A debate over free trade is looming as one of Washington’s first big stories of 2015.
The issue has already drawn attention because it’s an area where the new Republican majority in the Senate may actually help President Obama, whose trade policies have more vocal support among Republicans than Democrats.
Though many free-trade breakthroughs have occurred in Democratic administrations -- from Franklin Roosevelt ’s liberalisation during the New Deal to the North American Free Trade Agreement under President Clinton -- trade is a hard vote for Democrats.
And it has become harder as globalisation has impacted jobs and wages in some parts of the economy. As Obama said last month, “there’s a narrative there that makes for some tough politics”.
Those of us who believe that trade is vital to our economic future are looking to President Obama to try to change that narrative. When he does, Democrats in Congress as well as Republicans should listen with open minds.
Early in the year, Congress is expected to take up legislation that would grant the administration trade-promotion authority. This authority allows the president to send a trade agreement to Congress for a straight up-or-down vote without the ability to add crippling amendments that could kill the deal. US negotiators are hoping to conclude two major trade agreements -- the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership -- that would be submitted for a vote.
There are powerful reasons to support these agreements. One of every five American jobs is tied to exports, and the jobs generally pay better (up to almost 20%) than non-export-related jobs. U.S. exports are finishing a fifth straight record-breaking year, despite a stronger dollar.
Although currency fluctuations can make exports more or less attractive in the short run, one fact won’t change: 95 per cent of the world’s customers live outside our borders. As the US economy continues to improve, expanding trade can create more rewarding middle-class jobs.
The US economy is already one of the most open in the world. The goal of current talks is to lower barriers in other countries, and to raise foreign protection of the environment, workers’ rights and intellectual property. Obama is right to describe a more level playing field that improves conditions abroad and increases opportunities for American businesses as a “model for trade in the 21st century”.
Democrats can press for well-drawn trade pacts without turning their backs on those hurt in a changing economy. Labor unions, reflecting deep concerns about wage stagnation and outsourcing, have traditionally opposed trade deals and have urged Democratic lawmakers to follow suit.
But the answer to the global economy’s challenges is not to run from them. We should invest more in training and education. Businesses that profit from trade should pass on benefits in higher wages. Simply opposing free trade will not hide the facts of globalization, which overall have improved the lives of millions of Americans.
When trade-promotion authority came up in Congress last year, Senate Democrats blocked it. Doing so again would be bad policy and bad politics. Now the minority in both houses, congressional Democrats can draw a sharp contrast with the Republicans’ hyperpartisan, defeat-at-any-cost tactics. Instead Democrats can be a constructive force for elevating the discussion and giving President Obama an important bipartisan accomplishment.
Most Americans want Congress to work across party lines to get things done. Trade is an opportune place to start.
Ultimately, trade policy is about much more than domestic politics or even the economy. It signals a country’s ability to engage with the world and to lead. Obama has staked US influence in Asia to passage of the Trans-Pacific Partnership, a pact with 11 countries that account for 40% of the global economy. It is a cornerstone of US foreign policy and a matter of national security. Failure would carry a very high price.
The Obama administration is sounding confident of a win. The president said after the November midterms that he is “much more optimistic” of getting the Trans-Pacific Partnership. On trade-promotion authority, Orrin Hatch (R., Utah), the incoming Senate Finance Committee chairman, wants to “get it done, get it done right and get it done soon”.
Getting it done right will require bringing along the president’s party and, more important, the American public. As Obama said in Beijing last fall, “we also have to make sure that all of our people back home understand the benefits for them—that it means more trade, more good jobs, and higher incomes for people throughout the region, including the United States”.
It is time to make this case in earnest at home.
Mack McLarty was White House chief of staff and special envoy for the Americas under President Bill Clinton. He currently serves as chairman of McLarty Associates, an international strategic advisory firm.
This article was first published in the Wall Street Journal. Reproduced with permission.