Former USTR official shows how trade negotiators are out of touch


Former Deputy US Trade Representative Wendy Cutler recently published a Forbes commentary criticizing the national backlash against trade agreements and supporting the Trans-Pacific Partnership (TPP) trade and global governance deal. The article troublingly displays how the Office of the US Trade Representative (USTR) has failed to adjust trade strategy to correct for past mistakes. Snarky straw man arguments are crafted and knocked down to give the impression of rebutting them.

Cutler first joined the USTR in 1988 when our trade balance was improving due to President Reagan forcing Japan and Germany to revalue their currency. Since 1988, the trade deficit has deepened to achieve world record levels of size and persistence. This happened on Cutler’s watch but she has never expressed concern or remorse.

{mosads}Trade deficits destroy jobs, on net, and slow the economy. Trade surpluses create jobs, on net, and grow the economy. China, South Korea, and Germany know this. Their net export oriented growth strategy – funded by consumers in the US and elsewhere – is a primary fuel for their rise.

Cutler was the Chief U.S. Negotiator for the disastrous U.S.-Korea (KORUS) Free Trade Agreement which President Obama and Republican leadership pushed through Congress in 2011. Instead of creating jobs and growth, the South Korea deal was a debacle for the American economy causing a doubling of our prior US-Korea trade deficit in just four years, from approximately $14 billion to $28 billion annually. She has never admitted she messed up.

Instead, Cutler is doubling down to support the unpopular – and probably dead – Trans-Pacific Partnership agreement. 

“[T]he TPP will boost economic growth and support high-paying U.S. jobs.”

We not only heard that same argument in favor of the US-Korea trade deal, but also in favor of Congress approving legislation to allow China to join the World Trade Organization (WTO) in 2000. The US-China trade deficit exploded by 390% annually during that time, but USTR and Cutler have never said “sorry”.

The article fails to acknowledge that government reports have concluded that the TPP will result in an increased trade deficit, statistically zero growth, and virtually no net job creation over the next fifteen years. It also fails to address the reason: trade rival countries use new mercantilistic tactics to nullify the impact of tariff cuts by manipulating currency, subsidizing state-influenced companies and increasing border taxes.

Instead, Cutler disingenuously characterizes smart trade proponents arguments as holding the view that “ if we scrap our existing trade deals and click our heels together, manufacturing jobs will return, the middle class will grow, and income inequality will disappear.”

The phrases “magically bring US jobs back” in the title and “click our heels together” show the sneering disgust underneath. Credibility is not achieved.

The USTR’s prime objective has been more trade agreements.  That has been the metric. Net trade performance has not been the metric.  Quantity of trade deals is king, quality does not matter.  The facts and performance of past deals are irrelevant. 

The playbook is clear, but economically unwise.  Concede what you need to concede, but get the newest trade deal. Then mischaracterize the resulting 5,500 page mishmash as “export opportunities”, “job creation”, and “American leadership”.  Label any opponent as a “protectionist”.

American voters used to buy the globalist view of the world and thought that America was leading. But now we feel like suckers. The jobs did not materialize. Transnational corporations get more power than ever and more treats in the TPP goody-bag.

The US needs a national goal to balance trade, including a medium term goal of achieving trade surpluses to start balancing that deficits of the past. Changing the focus of national policy from “more trade deals” to “balanced trade” will force the executive branch to start addressing the biggest ticket foreign trade cheating tactics that cause otherwise competitive US companies and workers to be starved out of the market.

Michael Stumo is CEO of Coalition for a Prosperous America.


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