern about the <a href="https://theconversation.com/a-mercurial-treaty-the-trans-pacific-partnership-and-the-united-states-7471">intellectual property chapter of the Trans-Pacific Partnership</a> and its effects on public health objectives and access to essential medicines for poorer nations. In particular, <a href="http://blogs.computerworlduk.com/open-enterprise/2013/01/after-acta-tap-the-trans-atlantic-partnership-agreement/index.htm">commentators</a> point to the unpopular <a href="https://theconversation.com/opening-pandoras-box-secret-treaty-threatens-human-rights-6092">Anti-Counterfeiting Trade Agreement</a> and say a trade agreement between EU and US could foster a similarly flawed approach.</p>
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<figcaption><span class="caption">Médecins Sans Frontières on the Trans-Pacific Partnership.</span></figcaption>
</figure>
<p><a href="http://www.huffingtonpost.com/2013/02/12/state-of-the-union-obama-trade_n_2673259.html?utm_hp_ref=tw">Judit Rius of Médecins Sans Frontières</a> argues Obama needs to find a trade policy that adheres to his and previous administrations’ commitments to global health. She observed: “The TPP is a huge conflict with those stated goals.”</p>
<p><strong>The Environment, Biodiversity and Climate Change</strong></p>
<p>Obama has vowed to do more to combat climate change, urging Congress to pursue a “bipartisan, market-based solution to climate change” and saying he would use his executive powers if necessary to pursue sustainability goals. </p>
<p>This line follows on from <a href="http://www.guardian.co.uk/world/2013/jan/21/barack-obama-2013-inaugural-address">his inauguration speech</a>, where Obama alluded to the prospect of trade wars and patent fights over clean technology: “We cannot cede to other nations the technology that will power new jobs and new industries – we must claim its promise.” At this week’s State Union of Address, Obama expanded upon this: “As long as countries like China keep going all-in on clean energy, so must we.”</p>
<p>But Obama appears to lack clarity as to his ambitions for any international agreement on climate change and there is concern that <a href="http://www.eastasiaforum.org/2012/09/22/the-trans-pacific-partnership-the-environment-and-climate-change/">regional trade agreements may undercut environmental protection and climate policy</a>.</p>
<p><a href="http://sierraclub.typepad.com/compass/2012/10/senator-tpp-letter.html">United States Congressional leaders such as Ron Wyden</a> have been concerned the TPP will hinder, rather than help, environmental protection. <a href="http://elizabethmaymp.ca/submission-environmental-assessment-tpp">Elizabeth May, the leader of the Green Party in Canada, has warned that the TPP</a> could “fundamentally erode a government’s ability to enact laws, regulations and policies that protect its environment.” And the <a href="http://inthehouse.co.nz/node/16365">New Zealand Greens</a> have interrogated New Zealand Prime Minister John Key about the impact of the agreement. Likewise, the <a href="http://christine-milne.greensmps.org.au/content/media-releases/trans-pacific-partnership-negotiation-dead-water">Australian Greens have been sceptical of the agreement</a>.</p>
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<figcaption><span class="caption">New Zealand Parliament debates the Trans-Pacific Partnership.</span></figcaption>
</figure>
<p><strong>Trade, Wall Street and Main Street</strong></p>
<p>As a presidential candidate in 2007, Obama maintained that trade agreements should “not be just good for Wall Street - they should be good for Main Street”.</p>
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<figcaption><span class="caption">Barack Obama on NAFTA in 2007.</span></figcaption>
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<p>Such a critical attitude is absent from the President’s discussion of the TPP and TAFTA in 2013. In this aspect, Obama’s State of the Union address is a study in contradictions. His ambitious regional trade agenda does not necessarily sit well his public policy objectives in respect of work, public health, and the environment. As <a href="http://www.huffingtonpost.com/lori-wallach/sotu-tpp-tafta-wtf_b_2678523.html">Lori Wallach of Public Citizen</a> has noted: “Indeed, TPP and TAFTA would gut many of the most worthy goals included in Obama’s SOTU address if the American public and Congress let them come to fruition.”</p>
<p>There is also a need for the Obama administration to realise its promises of <a href="http://www.whitehouse.gov/the_press_office/TransparencyandOpenGovernment">transparent and open government</a> - particularly in matters of trade. </p>
<p>Thus far, such agreements have been negotiated in stealth and secrecy. The Obama administration should harmonise its trade objectives with its public policy agenda. The Obama administration should appoint a new United States Trade Representative who can truly realise “free and fair trade” across the Pacific and the Atlantic. Moreover, there is a need for the United States to embrace multilateral trade, and the Doha Agenda.</p><img src="https://counter.theconversation.com/content/12197/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr Matthew Rimmer is an Australian Research Council Future Fellow, working on Intellectual Property and Climate Change. He is an associate professor at the ANU College of Law, an associate director of the Australian Centre for Intellectual Property in Agriculture (ACIPA), and a member of the ANU Climate Change Institute. Dr Matthew Rimmer receives funding as an Australian Research Council Future Fellow working on "Intellectual Property and Climate Change: Inventing Clean Technologies" and a chief investigator in an Australian Research Council Discovery Project, “Promoting Plant Innovation in Australia”.</span></em></p>US President Barack Obama’s State of the Union plan to boost American exports and grow American jobs centres around two key regional trade agreements: the Trans-Pacific Partnership (TPP) and the Trans-Atlantic…Matthew Rimmer, ARC Future Fellow and Associate Professor in Intellectual Property, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.