Technology & Trade

Why Vote for a Copy When you can get the Original?

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By William Reinsch

This week I want to elaborate on a point I made in August regarding the Democrats’ trade policy statement, “A Better Deal on Trade and Jobs.” It is clear that trade will continue to be a front-page issue during the Trump administration, at least through next year’s midterm elections. As a result, Democrats need a trade policy, and they are busy trying to construct one. Unfortunately, if they continue on their current course, they’re doomed for one simple reason — Trump has made a career out of protectionism for more than 30 years. He owns it for better or worse, and a policy of “me too but we’re smarter” is not going to convince anybody. It is true that there is smart protectionism and stupid protectionism, and the fact that the president is a proponent of the latter theoretically opens a door for the Democrats to be the “smart” ones, but so far their policy has been more “me too” than “we’re smarter.” I’ll get to that shortly, but first a few words on the changing politics of trade.

Pew Research Center data from last spring — as well as more recent not-yet-published data from elsewhere — have shown consistent rank and file Democratic support for trade and trade agreements while Republicans have flip-flopped (although the most recent data suggests that some of them are returning to their previous free trade positions). That means that currently both parties’ politicians are out of step with their own voters — Democratic politicians are much more anti-trade than their voters, and Republicans are more pro-trade than their voters. Since trade is also a low intensity issue, meaning most people decide how they’re going to vote based on other issues, this disconnect between leaders and voters may not be self-correcting and could continue for some time.

It’s tempting to forecast a major party realignment over globalization, with the Republicans returning to their historic (1860-1940) support for protectionism and opposition to immigration, and Democrats to their equally historic support for open trade (until the 1970s). That would be a seismic shift in our political landscape, which is exactly why it is unlikely to occur, at least in the short space between now and November 2018. However, Democrats would be wise to keep that door open, if only to capture disaffected moderate Republicans appalled at their party’s rightward march. They also need to remember that the strongest support for trade and globalization comes from young voters and Latino voters, both growing constituencies that will be playing a larger role on our political field.

At the same time, it ought to be possible to speak to the concerns of Trump’s disaffected voters without alienating pro-trade voters or abandoning sound economic principles. In other words, smart protectionism.

First, reaffirm the rules and institutions that underpin the world trading system. Having rules guarantees you don’t win every battle, but having them also provides certainty and confidence that companies need to grow trade and jobs. Pursuing better rules multilaterally is harder than bilateral negotiations, but when it comes to rules and standards, the returns are much greater.

Second, use the rules creatively but understand that the game is chess, not checkers. The administration’s attempt to use section 232 to deal with steel and aluminum overcapacity was creative in its conception but has made everything worse for the industry because the administration failed to think through how the process could play out and how the foreign parties would respond. Instead of thinking 10-12 moves ahead, we opted for the dramatic press release without follow up.

Third, don’t lose sight of the objective, which is, or ought to be, creating more jobs and economic growth. The 232 cases correctly identified the problem but do not provide an easy path to a remedy that will be growth inducing. The 201 cases on solar panels and washing machines ought to require the president figuring out which option will actually create and/or preserve the most U.S. jobs. Hint: it might not be the ones that protect the U.S. producers.

Fourth, don’t tear down, build up. The administration’s NAFTA and KORUS proposals may be emotionally satisfying to Trump voters, but they will cost us jobs and cause chaos in the marketplace by destroying profitable arrangements that have been built up over 23 years in the case of NAFTA. Likewise, withdrawing from TTP was an enormous mistake that our economy will pay for years. Instead of tearing down current agreements we should be making new ones.

Fifth, talk about something else. Trade has never been, and should not be, a decisive issue in our domestic politics. It cannot be ignored, but Democrats would be smart to remind everybody that there are other more important issues.

Those principles are hardly a guaranteed roadmap to political success, but if Democrats are determined to flirt with protectionism, they would at least, help change the debate from “me too” to “we’re smarter.”
William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative.


Photo: Edith Soto
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