International Affairs

President-elect Trump proves a quick study — Now he needs a lesson on TPP


Often an iconoclast, President-elect Donald J. Trump is already showing signs of being a normal politician. As the old cliché goes, politicians campaign in poetry, but govern in prose. So it is with Trump.

{mosads}In less than two weeks since the election, already Trump has disavowed or downplayed many of the most controversial items that were central to his campaign. For example, Trump has signaled he will likely not investigate Hillary Clinton and may not repeal Obamacare.  


Amid all this drama, it would be easy to overlook one of the key campaign pledges that President-elect Trump is upholding: A promise to reverse free trade agreements, including the Trans-Pacific Partnership (TPP).

Last week President-elect Trump released a three-minute video outlining his administration’s top priorities for its first 100 days. Among the promises: A vow to file a notice of intent to withdraw from the TPP.

This is a shame. Opposing free trade is clearly popular politically. As a matter of policy, however, embracing trade protectionism would be a disaster. This is true for American workers as much as for Wall Street.

In the long run, it is simply not feasible to wall a country off from global competition. If we follow Trump’s trade policies, the result will not be restored American greatness, but rather accelerated decline and stagnation.

This year’s presidential campaign, and the durability of Trump’s anti-trade rhetoric, have exposed a dangerous emerging consensus that free trade is bad, especially for American workers. Now more than ever, leaders in both parties need to step up and explain clearly the benefits of free trade, as well as the costs of protectionism.

It must be said: Those of us who believe in open competition and free trade have done a dismal job of persuading our fellow citizens. In a democracy, ideas – and trust – matter.

Millions of people struggling in the Rust Belt and Midwest have been left behind by globalization and technological change. These middle and working class Americans are rightly skeptical of leaders’ claims to be looking out for them.    

It is these Americans in the post-industrial Midwest – places like Flint, Mich.; Youngstown, Ohio; and Scranton, Penn. – that we must convince if free-traders hope to win the battle of ideas.

Significantly, the three people responsible for crafting Trump’s domestic policy and outreach to Capitol Hill are all Midwesterners with a history of backing market-oriented policies: Indiana Gov. Mike Pence, Wisconsin Rep. Paul Ryan, and Wisconsinite RNC Chair Reince Priebus.

Each of these men appreciates the power of economic freedom. So, too, can their constituents.  

The case for free trade can be both positive and negative. Some of the positives are familiar: Free trade means cheaper consumer goods for everyone. At a time when 95 percent of global customers live outside the U.S., it is more important than ever for American companies to access burgeoning foreign markets. 

Which brings us to the TPP. The agreement would have formed an 11-nation market equaling two-fifths of the global economy.

The agreement also broke new ground in international trade. It was the first agreement that reduced not just tariffs, but also the more insidious governmental regulations that prevent U.S. firms from competing in foreign markets, including rules related to public procurement and intellectual property.

In place of the TPP, Trump has vowed that he will negotiate bilateral trade deals with individual countries. But bilateral deals are simply not as beneficial as multilateral ones. In a world of bilateral agreements, companies are left to navigate a complex patchwork of conflicting rules and regulations.

Streamlining these rules is a painstaking process. This is partly whit it took negotiators 10 years in two presidential administrations to finish the TPP.

The role of regional competition also helps explain the success of NAFTA. The reality is that today, Mexico, the U.S. and Canada often compete together as one bloc against other countries or regions of the world.

When a company is choosing where to locate its next factory, it compares low-cost countries like China or Vietnam to North America, which, under NAFTA, offers a varied cost structure, transportation efficiencies and uniform regulations. Consider that cars assembled in “North America” cross the U.S.-Mexico border as many as eight times before they are finished.

This is Adam Smith’s principle of comparative advantage at work in the 21st Century. The arguments are prosaic, not poetic. But they are real, and we ignore them at our peril.

Of course, some of the negative potential consequences of protectionism are more viscerally jarring.

Imagine, for example, the potential catastrophes that could result from a belligerent trade policy, such as an escalating trade war with China or even a military confrontation in the South China Sea.

Moreover, if other countries see the U.S. retreating from its global leadership role, they will simply cozy up to the next large nation willing to fill the void. Already we have seen this happen since the defeat of the TPP, as China has redoubled its economic diplomacy in Asia and Latin America.

It is folly to pretend that we can isolate ourselves from new competition – and new markets – that globalization has unleashed.

The “rise of the rest” is a done deal. The question is, how will the U.S. respond to an increasingly competitive world? Will we seize it as an opportunity to grow? Or shrink away and retreat behind walls?

Which choice would befit a truly great nation?

Berquist is a business and trade attorney at the law firm of Cozen O’Connor, in the firm’s Minneapolis office.

The views expressed by Contributors are their own and are not the views of The Hill.

Tags Adam Smith Hillary Clinton Mike Pence Paul Ryan
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