The GOP’s Growing Rift on Trade

[Reposted from the National Journal |  December 15, 2015]

While the GOP has largely sup­por­ted free trade for over three dec­ades, its top-tier pres­id­en­tial can­did­ates are split on the re­cently-struck Pa­cific trade accord, the most significant in a generation. And Don­ald Trump, the GOP front-run­ner, has been labeled by The Wall Street Journ­al as po­ten­tially the most pro­tec­tion­ist nom­in­ee since Her­bert Hoover.

The Trumped-up rhet­or­ic on clos­ing down the bor­ders—both to hu­mans and to trade—is so di­vis­ive that it en­dangers a split with­in the party, says Steph­en Moore, a con­ser­vat­ive eco­nom­ist who foun­ded the Com­mit­tee to Un­leash Prosper­ity with Steve For­bes, Larry Kud­low, and Ar­thur Laf­fer. He thinks Trump’s can­did­acy pits a pess­im­ist­ic, “1950s-style” Re­pub­lic­an pop­u­list wing versus an op­tim­ist­ic, free-mar­ket wing of the party.

“Here’s my big worry right now, as you fol­low what’s happened in the last year or so and es­pe­cially in the last six weeks or so,” said Moore in a phone in­ter­view. “I’m very nervous that Re­pub­lic­ans are be­com­ing a kind of ‘close the bor­der’ party—close the bor­der to people, close the bor­der to goods and ser­vices. And that’s bad eco­nom­ics. It’s ter­rible eco­nom­ics. And that’s the wrong dir­ec­tion.

“I worry that the party is go­ing down this Pat Buchanan wing of the party—that’s now the Don­ald Trump wing—is as­cend­ant,” ad­ded Moore. “There’s now be­com­ing a rift with­in the party between the ‘build the wall’ party and the—I think—the party Re­agan [built.]”

More than 30 years ago, Ron­ald Re­agan cam­paigned on a North Amer­ica Free Trade Agree­ment and, when he be­came pres­id­ent, entered the U.S. in­to the first free trade agreement with Israel. His em­phas­is on ex­pand­ing trade and lower­ing trade bar­ri­ers in an ef­fort to in­crease eco­nom­ic growth and cre­ate bet­ter pay­ing jobs stuck with the es­tab­lish­ment wing of the party. In 2012, the GOP plat­form stated: “A Re­pub­lic­an Pres­id­ent will com­plete ne­go­ti­ations for a Trans-Pa­cific Part­ner­ship to open rap­idly de­vel­op­ing Asi­an mar­kets to U.S. products. Bey­ond that, we en­vi­sion a world­wide mul­ti­lat­er­al agree­ment among na­tions com­mit­ted to the prin­ciples of open mar­kets, what has been called a ‘Re­agan Eco­nom­ic Zone,’ in which free trade will truly be fair trade for all con­cerned.”

Yet of the nine top-tier can­did­ates tak­ing the GOP pres­id­en­tial de­bate stage Tues­day night, at least four op­pose the Trans-Pa­cific Part­ner­ship. Con­gres­sion­al ap­prov­al for TPP, which was re­cently reached by the U.S. and 11 oth­er coun­tries around the Pa­cific Rim, is un­der severe polit­ic­al pres­sure. Sen­ate Ma­jor­ity Lead­er Mitch Mc­Con­nell said Tues­day that he is “dis­ap­poin­ted” but un­de­cided on the agree­ment—and warned Pres­id­ent Obama that vot­ing on his po­ten­tially last leg­acy-de­fin­ing achieve­ment should wait un­til after the 2016 elec­tion.

“I think he ought to take in­to ac­count the ob­vi­ous polit­ics of trade at the mo­ment in our coun­try,” Mc­Con­nell said at a Politico-sponsored break­fast.

The is­sue is blur­ring all kinds of lines. Along with both uni­ons and the “Middle Amer­ic­an Rad­ic­al,” Hil­lary Clin­ton and Don­ald Trump, Bernie Sanders and Ted Cruz all op­pose the pact.

The vast ma­jor­ity of Demo­crats in Con­gress op­pose the agree­ment, as they think TPP would out­source Amer­ic­an jobs and de­press wages. Re­pub­lic­ans are split. Many are par­tic­u­larly skep­tic­al of this agree­ment be­cause it was ne­go­ti­ated un­der the Obama ad­min­is­tra­tion, which has deemed TPP the most pro­gress­ive pact in U.S. his­tory, and are con­cerned it places bur­den­some en­vir­on­ment­al and labor reg­u­la­tions. Mc­Con­nell and the North Car­o­lina GOP con­gres­sion­al del­eg­a­tion have con­cerns about vari­ous to­bacco pro­vi­sions, and some Re­pub­lic­ans, par­tic­u­larly Sen. Or­rin Hatch of Utah, be­lieve the in­tel­lec­tu­al-prop­erty pro­tec­tions for phar­ma­ceut­ic­al com­pan­ies pro­du­cing bio­lo­gic drugs aren’t strong enough.

But oth­er con­ser­vat­ives are keen on lower­ing tar­iffs and tak­ing ad­vant­age of great­er eco­nom­ic trade with the Pa­cific na­tions sur­round­ing China. Grover Nor­quist, the chief of Amer­ic­ans for Tax Re­form, sup­ports the pact, while ac­know­ledging flaws in in­tel­lec­tu­al-prop­erty pro­vi­sions, among oth­ers.

“This is both sound for­eign policy and it’s great eco­nom­ic policy,” Nor­quist toldNa­tion­al Journ­al. “It’s 4,000 pages of tax cuts. Tar­iffs … tar­iffs suck. Tar­iffs kill jobs. Tar­iffs slow the eco­nomy. This is good. It’s not everything you wanted—no. But it’s pro­gress to­wards al­most everything you wanted.”

The GOP op­pos­i­tion, in his mind, “has everything to do with who wrote it and not what’s in it.”

Wheth­er this junc­ture sig­ni­fies a great­er surge in the pop­u­list wing of the GOP—or merely meas­ures a passing mo­ment, as oth­ers have be­fore—is up for de­bate.

“There’s a Buchanan wing that’s been anti-trade, anti-im­mig­rant for quite some time, and we’re just see­ing an­oth­er round of that in Cruz and in Trump,” says Douglas Holtz-Eakin, the dir­ect­or of do­mest­ic and eco­nom­ic policy for John Mc­Cain’s 2008 pres­id­en­tial cam­paign. Holtz-Eakin, who served in George W. Bush’s Coun­cil of Eco­nom­ic Ad­visers, can re­mem­ber the Re­pub­lic­an-led House’s squeak­er vote in 2002 grant­ing the White House en­hanced trade-ne­go­ti­at­ing powers. “Not a new phe­nomen­on. Vis­ible on the cam­paign trail—I don’t dis­agree with that. It’s been around be­fore.”