Op-Eds & Articles

The Old-School Answer to Global Trade

Amid controversy over President Trump’s “new NAFTA”, Open Markets fellow Beth Baltzan joins the trade debate with a groundbreaking essay on the Washington Monthly calling for a bold rethink of America’s trade policies to curb corporate power, protect workers and the environment.

April 5, 2019  |  by Beth Baltzan
Read on Washington Monthly

Heading into 2020, liberals are at a crossroads on trade. Most abhor Donald Trump’s “America First” rhetoric. And even as they increasingly recognize that something is amiss with the global system, many are frightened by his bull-in-a-china-shop approach. But just what is the big competing vision his opponents have to offer?

For decades, the political and intellectual leaders of the Democratic Party marched alongside the GOP under the banner of “free trade.” Organized labor often objected to the resulting loss of manufacturing jobs as corporations moved factories offshore or simply surrendered markets to foreign rivals. So did some Democratic politicians. (After all, Dick Gephardt’s slogan in his failed bid to win the 1988 Democratic presidential nomination was “Let’s Make America First Again.”) But union grievances tended to be dismissed as the plaints of workers unwilling, or unable, to compete in a global economy. All thinking people, at least in the party’s expanding wing of college-educated professionals, knew that free trade promoted international peace and prosperity, and anything less was special-interest politics.

This idea became particularly pervasive in the early 1990s, when President Bill Clinton embraced the North American Free Trade Agreement (NAFTA). The trade pact was originally proposed by Ronald Reagan and largely negotiated by George H. W. Bush, but Clinton adopted it with few changes. Democrats in the 1990s similarly supported the creation of the World Trade Organization (WTO), agreeing to abide by the decisions of a quasi-judicial body in Geneva on trade disputes, and welcomed China as a member. More recently, Barack Obama spent his last two years in office pursuing the Trans-Pacific Partnership (TPP), which he described as a means to box China out in favor of other Pacific Rim countries.

But by 2016, the consensus had cracked. Bernie Sanders won more than 40 percent of the Democratic Party’s primary votes in part by renouncing the party’s position on trade. Feeling the pressure from Sanders, Hillary Clinton split with Obama by turning on the TPP, which she had praised as secretary of state. Defenders of the status quo can still point to the fact that the expansion of global trade has reduced extreme poverty in parts of the developing world. But it has become increasingly difficult to deny that a flood of imports, particularly from China, has contributed to downward mobility among working-class Americans. In 2016, a team of economists published a groundbreaking study that found that the direct and indirect effects of Chinese imports had cost more than a million Americans their jobs since 2001 and dramatically reduced their lifetime income.

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