Can Free Trade Republicans Overcome Obama's Final Failure?
Is the Trans-Pacific Partnership (TPP) dead? Will it be the final failure of Barack Obama's presidency?
With Donald Trump winning the presidential election, the general assumption is that TPP is done. After all, President-elect Trump stated in his first-100-days Contract with the American Voter: "I will announce our withdrawal from the Trans-Pacific Partnership."
To paraphrase Mark Twain, however, the death of TPP might be greatly exaggerated. Well, perhaps.
The free-trade wing of the Republican Party is far from dead. Consider, for example, that Reuters quoted U.S. Rep. Kevin Brady (R-TX), chairman of U.S. House of Representatives Ways and Means Committee, saying, "Republicans are going to continue to support the freedom to trade." On TPP, he said, "Don't withdraw, renegotiate... There is plenty that levels the playing field. Renegotiate. Fix the problems that exist today. Let's find a way to move forward."
But if hope exists on TPP, it's not due to President Obama's leadership.
Keep in mind that during his 2008 campaign, Barack Obama was the "Donald Trump" candidate. He touted his opposition to trade agreements, and yes, called for renegotiating NAFTA. Once in office, Obama lost interest not just in protectionism (thankfully), but trade in general. However, a few positive signs of a shift getting under way could be seen. In early 2010, Obama called for a doubling of U.S. exports in five years. And in late 2011, he eventually got around to signing three trade deals - with South Korea, Colombia and Panama - initially negotiated by President George W. Bush.
Later, in his 2013 State of the Union, Obama spoke about completing negotiations on the TPP - a proposed agreement between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam - while also announcing trade talks with the European Union. Obama and partner nations signed TPP in February 2016.
This slow move from protectionism to pro-trade, though, wasn't exactly a come-to-Adam-Smith transformation. There was no push to get his own Democratic Party onboard, nor an aggressive, sustained pitch to the American people. Real investment of political capital in making the TPP happen clearly was lacking. At the same time, Obama was undercutting U.S. leadership on trade by delaying and ultimately rejecting the Keystone XL Pipeline project with Canada. By the way, exports did not double in five years - not even close.
In the end, Obama largely retreated from trade, and that left a political vacuum, which was filled by a 2016 presidential campaign jam packed with criticism hurled at free trade and TPP by both Hillary Clinton and Donald Trump.
Nonetheless, it's critical to understand how central trade is to the U.S. economy. For example, from 2000 to 2015, the growth in real U.S. exports accounted for 22.5 percent of total growth in real GDP, and growth in real total trade (i.e., exports plus imports) registered 41.6 percent of real GDP growth. For good measure, think about how much the economy has changed since the end of World War II. In 1950, for example, U.S. exports equaled 4.2 percent of GDP, while in 2015, they came in at 12.6 percent. Meanwhile, imports registered 4.0 percent of GDP in 1950, compared to 15.5 percent in 2015.
As for TPP, its main thrust is reducing trade barriers for U.S. businesses and workers - eliminating more than 18,000 tariffs on U.S. exports, including in manufacturing, agriculture, automotive, and information and computer technology sectors - while also strengthening intellectual property protections, covering an area generating 40 percent of global GDP.
So, here's to hoping that free traders like Chairman Brady can overcome the failure of Barack Obama, and convince President-elect Trump that trade and free trade agreements are critical to the U.S. and its role as a global economic leader.
