Can Obama’s free trade pact — the Trans-Pacific Partnership — survive this election?
If there is one area on which the more extreme representatives of the political left and right can agree, it is the nefarious character of the Trans-Pacific Partnership (TPP), the comprehensive trade deal signed last month by President Barack Obama and the leaders of 11 other Pacific nations.
Republican front-runner Donald Trump calls TPP “a horrible deal” and “insanity.“ Democratic candidate Bernie Sanders believes the TPP is “a disastrous trade agreement designed to protect the interests of the largest multinational corporations at the expense of workers, consumers, the environment and the foundations of American democracy.”
Why has the TPP, and free trade more generally, attracted so much ire during the presidential campaign? And with the deal still awaiting Congress’ approval, can it even survive?
Opposition from the left of the Democratic Party, of course, comes as no surprise.
According to mainstream trade theory, lower-skilled workers in rich countries will typically be hurt by free trade, at least in the long run. They will be directly in competition with workers from poorer countries, which have a comparative advantage in labor-intensive industries.
The left, traditionally linked with the working class and unions, has long opposed trade accords that might hurt their constituents. Clinton, her recent rhetoric to the contrary notwithstanding, is actually more pro-trade than might be expected of a left-of-center politician.
But it should be remembered that she represents the centrist wing of her party, one made up of socially liberal, economically pragmatic voters. Most Democrats who are skeptical of markets have been mobilized by Sanders.
The more interesting story is the puzzling opposition to trade from right-wing Republicans.
While low-skilled occupations are often on the losing side of trade deals, there are many winners as well. Trade theory suggests that higher-skilled workers, business owners and consumers in countries like the United States are likely to enjoy long-run benefits from free trade.
Not surprisingly, Republicans, as the party of business and capitalism, have mostly supported free trade since the realignments of the New Deal and the Second World War. Before that, they tended toward protectionism.
If Clinton and Trump are ultimately the nominees, then we will face an unusual situation in which the Republican candidate is anti-trade and the Democratic candidate is, at least lukewarmly, pro-trade. Does this represent a fundamental realignment of the parties on trade, similar to what occurred during the Great Depression and World War II?
The argument in favor of realignment is belied by a continuing pro-trade outlook among moderates in both parties. That makes it tough to argue that, in the future, we will see a pro-trade Democratic Party and an anti-trade Republican Party.
Instead, the split seems to be between the center and extreme in both parties. Why?
In multiparty systems, such as those found in most European democracies, Sanders and Clinton, John Kasich and Trump would be in different parties.
Sanders would probably be a social Democrat, Clinton a liberal, Kasich a Christian Democrat, and Trump a far-right populist.
Trump, in other words, is America’s Le Pen of France, its Haider of Austria, its Wilders of the Netherlands. And like the European far right, Trump mobilizes members of the majority group who feel that the economy has let them down.
These voters are likely to see free trade as a culprit in their economic malaise and to link it with other policies that they consider anti-national, such as open immigration and multiculturalism. With that in mind, it is not surprising that Trump, like the European far right, is an anti-trade populist.
So the split on trade within the Republican Party results from its effort to mobilize voters with contrasting economic interests and ideologies.
These voters may agree with one another on social issues, or on foreign policy, and so they live together within the same party. But their views diverge on a number of points, including trade.
In a multiparty system like those in Europe, groups on the extreme right are typically shut out of government by the unwillingness of center-right parties to form coalitions with them.
In the United States, the unique primary system has usually meant that the far right (and to a lesser extent the far left) mobilizes around a presidential candidate. This candidate is generally defeated by the centrist candidate of each party, who goes on to be the nominee. This happened in 2008 with the nomination of John McCain and again in 2012 with Mitt Romney.
What we are seeing now is the real chance that the candidate of the populist far right may walk away with the Republican nomination.
The possibility of a Trump victory coincides with the growth of similar ideologies in Europe, though these are mostly embodied in separate parties rather than as wings of a major party. Undoubtedly, the ongoing effects of the 2008 financial crisis (especially on employment), combined with increasing virulence of Islamist movements such as ISIS, is fueling this growth.
Of course, the increasing popularity of far-right populism is likely to matter well outside the realm of trade policy. But to return to the theme of this article: what would a Trump victory mean for the passage of TPP and for free trade more generally?
What this means for the TPP
In order to take effect, the Trans-Pacific Partnership needs to be approved by Congress with a majority vote, which leaders may well postpone until at least after the election.
Because of Congress’ prior grant of trade promotion authority to President Barack Obama, this vote must be taken without amendments.
Despite these advantageous terms for the president, however, there is great doubt that the TPP has enough voters in Congress for approval.
Left-wing Democrats and right-wing Republicans may well join together to kill it, especially in this highly polarized election year. Reluctance to ratify the agreement among Canada’s new Liberal leaders is not likely to help move the deal forward.
If a vote on TPP is indeed postponed until after next January, a President Trump would undoubtedly kill the agreement. A President Clinton, on the other hand, would probably move forward with it and, in a postelection Congress chastened by its brush with the populist right, would stand some chance of success.
So the future of trade policy in the United States and around the world is likely to rest, in large measure, with the outcome of the current election and whether Trump’s new right triumphs.
Not only would this outcome lead to the death of TPP, but it would also call into question America’s basic commitment to international cooperation. If the United States, as the primary guarantor of the liberal economic order, is unwilling to stand behind it, who will?