In his October 24 speech in Jacksonville, Republican presidential candidate Donald Trump discussed the Trans Pacific Partnership (TPP), the trade pact which President Obama just finished negotiating. Trump asked a key question of the Republicans in Congress: “Why can’t they put it off until I become elected?
[Howard Richman, Raymond Richman and Jesse Richman, American Thinker | October 30, 2015]
If Congress votes it down this winter, then the next President will be able to renegotiate the deal with the same fast-track authority that Congress gave Obama. Trump says that if he renegotiates: “Believe me, it will not be that deal, believe me.”
Last June, the Republican Congress trusted President Obama’s negotiating skill so much that it gave up its power to amend any trade treaty that Obama or his successor negotiates. Maybe they were relying upon Obama’s outstanding success in past negotiations:
· New Start Treaty. Obama’s New Start treaty with Russia gave up our option to put our world-leading anti-missile defense system in ICBM silos. In return we got a “reset” with Putin.
· Taliban 5 for Berdahl. Obama’s prisoner swap with the Taliban gave up five-Taliban leaders in return for one American deserter.
· Iran Nuclear Deal. Obama gave Iran $150 billion and lifted sanctions in return for self-inspection or delayed inspection of Iran’s nuclear facilities.
The very same Republican leaders who pushed through Fast-Track were disappointed when they read the final version of the Trans Pacific Partnership that Obama had just finished negotiating. Politico reports:
The deal has run into powerful headwinds already on the Hill, with key GOP trade advocates like Sen. Orrin Hatch saying he fears the agreement falls “woefully short” and Rep. Paul Ryan citing serious concerns as well.
Two new provisions were especially irritating:
1. Reduces Patent Protection on U.S. Pharmaceuticals
. The pact was supposed to give American pharmaceutical companies at least 11 years protection for their patents, but President Obama reduced that to 5 years. During the week in September when the terms were starting to leak, Biotech and Pharmaceutical Companies stock prices fell 10%.
2. Fails to Open Japan’s Markets to U.S. Agriculture. The pact was supposed to open foreign markets to American agricultural goods. But Japanese Prime Minister Abe has been reassuring Japanese farmers that the effect will be negligible because Japan will subsidize its producers by the same amount that it lowers its tariffs.
And those are just the new provisions. Although the treaty is still secret, we learned, during the Fast-Track debate, about some of the older provisions:
· Enables Currency manipulation. At Japan’s insistence, the treaty lets Japan, Mexico, Malaysia and Vietnam continue to manipulate currencies so that their producers can undersell U.S. producers in world markets.
· Reduces U.S. long-term growth and power. We did a study which found that countries with trade deficits lose power over time while countries with trade surpluses gain power. The reason is simple. Trade deficit countries lose business investment, while trade surplus countries gain it.
· Opens U.S. Borders. The treaty will open U.S. borders to mandated legal immigration.
· Establishes an International EPA. The TPP establishes an international level of environmental regulation which Obama could use to impose unfair climate regulations upon the U.S. economy.
· Undermines U.S. Sovereignty. As Senator Jeff Session disclosed, TPP is a “living document,” which means that new provisions and countries can be added without the consent of Congress. Moreover, it includes its own private court system that can impose multi-billion dollar fines upon the U.S. government.
In his Jacksonville speech, Trump showed why, as President, he would be the greatest communicator since Reagan. He explained TPP’s permission of currency manipulation in conversational language that his listeners could easily understand. He said (47:58 mark):
You know Japan is doing a very big number on us. They’ve devalued. They have Abe. We don’t have anybody to represent us. We have Carolyn Kennedy. Carolyn Kennedy, give me a break. Japan is doing great. Japan is devaluing the hell out of their currency. Did you see the report that just came out on Caterpillar Tractor?
Well I’ve been talking about this for one year and I’ve been telling this for one year and I said, “I think Caterpillar’s in trouble.” They came out with horrible numbers yesterday. Because I’m a natural business person, I know.
What happens is a friend of mine is an excavator, and he was very depressed. I said, “What’s wrong with you, Harold?”
And he said, “I just bought Komatsu tractors from Japan, which are OK, but they’re not as good as Cats, but they’re fine.”
I said, “Why, you’ve always bought…”
He said, “All my life, I bought Caterpillar tractors. And I’m so,” this is a big excavator, the big guy, “but they gave me, Komatsu and the country together, gave me a deal that I couldn’t turn down. And I feel bad about it. But I owe it to my family, to my wife, to my company, to my employees to make the best deal.”
I said, “I agree.”
But they did it through devaluation. Our new trade pact doesn’t even talk about devaluation, and that’s the number one tool of how we’re being taken advantage of in our country, is currency devaluation and manipulation.
In China, in Japan, in Mexico, every country that’s killing us, and we don’t even talk about it in that horrendous trade pact that they’re just signing now. We don’t even talk about it. Somebody said, “Do you like it?”
I said, “It’s horrendous. Why can’t they just put it off until I become elected. Believe me, it will not be that deal, believe me.”
The Republican leadership in Washington has been politically deaf. They gave Obama fast-track authority even though poll after poll showed that the American people, in general, and Republican voters, in particular, were strongly against it. Since then, TPP supporter Canadian Prime Minister Harper was voted out of office with the Trans Pacific Partnership being a key election issue.
In the U.S. presidential race not a single Democrat candidate supports it, now that Lincoln Chafee has left the race. On the Republican side TPP supporters Jeb Bush and Marco Rubio are trailing badly, while supporters Scott Walker and Rick Perry were forced to leave the race.
The U.S., the world’s foremost example of a predominantly private enterprise economy, does not need any trade treaties. All we need is a new policy to replace the unilateral free trade policy so beloved of the U.S. Chamber of Commerce. That policy has caused a decline in U.S. manufacturing, the loss of millions of high-paid manufacturing jobs for American workers, and has resulted in no economic growth in the incomes of millions of Americans.
The best policy, simply stated, is a policy of balanced trade. Our invention of the scaled tariff, a single country variable tariff, applicable only to our largest trading partners like China, Japan, and Mexico, meets with the approval of international law when applied by trade deficit countries, such as the United States. (See our book Balanced Trade, Lexington Books, 2014.)
Moreover, the scaled tariff would be immune to trade retaliation. Any country that retaliated by restricting its purchases of U.S. products would cause our tariff upon its products to rise. Instead, countries running huge trade surpluses with the U.S. would buy more of our products. Unlike tariff systems that reduce both imports and exports, the scaled tariff reduces imports, but increases exports.
When the Trans Pacific Partnership comes up for votes in the House and Senate this winter, Republicans will have a choice. They can continue to vote for this political and economic suicide pact, or they can vote it down so that the next president will have a chance to make America great again.
The Richmans co-authored the 2014 book Balanced Trade: Ending the Unbearable Costs of America’s Trade Deficits, published by Lexington Books, and the 2008 book Trading Away Our Future, published by Ideal Taxes Association.