The GOP’s Growing Rift on Trade

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The Re­pub­lic­an Party has split anew on one of its core ten­ets—free trade—and the ques­tion is how long the war will last.

[Reposted from the National Journal |  December 15, 2015]

While the GOP has largely sup­por­ted free trade for over three dec­ades, its top-tier pres­id­en­tial can­did­ates are split on the re­cently-struck Pa­cific trade accord, the most significant in a generation. And Don­ald Trump, the GOP front-run­ner, has been labeled by The Wall Street Journ­al as po­ten­tially the most pro­tec­tion­ist nom­in­ee since Her­bert Hoover.

The Trumped-up rhet­or­ic on clos­ing down the bor­ders—both to hu­mans and to trade—is so di­vis­ive that it en­dangers a split with­in the party, says Steph­en Moore, a con­ser­vat­ive eco­nom­ist who foun­ded the Com­mit­tee to Un­leash Prosper­ity with Steve For­bes, Larry Kud­low, and Ar­thur Laf­fer. He thinks Trump’s can­did­acy pits a pess­im­ist­ic, “1950s-style” Re­pub­lic­an pop­u­list wing versus an op­tim­ist­ic, free-mar­ket wing of the party.

“Here’s my big worry right now, as you fol­low what’s happened in the last year or so and es­pe­cially in the last six weeks or so,” said Moore in a phone in­ter­view. “I’m very nervous that Re­pub­lic­ans are be­com­ing a kind of ‘close the bor­der’ party—close the bor­der to people, close the bor­der to goods and ser­vices. And that’s bad eco­nom­ics. It’s ter­rible eco­nom­ics. And that’s the wrong dir­ec­tion.

“I worry that the party is go­ing down this Pat Buchanan wing of the party—that’s now the Don­ald Trump wing—is as­cend­ant,” ad­ded Moore. “There’s now be­com­ing a rift with­in the party between the ‘build the wall’ party and the—I think—the party Re­agan [built.]”

More than 30 years ago, Ron­ald Re­agan cam­paigned on a North Amer­ica Free Trade Agree­ment and, when he be­came pres­id­ent, entered the U.S. in­to the first free trade agreement with Israel. His em­phas­is on ex­pand­ing trade and lower­ing trade bar­ri­ers in an ef­fort to in­crease eco­nom­ic growth and cre­ate bet­ter pay­ing jobs stuck with the es­tab­lish­ment wing of the party. In 2012, the GOP plat­form stated: “A Re­pub­lic­an Pres­id­ent will com­plete ne­go­ti­ations for a Trans-Pa­cific Part­ner­ship to open rap­idly de­vel­op­ing Asi­an mar­kets to U.S. products. Bey­ond that, we en­vi­sion a world­wide mul­ti­lat­er­al agree­ment among na­tions com­mit­ted to the prin­ciples of open mar­kets, what has been called a ‘Re­agan Eco­nom­ic Zone,’ in which free trade will truly be fair trade for all con­cerned.”

Yet of the nine top-tier can­did­ates tak­ing the GOP pres­id­en­tial de­bate stage Tues­day night, at least four op­pose the Trans-Pa­cific Part­ner­ship. Con­gres­sion­al ap­prov­al for TPP, which was re­cently reached by the U.S. and 11 oth­er coun­tries around the Pa­cific Rim, is un­der severe polit­ic­al pres­sure. Sen­ate Ma­jor­ity Lead­er Mitch Mc­Con­nell said Tues­day that he is “dis­ap­poin­ted” but un­de­cided on the agree­ment—and warned Pres­id­ent Obama that vot­ing on his po­ten­tially last leg­acy-de­fin­ing achieve­ment should wait un­til after the 2016 elec­tion.

“I think he ought to take in­to ac­count the ob­vi­ous polit­ics of trade at the mo­ment in our coun­try,” Mc­Con­nell said at a Politico-sponsored break­fast.

The is­sue is blur­ring all kinds of lines. Along with both uni­ons and the “Middle Amer­ic­an Rad­ic­al,” Hil­lary Clin­ton and Don­ald Trump, Bernie Sanders and Ted Cruz all op­pose the pact.

