The recent defeat of Congressional efforts to pass a package of trade legislation including Trade Promotion Authority (TPA) and Trade Adjustment Assistance (TAA) provides a great opportunity to rethink the kinds of trade agreements Americans need in 2015.
Opposition to the TPA/TAA deal came from both the left and the right, making it clear that the old consensus on trade cannot hold.
Context matters in such things, and we need to acknowledge that the context in which we think about trade has shifted. With past U.S. administrations, whether Republican or Democratic, unambiguously committed to the free market system and the expansion of economic freedom around the world, a congressional grant of negotiating authority provided maximum leverage to U.S. negotiators to craft deals that reduced tariff and non-tariff barriers to trade and opened other countries’ markets and our own as well.
As tariffs have come down and non-tariff barriers have begun to fall, trade negotiators have turned their attention to a much wider range of issues, including things like labor and environmental standards, currency manipulation and investment regulations, and even human rights conventions. Trade agreements are becoming ever more comprehensive, and their regulatory reach has become significant.
Here’s where the U.S. context really matters. We have a president, committed to an expansive regulatory agenda at home, who has proclaimed his intention to negotiate “the most progressive trade agreement in our nation’s history.”
It is not clear why any Republican, conservative, or indeed anyone committed to economic freedom would want to grant him authority to do so. We have experienced six years of progressive economic policies at home, including new regulations aimed at curtailing energy availability and use, restricting access to finance, limiting options for health care, turning the internet into a public utility and stifling free choice and reform in the education sector. The result has been the slowest recovery in history, low economic growth and a huge expansion of federal debt.
The last thing we need is to add “progressive” trade agreements to the mix, extending our growth-killing regulatory policies overseas.
We have a president, committed to an expansive regulatory agenda at home, who has proclaimed his intention to negotiate “the most progressive trade agreement in our nation’s history.”
Trade liberalization is arguably the single most important factor in the massive reduction in worldwide poverty in recent years. It is certainly a prime factor in the remarkable standard of living in America and other developed countries. American consumers have benefited greatly from free trade, from lower prices and unprecedented affordable access to goods and services produced around the world.
Unfortunately, we currently have a president who wants a more “progressive” highly regulated economy, not one that offers more freedom or choice for individuals to trade with whomever they want. That’s the current context, and it imposes both a responsibility and an opportunity for congressional leadership.
The president wants Trade Promotion Authority, and Congress should give it to him. But what is needed is not the massive TPA recently shelved, with its expansive agenda justifying government intrusion into almost every area of economic activity, but rather a much narrower TPA, one that would limit the president to negotiation of an agreement that would expand choices and promote greater trade, not more economic regulation.
Above all, Congress should insist that any agreement contain only provisions that reduce tariffs and other barriers to trade. No new regulations on labor, no new regulations on the environment, no new regulations on finance—indeed, no new regulations at all.
It’s long past time for Congress to acknowledge Americans’ right to import. Of course we also want to improve access for our companies to overseas markets, but not if the cost is a reduction in our consumers’ ability to choose freely in the worldwide marketplace.
If the president won’t stand up for economic freedom, and resist the special interests, lobbyists and cronies who want to use the power of government to grant them economic privileges and protected monopoly markets at home, Congress is our best, perhaps our only, hope.
Those in Congress who believe in economic freedom have an opportunity over the next month to craft a new TPA that would instruct the president to negotiate with potential partners across the Pacific and the Atlantic to liberalize trade flows and get our economies moving again.
Of course Obama may not agree, in which case real trade liberalization will have to wait. Ultimately, it will be up to the American people to decide if they want to recommit to the principles of economic freedom that have brought unprecedented prosperity to our country, or stick with a “progressive” agenda that history teaches can deliver only low growth and economic stagnation.