Last fall, Hillary Clinton notoriously abandoned what she had once said was her most important accomplishment as secretary of state. With her cynical political calculation naked for all to see, she formally came out in opposition to the Trans-Pacific Partnership, a free-trade deal, which she had praised as the “gold standard” for “free, transparent, fair trade.”
In a year when all candidates have been bad-mouthing the free exchange of goods and services across national boundaries, there are unfortunate hints that some Senate Republicans, many of whom have long been dedicated supporters of free trade, seem to be doing something similar.
Even if abandoning free trade helps Republicans make peace with a skeptical electorate and presidential nominee, it is not good for the party’s or the country’s future. It is important that at least one party (and it’s not going to be the Democrats) stand up for a policy that has created great wealth in America and lifted billions out of poverty worldwide.
A news report this week hinted that several Republican senators and Senate candidates known for supporting free trade in the past are now offering reasons to back away from the TPP. Not all their concerns are groundless, but there is a danger that Donald Trump’s anti-trade candidacy is eroding other Republicans’ good judgment of policy.
The main reason for preserving Republicans’ Senate majority is that they will be able to carry on principles and ideas that create human flourishing and shared prosperity after this year’s crazy election is over. Free trade is one such idea. It should not be should cast aside in the clamor to hop aboard the bandwagon.
Free-trade agreements have created millions of jobs and trillions in wealth within the U.S. that did not exist before and could not exist otherwise. The expansion of free trade has, contrary to popular belief, not prevented a large, long-term expansion of American manufacturing output.
In 1993, the last year before NAFTA went into effect, the U.S. exported $42 billion in goods to Mexico. Last year, exports to Mexico were $236 billion, nearly three-and-a-half times as much after adjusting for inflation, according to the U.S. Census.
This has occurred not only with Mexico, but with many of America’s trading partners that have opened up as a result of various agreements. As the U.S. Chamber of Commerce points out, America has trade agreements with 20 nations that altogether represent only 6 percent of the rest of the world’s population. But those 6 percent are buying 50 percent of everything America exports. Just imagine the possibilities if that other 94 percent of humanity had access to our goods.
Competition from imports reduces prices and increases choices for consumers. Some argue that this results in a loss of jobs, but this is not strictly accurate. It means fewer of some jobs but more of other jobs that satisfy market demand, and more purchasing power in everyone’s pockets.
The data contradict the frequent claim that an exodus of manufacturing operations overseas is the main culprit in causing the sharp reduction to the number of American manufacturing jobs in the past four decades. In reality, we manufacture about three times as much today as we did in 1976. The fact that we do so with about one-third fewer workers in manufacturing is a function of improved efficiency, not a simple transfer of the same jobs elsewhere.
Free trade attracts foreign investment. A significant share of imports, for example, are foreign car parts that American workers use to build foreign-brand cars in places such as Indiana, Alabama and South Carolina, for other Americans to buy.
With Clinton’s flip-flop, we’ve already seen how shallow Democrats’ devotion is to this little-understood idea crucial to our prosperity. If Republicans take their political posturing on trade too far, there will be no one left to represent the common-sense policy agreed on by nearly every economist from Paul Krugman to Milton Friedman.
