DEMOCRATS MUST DEVELOP A COHERENT TRADE POLICY

Democrats missed the boat when it came to trade policy as an issue in the 2016 Presidential campaign. Donald Trump sealed an election victory by forcefully coming out against trade agreements and winning the support of Midwestern states devastated by the loss of its manufacturing base. This was contrasted with Hillary Clinton who argued that lost industrial jobs were gone for good but that the information age would create opportunities elsewhere in the economy.  Affected voters saw these new opportunities as a pipe dream and voted for the candidate who promised to bring the jobs back to their communities.

 Now, Democrats are losing yet another opportunity to make fair trade an issue in the 2018 mid-term elections.  President Trump, in an attempt to make good on his campaign promise, has begun to attack nations, friend and foe alike, in the name of fair trade. Democrats are sitting back and hoping that trade wars will upset the financial markets and anger enough farmers who have seen their produce slapped with tariffs, to work against Republican candidates. This approach is short sighted and demonstrates the lack of a long term strategy to formulate a lasting policy based on equality and justice.

Ironically, Republicans have traditionally been the bastion of free trade which on the whole favors capital at the expense of labor.  Corporations would prefer to utilize all global markets in building and distributing products, to maximize profit.  For this reason, the National Chamber of Commerce, a major Trump supporter on tax cuts and a campaign contributor has launched a campaign against his trade policy. 

But Trump has hitched his wagon to a populist ‘America First” view that anti free trade and anti-immigration policies are the key to maintaining his base and winning elections.  Traditional Republican objections will be futile as long as Trump controls the party messaging and apparatus.

Historically, Democrats were the party that sought to limit the negative aspects of free trade.  Since the FDR presidency, Democrats have followed the principle that it is a fundamental responsibility of government to ensure that a free market is managed in such a way as to produce the greatest good for the greatest number of people.  Somehow this view began to lose its importance as liberals seemed to downplay labor interests and to support globalization. 

In its eagerness to leave the industrial age behind and to enter the information age, the Democratic party forgot that many of its blue collar supporters were also being left behind.  Instead, identity politics with the view that struggling Americans could only be labeled as minorities or female or non-heterosexuals or the disabled and did not include healthy white males dominated the 2016 campaign. Bernie Sanders was an outlier on this view and was roundly criticized by liberals during the Democratic Primary for proposing that the party adopt protectionist policies that favored blue collar workers.

The Democratic Party must not make this mistake again. What is needed is a new paradigm in setting trade policies that achieve two goals: (1) build and maintain a strong middle class; (2) serve and strengthen U.S. foreign policy. In a recent Foreign Affairs article, “A Trade Policy for All” (June 26, 2018), two Vanderbilt Law School professors, Timothy Meyer and Ganesh Sitaraman offer what appears to me a responsible starting point.

The premise of the article is that liberalizing markets should be a means, not an end. The authors point out that tariffs are simply taxes on imported goods, economically beneficial to certain groups and detrimental to others.  They offer sound statistical evidence that from 1988 through 2008 free trade agreements overwhelming favored the corporate elite and middle classes in emerging markets at the expenses of the middle classes in advanced economies.  During this period the American middle class stagnated.  The conclusion is that these economic imbalances must be recognized and addressed, head on.

What is to be done in formulating a responsible trade policy?  First, take existing programs and fund them properly.  The Trade Adjustment Assistance Program has been around since 1962 to retrain and help relocate displaced workers.  It has never been given priority status and has been labeled “burial insurance” by labor unions.

Second, trade agreements themselves need to address the imbalance between winners and losers within each agreement. Taxes can be imbedded in regional trade agreements such as NAFTA with the proceeds going directly to the communities negatively affected by each treaty.

Third, for other free trade agreements that overwhelmingly benefit multi- national corporations, an appropriate tax must be applied that goes directly to subsidize those national industries that suffer from an open trade environment.

Like so many of President Trump’s executive decisions, his implementation of trade policy is misplaced and dangerous. Trying to bully other political elites into dropping tariffs, which will in turn threaten their own political constituencies, is a fool’s game and is contrary to international law and order.  Creating new tariffs by haphazardly throwing mud at the wall and seeing what sticks will hurt as many Americans as it helps.  Moreover, such a “bull in the china shop” approach unravels the fabric of political alliances that have taken decades to weave together.

There is a better way forward.  Trade policy is the province of Congress.  The U.S. Constitution grants the legislative branch authority to regulate international trade including establishing tariffs, drafting and implementing trade agreements, and other provisions affecting commerce within the United States. The House Ways and Means Committee and the Senate Finance Committee have primary congressional jurisdiction on trade matters.

The Democratic Party must make it clear to the voters that a fair and lasting trade policy will be a top priority once their members obtain a majority in Congress. They must articulate a trade policy that taxes the winners to help subsidize the losers within the terms of each Agreement.  In short: “A Trade Policy for All.”