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Both Donald Trump and Hillary Clinton ran against trade in the 2016 presidential election. The Trans-Pacific Partnership (TPP), in particular, became the symbol of all of globalization’s ills. But, like President Obama, President Trump will soon discover that trade is an opportunity to favorably define a presidency.
Americans did not vote against trade in November. For all the hype, Politico reports that 70% of those surveyed had never heard or read about TPP. The Chicago Council finds, moreover, that the U.S. electorate understands the trade helps consumers, and has little effect on jobs. Trump can and should move forward on trade.
It starts with TPP. The text is state-of-the-art, but this has not been explained to the American people. Obama pitched TPP as 18,000 tariff cuts and a “pivot” to Asia, but it’s more than that. It’s a legal template, and it matters well beyond trade with the 11 countries looking to join. Indeed, the real payoff to TPP will be had in the form of an even deeper U.S.-EU Transatlantic Trade and Investment Partnership (TTIP), as well as new negotiations at the World Trade Organization (WTO). Why?
Most Americans earn a paycheck in a service sector. Technology makes it possible to trade more of these services across borders. The demand for these services is strong because the middle class is growing everywhere. The U.S., for example, has a trade surplus in services with China. In fact, America accounts for a staggering proportion of global trade in services, closing in on 30%. The problem is that the WTO did little to liberalize this trade. TPP improves on the WTO, and this will put pressure on the WTO to complete the Trade in Services Agreement (TiSA) among the 23 countries in on these negotiations. This “club” needs to be much bigger if U.S. traded services are to realize their full potential. TPP’s success will help get similar text into the myriad trade deals being negotiated globally, and motivate the WTO to be more creative on traded services in order to stay relevant. Trump should prioritize this U.S. offensive interest.
Likewise, ideas are crucial to creating wealth in America. The United States designs things like iPhones, even if these are pieced together across global value chains. The return to investing in ideas hinges on having enforceable intellectual property (IP) rights. TPP improves on the WTO, offering some better rules, but more can be done. The jobs at stake pay nearly 50% more than jobs that aren’t IP-based. Washington has not always championed stronger IP. Trump can set a new course by advocating for stronger IP provisions, and work these into the WTO’s Information Technology Agreement and the Environmental Goods Agreement.
What about U.S. manufacturers, ranchers and farmers? On these fronts too, TPP goes deeper than the WTO. In addition to cutting tariffs, TPP offers novel ways of dealing with nontariff barriers, especially quality standards. First, the pact calls for more use of science-based global standards, making it easier for U.S. firms and farms to export with lesser fear of arbitrary differences in national standards abroad. Relatedly, TPP will give American exporters more input into the process by which foreign countries regulate their markets. This matters for all U.S. exports, 93% of which are estimated to fall under the technical regulations of our trade partners. TTIP will do even more on this front than TPP, but not if TPP fails.
Trade policy is complicated, but the reason America trades isn’t: 95% of the world’s consumers live outside our borders. Fair trade? Enforcement? Yes, but start out with deeper rules. Start out with TPP.
About the author: Marc Busch is an international trade policy and law expert at Dūcō and serves as a member of the Industry Trade Advisory Committee on Standards and Technical Trade Barriers (ITAC-16), a public-private group reporting to the U.S. Department of Commerce and the U.S. Trade Representative. Marc is the Karl F. Landegger Professor of International Business Diplomacy at the School of Foreign Service, Professor of Government and Professor of Business Administration at Georgetown University.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
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A Trump Trade Agenda
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January 27, 2017
Both Donald Trump and Hillary Clinton ran against trade in the 2016 presidential election. The Trans-Pacific Partnership (TPP), in particular, became the symbol of all of globalization’s ills. But, like President Obama, President Trump will soon discover that trade is an opportunity to favorably define a presidency.
Americans did not vote against trade in November. For all the hype, Politico reports that 70% of those surveyed had never heard or read about TPP. The Chicago Council finds, moreover, that the U.S. electorate understands the trade helps consumers, and has little effect on jobs. Trump can and should move forward on trade.
It starts with TPP. The text is state-of-the-art, but this has not been explained to the American people. Obama pitched TPP as 18,000 tariff cuts and a “pivot” to Asia, but it’s more than that. It’s a legal template, and it matters well beyond trade with the 11 countries looking to join. Indeed, the real payoff to TPP will be had in the form of an even deeper U.S.-EU Transatlantic Trade and Investment Partnership (TTIP), as well as new negotiations at the World Trade Organization (WTO). Why?
Most Americans earn a paycheck in a service sector. Technology makes it possible to trade more of these services across borders. The demand for these services is strong because the middle class is growing everywhere. The U.S., for example, has a trade surplus in services with China. In fact, America accounts for a staggering proportion of global trade in services, closing in on 30%. The problem is that the WTO did little to liberalize this trade. TPP improves on the WTO, and this will put pressure on the WTO to complete the Trade in Services Agreement (TiSA) among the 23 countries in on these negotiations. This “club” needs to be much bigger if U.S. traded services are to realize their full potential. TPP’s success will help get similar text into the myriad trade deals being negotiated globally, and motivate the WTO to be more creative on traded services in order to stay relevant. Trump should prioritize this U.S. offensive interest.
Likewise, ideas are crucial to creating wealth in America. The United States designs things like iPhones, even if these are pieced together across global value chains. The return to investing in ideas hinges on having enforceable intellectual property (IP) rights. TPP improves on the WTO, offering some better rules, but more can be done. The jobs at stake pay nearly 50% more than jobs that aren’t IP-based. Washington has not always championed stronger IP. Trump can set a new course by advocating for stronger IP provisions, and work these into the WTO’s Information Technology Agreement and the Environmental Goods Agreement.
What about U.S. manufacturers, ranchers and farmers? On these fronts too, TPP goes deeper than the WTO. In addition to cutting tariffs, TPP offers novel ways of dealing with nontariff barriers, especially quality standards. First, the pact calls for more use of science-based global standards, making it easier for U.S. firms and farms to export with lesser fear of arbitrary differences in national standards abroad. Relatedly, TPP will give American exporters more input into the process by which foreign countries regulate their markets. This matters for all U.S. exports, 93% of which are estimated to fall under the technical regulations of our trade partners. TTIP will do even more on this front than TPP, but not if TPP fails.
Trade policy is complicated, but the reason America trades isn’t: 95% of the world’s consumers live outside our borders. Fair trade? Enforcement? Yes, but start out with deeper rules. Start out with TPP.
About the author: Marc Busch is an international trade policy and law expert at Dūcō and serves as a member of the Industry Trade Advisory Committee on Standards and Technical Trade Barriers (ITAC-16), a public-private group reporting to the U.S. Department of Commerce and the U.S. Trade Representative. Marc is the Karl F. Landegger Professor of International Business Diplomacy at the School of Foreign Service, Professor of Government and Professor of Business Administration at Georgetown University.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.
