- By Phil LevyPhil Levy is Senior Fellow on the Global Economy, The Chicago Council on Global Affairs, and teaches strategy at Northwestern University’s Kellogg Schoool of Management.
On the eve of the election, Dan Drezner offered a wonderfully optimistic vision of foreign economic policy to come. He backed the view that we would see the issue move to the forefront and progress made, whatever the outcome of the vote. He catalogued the trade and investment deals that are currently mid-negotiation and concluded that success was likely:
"All of these deals are being negotiated by the Obama administration, so I think we can assume that the president has signed off on them … Furthermore, regardless of who wins Congress, these are the kinds of deals that still fall under that shrinking category of ‘doable in a reasonably bipartisan fashion.’"
I found it all very sweet. Dan was writing from Paris. Like Proust’s madeleine, his hopeful predictions stirred up memories of 2008 and of 2010 — more innocent times gone by, when my Democratic friends held great hope on the international economic front. In 2008, post-election, they would explain that President-elect Obama had multilateralism in his blood and that his recalcitrance on trade agreements had just been an election tactic to win over the unions. Why, they explained, we’d probably see the pending free trade agreements (S. Korea, Colombia, Panama) passed in lame duck session.
Two years later, with those same agreements still pending, there were hopeful murmurings that President Obama, chastened by the 2010 midterm election losses, would triangulate, just as President Clinton had in 1994. He would seek out areas of bipartisan agreement with the Republicans. What area seemed more promising than advances on trade? Of course, the agreements did eventually pass, but only after a bitter partisan conflict on the Hill. All that was accomplished was the completion of the 2006-2007 trade agenda; the administration and its allies in Congress explained that it was ‘premature’ to talk about measures such as renewed Trade Promotion Authority (normally a prerequisite for passage of any serious agreement). There was no forward progress. The WTO talks were left to linger. The vaunted Trans-Pacific Partnership (TPP) is actually a revived Bush administration project; participants hoping for a November 2011 conclusion saw the date come and go.
Thus, a recurrent disconnect between hope and experience. I was not going to be so churlish as to take issue with Dan’s reveries, until I saw Shadow Government guru Will Inboden actually take them seriously last week. So duty calls.
Reasons for skepticism about trade negotiation progress in President Obama’s second term:
-If, on a 10-point scale, the first term free trade challenges were a ‘degree of difficulty’ 2, then this term’s challenges are an 8 or a 9. In the first term, to be called a free trader, the president just had to get a willing Congress to vote on three pre-packaged, already complete agreements. That took him 2.5 years and ended up in a bloody fight. Even so, it really just required a weekend’s lobbying for a vote. Getting a TPP or a US-EU trade agreement would require sustained engagement, starting very soon, and the expenditure of substantial political capital. There are divisive, difficult issues such as intellectual property protection and the treatment of state-owned enterprises on the table in TPP; there’s the question of agriculture with the EU. If the president and his team could barely handle the first term tasks, those of the second look technically much more daunting. It is difficult to list the issues on which the president has shown the kind of sustained political engagement that would be required (e.g. working to persuade reluctant groups like Pharma or farmers to live with an agreement they viewed as problematic). Perhaps health care is an example, though even then the president was criticized for tossing it to Congress and walking away while members fought.
-It may be useful to distinguish between President Obama’s political cost/benefit of negotiating a trade and of concluding one. Negotiating a "21st century trade agreement" makes one look visionary and constructive. Everyone can imagine that the ultimate deal will be filled with the things they like and devoid of any deal breakers (even if all those doing the imagining have sharply conflicting visions). Concluding such a deal means not only resolving such conflicts, but also alienating President Obama’s political base. The 2011 votes on the pending FTA’s discredited the old notion that House Democrats were split in their views on trade; instead, they seemed relatively unified in opposition. I am not sure what evidence Dr. Drezner is reviewing that promises bipartisan support for upcoming trade agreements. Of course, President Obama might decide that he will largely pass his second term agenda with Republican support in the House, leaving Democrats to seethe, but if that it is his strategy, his early post-election statements have concealed it well. If, instead, President Obama is determined to pursue a partisan line, he needs his forces united, not divided. Nothing will split them more readily than a good trade fight. And all of this assumes that the president’s reluctance to advance the trade agenda was politically instrumental, as opposed to a reflection of his true beliefs.
-Trade agreements take time. If the president is to get anything completed, he needs to start right away. TPP is nowhere near ready, despite years of talks; most of the hard, most controversial issues have been deferred. The president is surely aware that the window for second-term presidents to achieve things is narrow. Does he want to devote that time to trade liberalization? He has not seemed inclined even to attack the divisive issue of environmental change, something he seems to care significantly more about.
We can be grateful that the president has indulged in more protectionism than embracing futile tariffs on Chinese tires and endorsing the "Buy America" concept. The problem is that U.S. trading partners will not be infinitely patient in awaiting the conclusion of the deals under discussion. From a broader foreign policy perspective, the TPP is absolutely central to the administration’s pivot to Asia. Europeans are eagerly backing the idea of an FTA as one of the few positive signals they might send to investors amidst the still-looming euro zone crisis. There will be serious foreign policy consequences if the president fools us thrice on support for trade.