A trade war is brewing. Not between the United States and Europe or the U.S. and Asia. No, this is a civil war within the Democratic Party.
The Democrats are divided on two major international trade agreements now reaching completion – the Transatlantic Trade and Investment Partnership (TTIP) with the European Union and the Transpacific Partnership (TPP) with 11 Asian nations. On one side of the fence is Sen. Elizabeth Warren and other opponents of these agreements in the party’s left; on the other is President Obama and what remains of the more centrist establishment that favors them.
The rhetoric is heating up, with Warren insinuating that Obama is a pawn of corporate interests who is hiding the truth by keeping the negotiations “secret.” The president states flatly that Warren is “wrong on this” and accuses her of playing politics with the issue. Meanwhile, presumptive Democratic nominee Hillary Clinton is desperately trying not to be drawn into the fray.
For those of us who were part of the politics of NAFTA more than two decades ago, the Democratic family feud is eerily familiar. Then, President George H.W. Bush had negotiated a free trade agreement with Mexico and Canada. Candidate Bill Clinton faced fierce opposition from much of the Democratic base, who predicted that NAFTA would be a disaster that would cost jobs and despoil the environment. Clinton’s natural impulse was to support free trade, but the opposition gave him pause. When as president he eventually sided with NAFTA’s supporters to push the implementing bill through Congress, many in the party never quite forgave him.
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Now, as then, each side of the trade debate is animated by a simple story.
For Warren and her allies in Congress, trade agreements are the villains in a tragic tale of a betrayal of American workers by global corporations. In this telling, trade agreements are vehicles for shipping jobs overseas. To fight them is to stand up for jobs and middle-class Americans.
For Obama and free-trade advocates, trade agreements are heroes, not villains, engines for economic growth and job creation. In this telling, trade agreements level the uneven playing field that holds America back and opens markets overseas for goods made here at home.
The discourse on trade always seems to reduce to these familiar tales.
But free-trade agreements are neither the villain behind our economic ills nor the hero come to rescue our economy.
The simple disaster story is, as Obama maintains, simply wrong. The evidence over many years is that reductions in trade barriers, stronger intellectual property rights and protections for international investment – the guts of modern trade agreements – have helped create enormous wealth. In aggregate, trade agreements that open markets are a big win. Blocking them will do little to solve the problems faced by America’s middle class.
But the simple heroic rescue tale is just as wrong. Global trade has made possible the amazing richness of modern life, but it also has helped enable enormous concentrations of wealth and economic power, great disparities between rich and poor, unsustainable demands on natural resources and environmental damage on a global scale. New freetrade agreements will do little to address these issues.
In a sense, then, the brouhaha over TPP and TTIP is a distraction from the real issue. The question is not whether to have a more-or-less open trading system, but whether we will have a global economy that works for all. Trade agreements alone cannot ensure this. For this to happen, we must be prepared to accompany agreements with stronger measures to ensure competition and check monopoly power, with minimum wage and worker rights provisions that help ensure wider sharing of the gains from trade and with stronger regulations that minimize the environmental and other costs from global commerce. Otherwise, these issues of disparity, resources and environment will continue to be ignored.
Free-trade agreements are just a start of a much more challenging task, one that will require breaking away from the old stories of trade, pro and con, to construct a new story about the real challenge that confronts us.
Frederick Mayer is a professor of public policy, political science and environment at Duke University’s Sanford School of Public Policy. He served as senior international trade and foreign policy adviser to former U.S. Sen. Bill Bradley 1992-93 .