Democrats' trade plan tries to 'out-Trump' Trump — bad idea
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With the rollout of their new “A Better Deal” agenda, congressional Democrats have a chance for a reset with American voters. And nowhere do they need a reset more than on trade.

Unfortunately, with their recent announcement of “A Better Deal on Trade and Jobs,” Democrats missed a key opportunity to offer a balanced trade plan that backs both stronger enforcement and trade’s constructive role in supporting millions of good jobs.

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In launching their new trade agenda, Washington Democrats doubled down on the hard-edged protectionist rhetoric heard from both parties in 2016 — rhetoric that casts trade as a threat and focuses largely on traditional manufacturing and the decade of undeniable economic damage caused by Chinese competition. It’s hardly surprising, then, that the “Better Deal” trade program is mostly an exercise in limiting global trade and investment.

 

The plan lacks a positive agenda to open export markets for U.S. manufacturers, farmers and services suppliers; support global supply chains for American producers; “democratize” trade by expanding small business exports; or promote foreign investment that supports well-paying U.S. jobs.

Rather than acknowledging that trade can be a key opportunity for U.S. growth, the plan’s aggressive protectionism would invite foreign retaliation and threaten American jobs that depend on trade.

The “Better Deal” trade agenda incorporates a number of longstanding proposals to curb trade and investment, including expanding "Buy American" programs and penalizing companies and contractors that outsource. It also proposes an independent trade prosecutor, greater transparency in the renegotiation of NAFTA and an “American Jobs Security Council,” which could block foreign investments for a broadly defined set of economic reasons.

To be sure, it’s critical to devote more resources and attention to trade enforcement to assure that American producers and workers fully benefit from global trade rules. Although Congress significantly expanded trade negotiation transparency in 2015, trade transparency is still important given the Trump administration’s unprecedented aversion to disclosure.

But, many specific proposals in the new plan would likely do more harm than good. Expanding "Buy American" requirements, for instance, could ultimately cost more American jobs than it supports. Similarly, blocking foreign investment for a broad array of economic reasons would encourage other countries to maintain or expand their own economic restrictions on key American exports.

Of particular concern is the Democratic plan’s support for unilateral American trade enforcement outside of the World Trade Organization’s (WTO) rules. Bypassing the WTO risks destabilizing a global trade system that — despite its flaws — provides huge economic benefits to the United States and American workers.

The plan’s supporters claim this unilateralism is justified by China’s history of ignoring trade obligations and the inadequacy of current trade rules. But joining China as a trade scofflaw and risking significant retaliation against American trade is both dangerous and irresponsible. The better course would be to join with like-minded countries in ratcheting up WTO trade enforcement and establishing new global norms on issues like the conduct of state-owned enterprises.

The “Better Deal” trade platform is equally troubling because of what it fails to include.  

Although its purported focus is on helping working Americans, the plan offers little constructive support for the one-in-five U.S. workers — some 41 million Americans — whose jobs depend on maintaining and growing open, rules-based trade. Most of these workers have the kinds of good middle-class jobs that Americans want.

Workers in export-oriented industries, for example, earn some 18-percent more than those in non-exporting sectors, while trade-dependent jobs in transportation and warehousing pay higher than the national average — even for many with a high school education.

The lack of balance in the “Better Deal” trade program is also politically short-sighted. Reports characterize the Democratic proposal as an anti-corporate, populist initiative designed to “out-Trump” President Trump on trade. But, is that even possible? If it were, is it a sound strategy for expanding Democratic support?

Early returns from Trump’s tenure point to the perils in following the president down a protectionist path. Although Trump enjoyed extensive electoral support from rural America, he’s already causing serious heartburn in the heartland as voters see the growing damage that Trump’s protectionism is causing for America’s farmers.

Similarly, Trump’s single-minded pursuit of unilateral trade restrictions on steel and aluminum threatens American jobs in downstream industries and in export sectors that would face eventual foreign retaliation.

Doubling down on anti-trade populism is especially risky for Democrats at a time when Americans increasingly support global engagement. In a February Gallup poll, a record-high 72 percent of Americans (including 80 percent of Democrats and 71 percent of Independents) saw trade as an opportunity — versus only 23 percent who saw it as a threat. That level of support was up sharply from 58 percent last year, despite — or perhaps because of — the anti-trade rhetoric of the 2016 campaign.

It’s also noteworthy that Democratic governors and mayors — who appreciate how trade supports opportunity and jobs in their communities — are also broadly supportive of a positive agenda to expand U.S. trade.

Congressional Democrats need to offer a more balanced set of ideas on trade. They can begin by announcing market-opening policies that enable American producers, workers and small businesses to compete more effectively in foreign markets and share more fully in the opportunities that rules-based trade provides. For the millions of Americans whose livelihoods depend on trade, that would be “A Better Deal.” 

Ed Gerwin is senior fellow for trade and global opportunity at the Progressive Policy Institute. PPI is a Washington think tank that develops and advances proposals to support economic growth, shared opportunity and political reform. Follow Ed on Twitter @EdGerwin.


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