Trading in ignorance
Nothing is more disappointing in the current presidential campaign than both candidates’ aversion to talking straight to the American people about the issues that will actually determine the nation’s future. Aside from the absence of any discussion of entitlement reform, nowhere is that failure more glaring than on the issue of trade, where both candidates traffic largely in misperceptions, fears and anxieties.
The Republican Party nominee, ostensibly a businessman, has a content-free message on trade that’s equal parts narcissism and fear-mongering: America, somehow, manages to get the short end of every stick, and only Donald Trump can make it better. NAFTA and every other trade deal is necessarily bad, since he didn’t have anything to do with them. Never mind that since NAFTA became the world’s biggest free trade area, trade among the U.S., Canada and Mexico has quadrupled, and investment has multiplied fivefold. Workers in the NAFTA countries are now more competitive worldwide, and the countries are integrated into regional supply chains. Some 40 cents of the value of every good exported by Mexico to the U.S. is actually the re-export of goods that were produced by American workers.
Meanwhile, the Democratic Party, in avoiding a hostile takeover by an un-Democratic socialist, moved so far to the left on trade that it’s fertilizing the same kind of ignorance that Trump nurtures. Hillary Clinton’s change of heart over the Trans-Pacific Partnership, which she had openly and unequivocally embraced months before, is another of the flip-flops that make so many uncomfortable with her.
Florida and Floridians have good reason to care about trade issues. One of six jobs in the state is supported by trade. Eighty nations have consulates here. Some $147 billion in trade passed through our airports and seaports in 2015. The state ranks sixth in attracting foreign investment; some 260,000 Floridians work for foreign-owned companies, including 600 high-end aircraft manufacturing jobs moved here by Embraer in 2014. More than 60,000 companies in Florida export, selling $61 billion of goods abroad in 2015 and another $33 billion in travel and professional services. One in every five companies in the U.S. that exports is located in Florida. We are, in every way, a global state.
James Bacchus, a Floridian, is a wise voice on trade issues. Chair of the Greenberg Traurig law firm’s global practice, Bacchus served as Gov. Reubin Askew’s special assistant when Askew was U.S. trade representative. Bacchus went on to serve two terms in the U.S. House of Representatives, representing a central Florida district, and led bipartisan efforts to advance trade issues, including NAFTA. He then became the first American to serve on the Appellate Body of the World Trade Organization — the group that decides trade disputes among the 165 countries that belong to the WTO. He chaired that Appellate Body twice.
Bacchus declines to comment specifically on either of the political parties or their candidates, but he has a perspective on trade that’s informed and important. (His comments are his, not his firm’s, he notes.)
Polls, he says, show that the vast majority of Americans continue to support trade. But in the current political environment, trade has become a “proxy for all kinds of disappointments,” including the mistaken belief that trade is responsible for the loss of manufacturing jobs. A study cited by Dartmouth economics professor Douglas Irwin in Foreign Affairs magazine found that advances in technology — productivity improvements — were responsible for 85% of manufacturing job losses in the U.S., with trade accounting for only 13%. Another indicator that technology, not trade, has more impact: In Florida, despite job losses in manufacturing, manufacturing output has increased by more than 21% since 2000. It is, of course, easier for politicians to blame trade deals than to craft policies to deal with the challenging dynamic of robots and computers replacing workers.
The Trans-Pacific Partnership, Bacchus says, is a huge opportunity for the U.S. to influence the rules that will shape trade for decades. “The provisions on digital trade alone make the agreement worth approving,” he says, and environmental and labor protections are “light years beyond anything in any other international trade agreement.” Japan made concessions in agricultural trade that the U.S. had been seeking since the Carter administration. Also significant are rules that would be “enormously important” to the U.S. in its fast-growing trade in services and intellectual property. “That’s rarely mentioned,” he says.
Bacchus has written eloquently for years about the connections between trade and freedom. “The struggle in the world today,” he says, “is not a struggle along the tired truisms of left and right. The real struggle is between open and closed societies.” No country has ever grown and sustained growth without being open and remaining open to the rest of the world’s economy. “That is a prerequisite to growth and a prerequisite to being competitive,” Bacchus says.
America has done well at creating an open economy but less well at creating policies and actions to stimulate growth that’s inclusive and sustainable. “That’s where we’ve fallen down,” says Bacchus — “investments in children, education, training, retraining, environmental protection, infrastructure, power grids, labor mobility — the ingredients of competitiveness. We need to make certain that our people have all the tools they need to have to take advantage of the opportunities that come from being open to trade.
“These are the things we should be focusing on domestically instead of blaming trade.”