The Economist: Obama's unwillingness to fight for trade is going to make everybody $600 billion poorer

Administration officials are still claiming that President Obama hasn’t given up on the fight for fast-track trade promotion authority (the better to complete a couple of major trade deal with Pacific countries and the European Union), despite Democrats’ general reluctance to engage on the issue and Harry Reid’s insistence that he won’t even entertain the notion during this politically sensitive pre-midterm period, but… Obama isn’t exactly pushing it, either. One of Democrats’ big arguments against the idea of setting the United States up for freer trade is that none of the deals on the table would really do that much to help out our economy anyway, so there’s no use getting so upset over the whole thing — but The Economist offers up some solid numbers to explode that myth, as well as some apt criticism of Obama’s pusillanimity to boot:

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If not championed by leaders who understand its broad benefits, it will constantly be eroded by narrow economic nationalism. Mr Obama now appears to be surrendering to protectionists within his own party. If he cannot drag Democrats back to their senses, the world will lose its best opportunity in two decades for a burst of liberalisation. …

In fact, the deals on the table are big. Reasonable estimates say that the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) could boost the world’s annual output by $600 billion—equivalent to adding another Saudi Arabia. Some $200 billion of that would accrue to America. And the actual gains could be even larger. The agreements would clear the way for freer trade in services, which account for most of rich countries’ GDP but only a small share of trade. Opening up trade in services could help reduce the cost of everything from shipping to banking, education and health care. Exposing professional occupations to the same global competition that factory workers have faced for decades could even strike a blow against the income inequality that Mr Obama so often decries.

Tactically, even a short delay could prove fatal to both deals. Pacific negotiations have been extended while America and Japan hammer out compromises on agriculture. Why should Japanese politicians risk infuriating their farmers when any agreement can be torn up on Capitol Hill? The deal with the EU was meant to be done swiftly—perhaps in as little as two years—to keep politics from mucking it up. Europe’s leaders will now doubt America’s commitment, given how feebly Mr Obama has fought for fast-track.

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Maybe Democrats will be more willing to take up the issue agenda after the midterms, but it’s not like their pro-labor/protectionist politics are ever going away unless they decide to actually do something about it — and as The Economist notes, delay means some serious opportunity costs for all of the parties involved here. Man, if only those stubborn Democrats would stop obstructing President Obama’s economic agenda!

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David Strom 6:40 PM | April 18, 2024
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