Making a Case for American Trade Again
President-elect Donald Trump made throwing out America’s international and trade agreements a hallmark of his campaign. His election is a rebuke to the globalists who have been part of the American presidency for the past 70 years. Free traders are in for rough ride over the next term.
In the first 100 days,
“I will announce my intention to renegotiate NAFTA or withdraw from the deal under Article 2205. I will announce our withdrawal from the Trans-Pacific Partnership, I will direct my Secretary of the Treasury to label China a currency manipulator,”
President Trump may be hostile to agreements that foster the flow of goods and services between nations, but this philosophy does not seem to apply to American energy.
Energy producers and traders will have an easier time in the Trump administration. The crude export ban that was lifted by President Obama will stay. And, many regulations of fossil fuels will be lifted. This could bode well for coal, crude, and gas exports. Theoretically, this will increase production of energy and create new jobs in energy-producing regions of the country. Under a Trump administration, America may become a leader in carbon-based energy exports, but a protectionist in the export of goods and services.
Before this election, many American leaders believed that the opening of foreign markets would benefit U.S. businesses that are already doing business globally, such as Apple, Microsoft, Nike, Lockheed Martin, PricewaterhouseCoopers, and Caterpillar, to name a few. In turn, American business would advance U.S. soft power and influence around the world.
Since the enactment of the North American Free Trade Agreement ( NAFTA ) 25 years ago, trade has powered the growth of businesses, jobs, and the economy—not to mention strategic relationships with America’s trading partners. Between 1993 and 2015, trade between the U.S., Canada and Mexico soared from $297 billion to $1.14 trillion. This boosted corporate profits, increased job growth, and expanded the economies of all three countries. It also lowered prices for consumers.
For the past eight years, President Obama has been one of the strongest defenders of trade with the passage of the Colombia, Panama, and Korea Free Trade Agreements; the conclusion of the Trans-Pacific Partnership ( TPP ); and the start of the Transatlantic Trade and Investment Partnership ( TTIP ) negotiations with the European Union.
Despite these successes, the word “trade” became a bad one. The populist campaigns of Trump and Senator Bernie Sanders attacked the bipartisan consensus on free trade. These candidates and their supporters persuaded many Middle Americans that protectionism is the key to jobs and a stronger economy.
A survey by the Chicago Council on Global Affairs found that Trump’s attacks on trade have changed Republican attitudes far more than Senator Bernie Sanders’ rhetoric influenced Democrats. The survey found that 55 percent of Democrats and 59 percent of Republicans agreed with the statement that “Trade is good for the U.S. economy” in 2004. By 2016, those numbers reversed – 68 percent of Democrats think trade is good for the economy (a 13-point increase), compared to just 51 percent of Republicans (an 8-point decline).
With respect to specific trade deals, the gap between Republicans and Democrats is equally pronounced. Trade has always had supporters among Democrats and Republicans, but now trade seems to be a pariah among base voters regardless of party identity.
Trump’s win in the election leaves the future of the Transatlantic Trade and Investment Partnership (TTIP) up in the air as the president-elect has given few details on his position on the ongoing negotiations with the European Union, while his broader anti-trade rhetoric has simmered expectations that the deal will come to fruition.
Trans-Pacific Partnership (TPP) detractors and supporter alike see the Pacific trade deal as effectively dead — citing the president-elect’s opposition to it and the unwillingness of Republican congressional leaders to bring up the controversial deal for a vote in a lame-duck session.
The burden is now on American corporations and free traders to explain to the American public and the Trump Administration how trade creates jobs, reduces international conflicts, and advances American global interests — including stability and peace with our trading partners
It is time for those who benefit from trade to make the case for trade — because we know everyone benefits from it. This election may have set the case for trade back a few years, but if we can talk about the benefits of global trade, we can continue to move our nation forward.
Matt J. Lauer is an Executive Vice President of MSLGROUP and leads its international practice from the Washington, D.C. office. He is the former Executive Director of the U.S. Advisory Commission on Public Diplomacy at the Department of State. He is an advisor to the board of Mercuria Energy Trading, one of the world’s largest commodities trading corporations, and developed the Swiss company’s public affairs strategy in its acquisition of the commodities trading unit of J.P. Morgan Chase & Co. Connect with him on Twitter: @MattJLauer