How Clinton Can Fall in Love With Free Trade All Over Again

In October, with Sen. Bernie Sanders proving to be a peskier-than-expected challenger for the Democratic presidential ticket, Hillary Clinton came out against the Trans-Pacific Partnership, a massive trade deal with Pacific nations that would cover 40 percent of the world’s economy.

It was, in the context of the heated fight for the Democratic nomination, understandable enough: Sanders was surging on his revolutionary message, which included an assault on free trade. He ended up nudging Clinton to the left on many other issues too, from Wall Street regulation to energy oversight.

But for anybody who followed Clinton’s tenure as secretary of state, those comments were jarring: She had championed the deal herself, put it at the center of her own diplomatic “pivot” to Asia, and called it the “gold standard” of trade deals. Repeatedly during her time as the nation’s top diplomat, Clinton touted the pact, strongly backed by her boss, President Barack Obama. One count has her publicly supporting it 45 times.

Trade experts don’t buy Clinton’s supposed change of heart. They told Foreign Policy that they very much doubt she would simply scrap a trade deal negotiated in good faith with many Asian nations, some of whom, like Japan, are close U.S. allies. Clinton knows, they say, that jettisoning the deal now would poison U.S. standing around the world.

There’s a clear path for her to evolve back to supporting the TPP, especially now that the fight for the Democratic nomination is over. Clinton has said she would fight currency manipulation by China, which is not a signatory to the TPP, and by other nations like Japan and Vietnam, which are signatories, with new duties and tariffs.

Many who oppose the Asian trade deal are also concerned about currency manipulation, conveniently ignoring the fact that most economists figure this has been a non-issue for years. Sen. Rob Portman (R-Ohio), a former U.S trade representative, and Rep. Nancy Pelosi (D-Calif.) won’t back it because they don’t think there is adequate punishment for deliberately cheapening a nation’s currency, which makes their exports more competitive. An undervalued currency also makes it more attractive for U.S. companies to ship jobs overseas, where they can pay less in wages.     

“Clinton cites currency manipulation as one of her reasons for not supporting it,” Lee Branstetter, a nonresident senior fellow at the Peterson Institute for International Economics, told FP recently. “One could imagine an even stronger legislative proposal punishing currency manipulators being paired with the legislation that would pass TPP.”

There is precedent for this kind of maneuvering, and Clinton doesn’t have to look hard to find it. When her husband, Bill Clinton, took office, he made environmental and labor side agreements to the North American Free Trade Agreement to placate opponents, especially labor unions, which opposed the pact. “He then worked very hard to pass it,” said Scott Miller, a trade expert at the Center for Strategic and Advanced International Studies.

Miller said he does not believe Clinton has issued a hard “no” on TPP. “She’s been hedged. She said it’s not good enough; she hasn’t said she opposes it. The ‘not good enough’ gives her a window,” he said.

In an email to FP, spokesperson Jesse Lehrich said her candidate “will only support deals that create good jobs, raise wages, and advance our national security.”

If the United States does ultimately abandon TPP, it would open the door for China to step in. Right now, Beijing is negotiating the Regional Comprehensive Economic Partnership, a deal meant to rival TPP that does not include the United States, but which would include India, potentially making it a major Asian trade bloc. Obama often argues that the TPP is needed to allow the United States to set the rules of the game in the Asia-Pacific, rather than abdicating the playing field to China.  

“I have every expectation that [RCEP] will get negotiated and it will not include the U.S. That gives China negotiating leverage,” Branstetter said. “If we’re not out there negotiating and ultimately passing deals other nations will move forward as we’re standing still.”

Clinton’s flip-flop on trade makes sense politically. Both presumptive Republican presidential nominee Donald Trump and Sanders have used trade as a bogeyman for why the working and middle classes are falling behind. They have convinced many voters that international trade pacts like the TPP cost America manufacturing jobs, essentially creating two classes of citizens: those with a college degree, who are enjoying the benefits of a growing economy, and those without one, who have been left behind. Economists of all stripes overwhelmingly agree that free trade benefits the overall economy, increases overall employment, and saves consumers money — but some workers in some sectors see a lot more of the pain than the gains.

However, Miller said he doesn’t expect Clinton to have to defend her flip-flop on the campaign trail. Because she and Trump both oppose the deal, he said TPP is a settled issue. There’s always the chance Obama could manage to get enough votes in the House and Senate to pass the deal during the lame-duck Congress after November’s presidential election. Obama’s trade ambassador, Michael B. Froman, recently suggested this was a possibility.

If the fate of Obama’s signature trade deals falls to a President Clinton, Miller cautioned against expecting a quick passage. He said it would take months for Clinton to get her administration up and running, and even more time to create the momentum to push the deal through Congress.

For Branstetter, nothing less than the credibility of the United States is at stake.

“If the U.S. turns its back on TPP, we will be deeply undermining our stance as a negotiating partner,” he added. Killing it “would make it much harder for that going forward to negotiate good trade deals.”

Photo credit: CHIP SOMODEVILLA/Getty Images/Foreign Policy illustration