Almost ten years ago under President George W. Bush, Democrats in the House and Senate voted overwhelmingly against the last controversial free trade agreement to come before Congress, the Central American Free Trade Agreement (CAFTA). Now leading Democrats in Congress are threatening to deny or delay, giving President Obama the Trade Promotion Authority (TPA) essential to complete two of the largest free trade agreements in American history, the Trans-Pacific Partnership (TPP) and the Transatlantic Partnership (TTIP). These agreements have enormous potential for creating hundreds of thousands of jobs and an almost one percent increase in U.S. GDP without adding to the deficit.
If the Democratic Party cares about jobs, the deficit and the economy, it needs to embrace trade promotion authority and the two trade agreements for a number of reasons.
For one thing, these pacts dwarf CAFTA, which involved five small Central American states. By 2020 some three-fifths of global GDP will come from Asia. TPP would help position the U.S. to take advantage of the growth of Asian markets.
TTIP with the European Union would be even bigger. The U.S. has the world’s largest trade and investment relationship with the EU states. U.S. companies invest more than three times as much in tiny Ireland as in China. The bilateral trade relationship supports more than five million jobs in our respective markets. Some 60 percent of transatlantic trade is between affiliates of EU and American parent companies. TTIP would increase U.S. GDP by more than 0.5 percent without any taxpayer money.
Second, both agreements advance our strategic and commercial interests. TPP would support the Obama Administration’s “pivot” to Asia by enhancing America’s influence in the region, and create pressure for market reforms in non-market economies. Likewise, a successful transatlantic trade agreement would reassure our European allies with whom we work closely on issues from Iranian sanctions to Syria and Afghanistan, that we continue to see them as a crucial partners in solving global problems.
Third, Japan has joined the TPP negotiations, which will require it to open its markets to agricultural and manufactured goods and services. We remember the rift in U.S.-Japan relations when President Clinton and his tough trade negotiator Mickey Kantor demanded that Japan open its auto market. More than 20 years later, U.S. and other foreign firms still face huge trade barriers in Japan.
Today is the best opportunity in the post-World War II era to drive real change in Japan through the TPP negotiations. After more than a decade of “lost” years of Japanese slow growth and deflation, the current prime minister Shinzo Abe is combining stimulative fiscal and monetary action — known as “Abenomics” — with a courageous willingness to drive real economic reform. That reform will require Abe to take on his own domestic agricultural and industrial interests. He can do this more effectively within a multilateral process like TPP, where he can point to other gains for Japan.
Many leading Japanese companies now support domestic reforms and freer trade, given how inextricably intertwined they are with the U.S. economy. Today, Honda exports more cars made in America than it imports to the U.S. from Japan. Toshiba owns Westinghouse and Japanese banks play a large and productive role in the U.S. providing credit to small, medium and large US companies. The United States has been waiting for decades for real reform in Japan — we must seize this unique moment.
Fourth, one key reason congressional Democrats opposed CAFTA in 2005 and have looked askance at other free trade agreements was the fear they would lower worker and environmental standards. By contrast, the late, great Lane Kirkland, former president of the AFL-CIO, supported a transatlantic free trade agreement like TTIP precisely because he knew that the EU has generally higher safety, environmental and worker standards.
Fifth, President Obama and congressional Democrats have adopted the most progressive policies since the Great Society, with near-universal health insurance, tax increases to reduce the budget deficit, long-delayed rights for gay and lesbian Americans, and tough environmental standards. Now congressional Democrats should show they are also pro-growth. In the CAFTA vote, many Democrats simply did not want to give President George W. Bush a victory, when many core Democratic constituencies were also opposed. Now, with a Democratic president, any wavering Democrats should lean in support of free trade and their president.
Congressional Democrats should remember that the most significant breakthroughs in global trade occurred under Democratic presidents. President Kennedy initiated the Kennedy Round of multilateral negotiations. President Carter and his skillful trade negotiator, former Democratic National Committee chairman Robert Strauss, completed the Tokyo Round. President Clinton’s presidency was perhaps the most significant in opening the arteries of trade, with the passage of NAFTA and completion of the Uruguay Round, bringing China into the World Trade Organization and elevating Asia-Pacific Economic Cooperation to a head-of-state forum.
President Obama wants to build on this legacy with TPA, TPP, and TTIP. These agreements deserve bipartisan support, starting with the vital TPA vote. And while they’re at it, Hill Democrats can find other areas for progress by advancing the bipartisan 2014 budget deal reached by Rep. Paul D. Ryan, R-Wis., and Sen. Patty Murray, D-Wash.
Stuart E. Eizenstat and David M. Marchick are both attorneys in Washington, D.C. who served in the Clinton administration.