U.S. trade policy—time to start over



Jeff Faux | Economic Policy Institute

Anger over the impact of international trade on jobs,wages, and opportunities was a major cause of Donald Trump’s election. As the Democratic Party’s politicians and pundits search through the rubble of Hillary Clinton’s candidacy for clues to her stunning loss, they need to take an honest look at their own contribution.

Since the signing of the 1994 North American Free Trade Agreement (NAFTA) (conceived by Ronald Reagan,negotiated by George H. W. Bush, and sold to the Congress by Bill Clinton) the Washington policy class has relentlessly pursued ever more so-called free trade agreements.

As the Economic Policy Institute has been reporting for decades, these deals have devastated our country’s industrial base and the economic security of millions of Americans. Under pressure from multinational corporations, Republican and Democratic leaders have systematically traded away the income and job security of American workers in exchange for promoting the interests of American international investors.

It was only a matter of time before voters in the most affected states rebelled against the elites of both parties.There were enough of them in Michigan, Ohio,Pennsylvania, Wisconsin, and Iowa—many of whom had voted for Obama in the previous election—to carry Trump to the White House.

But the issue remains. Trump has declared the twelve-nation Trans-Pacific Partnership (TPP) dead. Instead, he promises to negotiate “fair bilateral trade deals that bring jobs and industry back onto American shores.” We have heard that before. Barack Obama predicted 70,000 new jobs from the bilateral U.S.–Korea Free Trade Agreement he signed in 2011. Four years later we had already lost 95,000.

Trump may be, as he boasts, a better negotiator than Barack Obama. He was certainly right in criticizing Obama’s deals. But the root cause of the loss of jobs and industry to globalization goes deeper than the trade pacts’ details. It is inherent in economic policies that relentlessly open up American workers and their communities to brutal global competition for which they have not been prepared.The result is that the costs to American workers of each cycle of expanded trade relentlessly exceed the benefits.

This fundamental problem will not be resolved by better negotiations.The trade policy of the last quarter century is now bankrupt, economically and politically.This is the moment for America to go back to the drawing board and rethink strategies for competing in the global economy in ways that raise living standards for all. The first step is to declare a freeze on all trade negotiations—bilateral as well as multilateral—until we have such strategies in place.


Read the full report here