The vast ma­jor­ity of Demo­crats in Con­gress op­pose the agree­ment, as they think TPP would out­source Amer­ic­an jobs and de­press wages. Re­pub­lic­ans are split. Many are par­tic­u­larly skep­tic­al of this agree­ment be­cause it was ne­go­ti­ated un­der the Obama ad­min­is­tra­tion, which has deemed TPP the most pro­gress­ive pact in U.S. his­tory, and are con­cerned it places bur­den­some en­vir­on­ment­al and labor reg­u­la­tions. Mc­Con­nell and the North Car­o­lina GOP con­gres­sion­al del­eg­a­tion have con­cerns about vari­ous to­bacco pro­vi­sions, and some Re­pub­lic­ans, par­tic­u­larly Sen. Or­rin Hatch of Utah, be­lieve the in­tel­lec­tu­al-prop­erty pro­tec­tions for phar­ma­ceut­ic­al com­pan­ies pro­du­cing bio­lo­gic drugs aren’t strong enough.

But oth­er con­ser­vat­ives are keen on lower­ing tar­iffs and tak­ing ad­vant­age of great­er eco­nom­ic trade with the Pa­cific na­tions sur­round­ing China. Grover Nor­quist, the chief of Amer­ic­ans for Tax Re­form, sup­ports the pact, while ac­know­ledging flaws in in­tel­lec­tu­al-prop­erty pro­vi­sions, among oth­ers.

“This is both sound for­eign policy and it’s great eco­nom­ic policy,” Nor­quist toldNa­tion­al Journ­al. “It’s 4,000 pages of tax cuts. Tar­iffs … tar­iffs suck. Tar­iffs kill jobs. Tar­iffs slow the eco­nomy. This is good. It’s not everything you wanted—no. But it’s pro­gress to­wards al­most everything you wanted.”

The GOP op­pos­i­tion, in his mind, “has everything to do with who wrote it and not what’s in it.”

Wheth­er this junc­ture sig­ni­fies a great­er surge in the pop­u­list wing of the GOP—or merely meas­ures a passing mo­ment, as oth­ers have be­fore—is up for de­bate.

“There’s a Buchanan wing that’s been anti-trade, anti-im­mig­rant for quite some time, and we’re just see­ing an­oth­er round of that in Cruz and in Trump,” says Douglas Holtz-Eakin, the dir­ect­or of do­mest­ic and eco­nom­ic policy for John Mc­Cain’s 2008 pres­id­en­tial cam­paign. Holtz-Eakin, who served in George W. Bush’s Coun­cil of Eco­nom­ic Ad­visers, can re­mem­ber the Re­pub­lic­an-led House’s squeak­er vote in 2002 grant­ing the White House en­hanced trade-ne­go­ti­at­ing powers. “Not a new phe­nomen­on. Vis­ible on the cam­paign trail—I don’t dis­agree with that. It’s been around be­fore.”

 

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  • commented 2015-12-23 10:56:34 -0500
    My first ever bumper sticker says Bernie 2016. The establishment wing of both parties cannot get enough of global labor arbitrage through both immigration and “free” open borders trade, plus maximum systemic risk through open borders financial flows. Would THE DONALD or Hillary have the guts to crack down on Wall Street, the real center of profit off of ALL indiscriminate cross border corruption and trafficking? I do hope that THE DONALD does stay in the race just to raise the profile of the China trade deficit as an issue that the media would love to cover up. The media loves sensationalism and nothing else.
  • commented 2015-12-22 16:41:09 -0500
    THE DONALD is against FREE TRADE, and against OPEN BORDERS.
    The best way to get elected in a democracy when a person has no previous public positions for the voting population to overlook is to tell the PEOPLE WHAT THEY WANT TO HEAR. HOWEVER, once elected it is never difficult for a person to change their mind. THE DONALD, being a 1%er would have more to gain by keeping the borders open and passing of the TPP than the closing and stopping the TPP. Once in office and a mind is conveniently changed, what can the public do to that person, vote that person out of office. WELL getting that person out did a lot of good after the DAMAGE IS DONE.
    That is why I LIKE BERNIE SANDERS!!!!
  • commented 2015-12-22 11:21:57 -0500
    Do not firewall or contain anything, just let Murphy’s law take over and crash the entire system? Do not close the border to cheap labor, unsafe consumer products, mortgage backed securities, credit default swaps or Greek debt?
    Remove the Glass-Steagall firewall?
    Delegate the domestic lawmaking powers to the executive branch making secret deals with foreign powers and completely bypass Congress? This is how the Holier than Thou “principle” of free trade actually works?