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Is the US turning its back on international trade?

The United States has been a staunch proponent of free (or at least liberalized) trade since the 1940s under Democratic and Republican presidents write Pater Sparding and Rachel Tausendfreund. In this year’s highly polarized presidential election, however, both Hillary Clinton and Donald Trump criticize it, and in particular oppose the Trans-Pacific Partnership (TPP), which Congress has so far refused to approve. Clinton’s nuanced position on trade is not so unusual for a Democratic candidate, but Trump’s stark rhetoric is a big change for the Republican Party. While it is tempting to attribute these positions on trade to campaign dynamics, there seems to be a deeper shift that will linger past November.

Modern U.S. trade policy was built from the rubble of the global economic collapse of the 1930s. Protectionism was seen to have worsened the Great Depression and as partly to blame for World War II. That is why President Franklin D. Roosevelt argued an open global trading system would secure the “economic foundations of peace.” His Democratic party had since the late 19thcentury associated high tariffs with profits for the wealthy and monopolies, and low tariffs with low prices for the consumer. The Republicans, who had been protectionists, moved to become a free-trade party in the 1950s and early 1960s. Meanwhile, however, the Democrats began to moderate their support for liberal trade policies, against which the AFL-CIO, the largest union organization, turned in the late 1960s.

In recent times, at least at the level of their leaderships, the Republicans have been the free-trade party, while the Democrats have been split. Democratic presidents have consistently liberalized trade, but with limited support from their party in Congress. For example, the 1993 North Atlantic Free Trade Agreement (NAFTA) signed by Bill Clinton was rejected by 60 percent of House Democrats while 75 percent of Republicans voted for it. As a rule, candidates feel free to criticize trade but geopolitical and economic considerations win out once they are in the White House. Thus, as candidate Clinton had showed lukewarm support for NAFTA, but in office he pursued a strong liberalization agenda, including a major agreement with China.

Today both parties face a similar conflict between elite and base on trade. Bernie Sanders’ criticism of trade agreements resonated with many Democratic voters, pushing Clinton to a more critical position, especially on TPP. Trump and a large part of the Republican base are aligned against the party’s elite. His attacks against free-trade deals appeal to older working-class, rural, white voters in the Rust Belt who have been hardest hit from the loss of a third of the countries’ manufacturing jobs since the 1980s, which many blame on trade with Mexico, China, and Japan. These economically insecure voters have long voted Republican despite the party’s trade stance. Now they have found in Trump a candidate aligned with them on this issue.

These parallel developments in both parties may not mean the consensus on trade is over, but it suggests pursuing it further could be on hold for the near future. Though Americans narrowly favor international trade in general, and even TPP, a narrow majority of Republican and Republican-leaning voters now see trade deals as a bad thing. Republicans in Congress will have a tougher time ignoring them than in the past, making it harder to ratify negotiated agreements.

More importantly, voters regardless of party identification also increasingly project on trade their concerns over real problems. Millions of manufacturing jobs that have been lost are not being replaced with anything as well paid or secure. Today’s workers are worse off than their parents were and the middle class is getting smaller and poorer, while 95 percent of the income increase in the country is going to the wealthiest 1 percent. Voters are right to be angry. The system is not working for many of them. Studies have shown that trade agreements like NAFTA or the opening of trade with China have had some detrimental effects on jobs and wages, albeit limited, localized or confined to specific sectors. As Secretary of State John Kerry said recently at a GMF event, the problem is not trade but “that more people need to share in the benefits of that trade.”

In previous years, trade tended to fade as a divisive political issue after elections. This is not likely to be the case after 2016, given the growing splits between party elites and bases. The campaign has shown that voters no longer believe promises that there will be no losers from trade. In the past, these promises have not been backed by enough concrete action to share with the people who do the work the benefits of an open trading system or to mitigate its negative impacts. If after this election Republican and Democratic leaders do not enact such policies, the anti-trade constituency in the United States will grow.

Peter Sparding is a transatlantic fellow with the Europe programme of the German Marshal Fund (GMF). Rachel Tausendfreund is editorial director of the GMF based in Berlin. This article was first published by the GMF. More information can be found at www.gmfus.org

 

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