Going back as far as the nation’s founding, a streak of protectionism runs through our common American experience like a thread. Sometimes it’s dominated the discussion, as it did when William McKinley used the issue to build a political career leading to the White House. Sometimes, as it’s been for most of the post-war era, it’s been in the background, but it’s always been there.
The period of economic globalization kicked off by the passage of the North America Free Trade Agreement — remember when H. Ross Perot famously talked about the giant sucking sound? — has reached a peak now that the Trans-Pacific Partnership has been negotiated and is ready to go before Congress for approval.
To be sure, advocacy for protectionism and opposition to a particular trade agreement are not precisely the same. Conceptually, though, as one understands the current state of the body politic, they might as well be. The idea that jobs in America are disappearing because trade deals make this an attractive option for business has fueled a kind of popular resentment of the establishment propelling an outsider to a major party nomination. Lost in this of course is any serious discussion of the way the American government is, through taxation, regulation, and plain, outright, bureaucratic stupidity helping to drive those same jobs offshore to places where the rules provide greater competitive advantage for business that is now, and should continue for some time to be global.
Rather than being a step back, the TPP is a forward-looking effort to redress imbalances and to establish rules of the trade routes for a substantial portion of the global economy without, as Irwin Stelzer recently wrote here in a piece called Some Deal a substantial loss of control of our own economic future.
America’s future economic life is dependent on the opening of new markets, allowing U.S. products to reach international consumers whether we like it or not and with or without the enactment of TPP. We should never forget that this country thrives on the competitiveness essential to the market system. Many of the industrial and manufacturing difficulties we’ve experienced over the last forty years relate to the inability of existing concerns to evolve and adapt to changing realties thanks to the protections given them by the government. Failing to understand the reality of the economy then, measured against the changes occurring in the growing global marketplace, was almost fatal. Failing to understand them now, and to understand that the TPP makes sense in light of those changes, could be even more damaging. We do not have ultimate control of our economic life — we must share the global space with others. The passage or defeat of TPP doesn’t change that, but TPP levels the playing field between competitors by forcing them to a common understanding of what is and what is not acceptable trade practice.
Economic isolation is not in our best interests even if it were achievable. Nearly one half of $1 trillion worth of American goods has been exported since the first of the year. In 2014 the United States exported almost three-quarters of $1 billion in goods and almost $200 billion in services to the countries that make up the TPP all by itself. Combined they are the largest market for our exports in the world.
Critics of TPP say its contribution to the U.S. economy will be trivial. Aside from the fact that no increase in jobs or exports is “trivial” in a no-growth economy like the one Mr. Obama has fashioned for us, the expansion of markets under discussion already affects 40 percent of the global economy. What is clear is the failure to finalize the TPP by the end of the current year could dramatically impact the nation’s agriculture sector and the U.S. economy negatively as a whole. Delaying TPP for just one more year would cost the U.S. economy $94 billion a year according to some estimates, which works out to about $700 annually per U.S. household.
As for the notion the Investor-State Dispute Settlement clause, which has understandably garnered significant attention among TPP’s opponents, allows foreigners to sue our government, perhaps win large tax-payer-funded damage awards, and imposes an international panel as the sole and final arbiter of these disputes, a careful reading of the document suggests otherwise. All ISDS awards are subject to subsequent review either by domestic courts or international review panels.
This is common practice. ISDS is found in more than 3,000 existing agreements around the world, covering 180 countries. The U.S. has taken part in 51 of these agreements with ISDS over the last 30 years. Moreover the U.S. has never lost an ISDS case. Only 13 cases have been brought to conclusion against us — and the U.S. has prevailed on appeal every time.
More than half of companies that initiate ISDS cases are small- and medium-sized businesses or individual investors, so the millions of American workers they employ stand to potentially benefit from strong ISDS protections. By raising standards through each agreement, we’ve actually spurred a drop in ISDS claims, despite increased levels of cross-border investment. Only one new case has been brought against the U.S. in the last five years.
Ronald Reagan used to talk about the need for increased trade among nations, trade that was free and fair. TPP helps us get to his objectives in a part of the world that is not only the largest potential emerging market but one that is a major market for us now. Even though there will certainly be some level of economic displacement here at home, the new jobs and new businesses and capital freed up for investments in new ventures and new technologies will more than compensate for whatever is lost. It’s time to approve TPP and move on, perhaps with negotiations that will — now that Cuba is back in the family of nations — a Caribbean basin free trade zone that will add even more jobs to the U.S. economy while lowering costs for consumers. That would be a good deal — good for America, good for the world.
Peter Roff, formerly a senior political writer for United Press International, now appears regularly as a contributor to the One America News network.Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
