Trump and Trade

The election of Trump has been a weird time for those of us who care deeply about reshaping global trade to be fair to workers and ecosystems. Our criticisms got at least some traction on the left before November. But in the aftermath of Trump’s election, there were a lot of pieces by prominent liberals that ignored all the horrible parts of NAFTA, CAFTA, the TPP, and other free trade agreements in favor of a full-throated defense of globalism and the trade agreements that are part and parcel of it. There are a number of problems with this, including that these trade agreements have utterly decimated working-class people in the United States, helping lead to the political problems of the present. We can have a global society and one that treats people fairly, takes unemployment seriously, and spreads the benefits of trade more broadly. Our reaction to Trump should not be “We need the TPP.” It should be, “We need trade agreements that give workers and citizens the same rights to the international legal framework that corporations enjoy and we need baseline labor and environmental standards enforceable through both national and extra-national courts.” But the first step really is to push back against Trump’s half-baked racist bluster. I appreciated this Robert Kuttner piece on the position left critiques of trade find themselves and what to do.

First, Trump’s trade policy diverts attention from an entirely legitimate and overdue critique of the current trading order. The “postwar order” that Porter cites Trump as threatening was actually toppled in the 1970s.

In the original postwar order—the one that led to 30 years of growth that produced broadly shared prosperity—labor rights were protected, there was tight regulation of financial speculation, and nations had the right to have national industrial policies and public investments without being hauled before some trade tribunal as protectionists.
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The global order that followed bashed labor, liberated capital, and restored the brand of laissez-faire that brought us the Great Depression and the financial collapse of 2008. We need a very different sort of trade regime that puts social rights back on the same level with financial rights.

This is the sort of protection that can be defended as both sound economic policy and sound social policy. If we had kept more of it, workers would not have taken it on the chin and we would not have gotten President Trump.

So the trouble with Trump is not that he challenges the current trading system. The problem—as with all of his policies—is that he is an opportunist and a hypocrite. And that raises the second concern. His actual trade policies are an incoherent mash-up.

For instance, his revisions of NAFTA are likely to restore many of the same pro-corporate provisions in Obama’s failed TPP. Trump objects to them, not because they help corporate cronies but because Obama’s name was on the TPP deal. Credible reports suggest that Trump will make NAFTA’s existing anti-regulatory protections for big business even worse.

Trump made an ad hoc bargain with China under which China will accept more American exports of beef, and in return the United States will import Chinese cooked chicken products—with no country-of-origin labeling—so that consumers cannot know what they are buying. China is notorious for having lax or nonexistent food inspection standards. Yuck! This is exactly the kind of free trade we don’t need.

Occasionally, he gets something right. Trump has threatened to punish China for producing steel at well below the cost of production and dumping it on world markets. Those actions do violate trade norms, hurt U.S. industry, and should indeed be subject to sanctions.

But we’ll see what Trump actually delivers. In his communications with Chinese leader Xi Jinping, Trump promised to ease up on trade threats if China would take a harder line with North Korea.

Meanwhile, China’s planned and subsidized economy and its predatory trade policies are undermining America’s ability to compete in the entire range of green industries, from solar panels to wind turbines to rail cars.

U.S. solar manufacturers have filed a trade complaint—as they should. It remains to be seen what Trump will do, given his other geopolitical goals vis-à-vis China. Diplomatic finesse, much less ideological consistency, is not the man’s strong suit.

The response to Trump’s idiocy needs to be a further examination of what is the trade system we want to see, not a knee-jerk defense of the TPP because Trump theoretically opposes it.