Michael Stumo is the CEO of the Coalition for a Prosperous America.
While pushing legislation through Congress to grant Permanent Normal Trade Relations status with China in 2000, President Clinton proclaimed, “This a hundred-to-nothing deal for America when it comes to the economic consequences.”
[Reposted from The Hill | Michael Stumo | June 5, 2015]
A giddy Clinton further pledged that the legislation would “increase U.S. jobs and reduce our national debt.”
It did the opposite.
Nearly 15 years after lofty promises of future prosperity, America imports $1 billion per day more from China than it exports. Today, our annual trade deficit with China is larger than the economies of Denmark, Portugal, Greece, Chile, Hong Kong, Egypt and 150 other countries.
President Clinton also guaranteed gold at the end of the rainbow with a giant World Trade Organization deal and the North American Free Trade Agreement, which he said would create 200,000 jobs by 1995 alone.
Wrong again. Since then, America has bled manufacturing jobs, the middle class has all but evaporated and the trade deficit has ballooned to $740 billion.
More recent presidential assurances in support of the Korea trade agreement were also incorrect. Our trade deficit with Korea worsened by 72 percent.
This record makes the ongoing debate over Trade Promotion Authority (TPA) perplexing.
President Obama is asking Congress to set aside normal legislative procedure and the jurisdiction granted legislators under the Constitution so he, and his successor, can secretly negotiate any trade deal with any country for six years.
If the president is granted TPA, he can add non-trade provisions that change domestic law and foreign policy. And he will be able to write implementing legislation, which cannot be amended, to change U.S. law and regulations to conform to the new trade deal. Instead of asserting congressional power, Congress would merely ratify the president’s plan.
Unfortunately, many lawmakers seem willing to cede their power for vague – and repeatedly wrong – promises of an economic nirvana that is just around the corner.
The first quarter GDP shrunk because of the trade deficit. Yet, there is no accountability for achieving good net trade results from any pending or future trade deal.
Furthermore, the TPA bill rejects enforceable rules to hold our trading partners accountable for predatory trade practices used to gain a competitive edge against Americans – even after free trade agreements supposedly have removed the barriers to U.S. exports.
President Obama simply wants a rubber-stamp Congress for trade deals, and he chastises TPA critics as “stuck in the past” while championing a plan that is copied and pasted from the NAFTA and Bush days.
America’s 40 straight years of trade deficits and inexorably rising foreign debt are a symptom of enabling trade cheating by others, not free trade. Recommitting the same mistakes of the past will not turn the tide.
True free traders know that tariffs and quotas are no longer the issue. 21st Century problems – like currency manipulation, foreign subsidies, state-owned enterprises and consumption taxes – now eclipse any benefit that could be achieved from the same old trade concessions.
America became an economic superpower by innovating and manufacturing, building supply chains, paying people well, creating wealth here at home, expanding the middle class, and being a net exporter.
Back then, President Reagan adopted the principle of “free and fair trade with free and fair traders.” His trade doctrine centered on the 3 R’s of reciprocity, rules and results. Reagan did not believe in pretending we have free and fair trade when we did not. And he did not lose focus upon results.
Reagan used to Plaza Accord of 1985 to rein in currency manipulation by Japan and Germany. He remedied the related problem of Japan’s industrial subsidies. Manufacturing production volume, growth and the U.S. trade balance markedly improved as a result.
We need a similarly clear-headed and results-oriented trade strategy today.
Congress should reject TPA and pursue a plan to fix the trade deficit, grow American production and return to broadly shared prosperity.