Why We Still Need a Trans-Pacific Partnership
Robert Petrosyan, Fiscal Policy Senior Editor
Ever since the Reagan Revolution, one of the bedrock principles of the Republican Party has been its support of free trade. The party believed that by removing barriers to free trade, the US would benefit by having more markets to sell its goods to and a larger selection of goods for American consumers to purchase. From 1980 to 2008, our economy has faced tremendous growth and innovation, and the quality of our technology and goods has never been greater.
However, the Great Recession and the subsequent slow economic recovery has lowered America’s faith in free trade. Recent political events, such as Brexit, the EU banking crisis, and the Syrian refugee crisis have shifted the conversation against economic trade and globalism. However, I believe it is very important to make a distinction between the two types of globalism, the two types being economic and political.
Political globalism lumps several different countries together, and tries to artificially bind them under one system, without any regard to differing cultures, customs and conditions. This disrespect for sovereignty and the desire to artificially form a new culture rarely works, and and we’ve seen this in Europe, where the European Union is already falling apart at the seams. Large political blocs that are formed this way, such as the EU, would eventually lose the specialties that made each former country unique, and it would decrease the amount of specialization in the broader economy.
Economic globalism, or free trade, on the other hand, respects and encourages sovereignty, and incentivizes each country to specialize in the production of its goods. It would then trade the surplus goods for goods produced in foreign countries. This heightened efficiency increases the overall amount of wealth in each country, while also increasing the overall bundle of goods available for consumers to purchase.
With that in mind, the Republican Party, and the US as a whole, has begun to turn against free trade. When entering office, President Obama wanted to shift his foreign policy away from the Middle East and towards Asia. The Trans-Pacific Partnership was his vision for an increased American focus there. At the time, Republicans were in strong support of the TPP as well. With it being one of the few issues where President Obama and Speaker Ryan aligned, it seemed like the TPP had an easy path to becoming law.
However, critics from both the left and the right soon began to emerge. On the left, progressive leaders like Elizabeth Warren and Bernie Sanders spearheaded opposition to the bill. Over time, their concerns over the TPP being a giveaway to corporations and a boon for outsourcing made Democratic support for the bill peel away. On the right, the rise of Donald Trump and his brand of populism in the Republican primaries began to turn Republican legislators against the TPP.
When Trump won, the TPP was immediately scrapped, and Trump promised to rework other trade deals as well, especially NAFTA. President Trump promised to create trade deals that will work for America. It would be a good idea for Trump to create a new version of the TPP as opposed to scrapping the concept entirely.
For all its flaws and secrets, the TPP was brilliant in allowing greater access to American goods, not just in Asia, but also in South America and Oceania. At the same time, it also served as a geopolitical counter to China. This deal would have brought twelve countries together economically, reduced their tariffs, and gave each country greater access to international goods. For example, American cars would be able to be sold in Japanese markets, due to lower restrictions on the amount of cars the US can sell there, thus creating jobs for manufacturing companies in the Rust Belt. Also, eliminating tariffs would mean a larger variety of goods coming into the country, and at much cheaper prices, which benefits the American consumer.
Additionally, the TPP would have served as an economic counterweight against China in a critical region. By bringing in countries like Japan and Vietnam into an American trade deal, the US retains a dominant influence in the economies of those countries. By giving up on the deal, the US will allow China to make its own deals in the region, and outperform the US there. Without a check from the US, China will have have no reason to stop some of its unscrupulous economic practices, such as currency manipulation and theft of US trade secrets.
Unfortunately, despite those benefits, the TPP was scrapped. However, we should not abandon the concept entirely. President Trump, as part of his pledge to write better trade deals, should work to write an improved version of the TPP. This new deal should be much more transparent than the old one, and should not include provisions that may adversely impact the sovereignty of the US or any of the other participating nations.
Since President Trump intends to be tough on China, he should not allow China to take over economic leadership in the Pacific Rim. The best way to counter them is to build a better trade deal, and bring convince surrounding countries to join the American economic bloc. Ideally, this new deal would also include countries like South Korea and Taiwan. This way, there would be economic pressure on China to change its policies and liberalize its economy.
By instituting a new and improved TPP with standards more favorable to the US, President Trump can ensure that America dominates trade while also countering Chinese influence in the Pacific.
Follow this author on Twitter @Rob_Petrosyan