Hurray for the last three trade deals of the 1990s

I have had two really scarring experiences in my time. One was my childhood. The other was my adult life.

As a child, despite growing up in Beaver Cleaver’s America with two loving parents, generally hygienic siblings, and the usual allotment of hamsters, turtles, cats, and a dog, there was still plenty of room for psychological trauma. Most of it came subtly but the damage has been irreversible (as my wife and children will attest). For example, I would bounce in the house beaming to report my grades, be asked how I did, describe the triumph of all As and a B and then, after a long pause, be greeted with "What was the B in?"

As an adult, well, it’s much too complicated to go into here. But certainly one scarring experience was working in the United States Department of Commerce. For one thing, the inside of the Commerce Building was so dark, featureless and cavernous that it actually became a kind of spiritual black hole, sucking the souls out of its occupants with a ruthless efficiency that calls to mind a kind of industrial-strength version of the movie Poltergeist. Next, while you may have heard of Churchill’s famous description of Russia as a riddle wrapped in a mystery inside an enigma, well Commerce was a backwater wrapped in a bureaucracy inside a dysfunctional political system.

On top of that, I was largely involved in trade policy which involved making assertions about which we had no substantiation in support of policies we were not sure would work while hoping the negative consequences would not be so bad. And as it turned out, while my pro-trade reflex is still intact, it has over the years been tempered by the kind of caution blended with cynicism that can only come from exposure to the hype associated with the economic benefits associated with trade deals.

So, in short, not only am damaged goods but I have special experience which may account for how underwhelmed I am by the just achieved trade deals with Korea, Colombia, and Panama.  I mean I know people are celebrating. I even have friends who are and I don’t want to spoil their fun. So I offer my psychological history as a kind of an excuse for being a spoil-sport.

Not that these deals aren’t net net a good thing.  They are. The Korea deal is even potentially economically significant … in a smallish kind of way. And there are those 70,000 jobs the administration is claiming will be created by the $13-15 billion in new exports the deals might help generate.  But I can’t help but think this is all pretty weak beer and that these deals are more like a throw-back to a bygone era of activist trade policy than they are indicator of some new push toward opening global markets.

In a way, not only are these Bush Administration policies come to long overdue fruition, but they kind of feel like they are simply the last spasm of 1990s trade liberalization.

Given the way we in the Clinton years oversold NAFTA (guilty) and how the China FTA has worked out (we’ve still got a host of problems with them from currency manipulation to IP extortion) and the fact that we’ve been bleeding jobs for a decade and have stubbornly high unemployment and the world is heading into a recession, it’s not surprising that this administration doesn’t have much appetite for new trade deals. Indeed, given all those things, getting these deals approved represents something of a triumph for the Obama trade team. It wasn’t easy and it is clear there was deep apprehensiveness about aspects of these deals within the administration and within Democratic Party ranks on the Hill.

And for Asia policy hands and industries like the auto and agriculture sectors, the Korea deal represents the important solidification of a key relationship and access to a rapidly growing market of some size. And for Latin policy hands, well, they’re just happy to have something to talk about other than Mexican cartels and the gnawing sense that Washington thinks South America snapped off and drifted away in a recent earthquake or hurricane.

But having said that, the most important reaction to these trade deals is akin to my parents’ reaction to my report card in that it looks past the accomplishment to the deflating underlying issue.  In this case, the issue is "now what?" What is the next chapter in U.S. trade policy going to look like?  A protracted period of inaction in terms of new deals with a major shift in focus (generally justified) to enforcement issues seems most likely. But with world markets representing vital potential growth for U.S. companies and workers and with material tariff and non-tariff barriers still in place, it’s time for a new conversation and new ideas. Some have come from smart past USTRs like Sue Schwab (see her Foreign Affairs piece from a while back on this) and Charlene Barshefsky, who has written and spoken persuasively about the need to focus on sectoral deals. Agricultural trade liberalization is certainly one of the next big hurdles as is dealing with questions of currency manipulation and growing "conditions" imposed on companies that would trade with big markets like the forced transfer of IP or the forced location of factories in the target country.

We have to deal with a world in which most other countries aggressively practice industrial policies that tilt the playing field in their direction and we more or less passively complain about conditions without doing much about it. And we have to deal more effectively with dislocated workers while they search for new jobs, not just providing training but the kind of economic safety net that will have the embracing the benefits of trade much as some European workers do because they don’t fear it will undermine their families’ well-being.

In all likelihood however, the conversation about what is next is going to unfold slowly and the cheers for these deals will quickly give way to the same deafening silence that rings in the head of aging little boys who weren’t sufficiently appreciated in their youth.