Hillary Clinton’s Embarrassing TPP Flip Flop

Like all trade agreements, the Trans-Pacific Partnership (TPP) creates some winners and losers — but any economic downsides are outweighed by the geopolitical benefits.

The TPP facilitates commerce among 12 Pacific Rim countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam) covering about 40% of global trade.

Notice how that list doesn’t include China?

As China’s economy grows, and other countries increasingly rely on it for trade, its political influence will grow as well. By tying 11 Pacific Rim economies together with America’s, the United States ensures continued influence in East and Southeast Asia, and pushes back against China’s forays into South America.

It’s America’s best long-term strategic move regarding China’s rise and the centerpiece of the Obama administration’s “pivot to Asia.” Hillary Clinton surely knows this.

Going with the Anti-Trade Flow

Hillary was for the TPP before she was against it.

In one of many statements advocating for the agreement when she was Secretary of State, Clinton asserted in 2012 that “this TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field.” Now she says she opposes it.

In fairness to Clinton, supporting an agreement in the abstract is not the same as supporting a finalized deal. The TPP was signed in February 2016, and Clinton claims that specific provisions failed to meet her standards.

Changing a position in response to new information is much better than stubbornly sticking to one’s original position no matter what happens. But, while Hillary’s evolution on other issues, such as the Crime Bill, make sense, this one seems driven more by Bernie Sanders’ appeal to anti-trade Democrats than by new facts.

Hillary’s “Objections”

Consider Clinton’s criticisms of the TPP:

It improves patent protection for pharmaceuticals

Critics argue that this hurts producers of generic drugs, thereby harming patients by making some treatments more expensive. Supporters argue that it helps patients by encouraging companies to risk millions of dollars developing new drugs.

Regardless of where Clinton comes down on this debate, it’s a relatively small point in context, and making the perfect the enemy of the good runs counter to Hillary’s governing philosophy and campaign pitch.

It fails to address currency manipulation

Critics argue that some Asian countries, including Japan, Malaysia and Singapore, manipulate their currencies to help exporters, which increases America’s trade deficit, hurting American workers.

However, trade deficits aren’t inherently good or bad. Still, if we assume Hillary agrees that Asian currency manipulation is a problem, rejecting the TPP does nothing to stop it.

It hurts American workers

This appears to be the most disingenuous of Hillary’s objections. It’s a standard criticism of all free trade deals, and parrots one of Bernie Sanders’ talking points. It’s also inaccurate.

Free trade agreements hurt some American workers. Reducing the costs of trade encourages companies to move some operations to countries with cheaper labor costs, reducing American jobs.

However, Free trade tends to increase GDP and reduce the cost of consumer goods, which helps the vast majority of Americans. As a result, they have more to spend on other things, including services and domestically-produced goods, increasing American jobs. Additionally, trade reduces the cost of manufacturing inputs, which also increases jobs.

Put these together, and free trade’s effect on total employment is mostly a wash.

How to Help People Hurt by Free Trade

Nevertheless, it is true that free trade costs some Americans their jobs. And while the net effect on jobs is ambiguous, aggregate measures are little comfort to anyone who just got fired.

Even worse, the lost jobs tend to be of the higher-paying/lower-skill variety. Many Americans used to be able to graduate high school and get a position at a factory with good job security and enough pay to support a family. That’s no longer the case in the age of globalization.

The government needs to do more to help people who lose their job due to circumstances out of their control. But pretending that we can turn the clock back decades and stop globalization (and automation) doesn’t help anyone. Instead, we should help more Americans get education and job training, provide funds for people to move from low-employment to high-employment areas, and establish a form of wage insurance.

The Consequences of Hillary’s New Position

Opposing TPP effectively asks the United States to hurt some Americans (consumers, manufacturers) to help others (manufacturing workers), all while reducing economic growth. However, even if the economic benefits of the deal are negligible, they’re dwarfed by the geopolitical benefits.

The Obama administration supports it, and Hillary Clinton probably supports it as well. As she argued in her book Hard Choices, “it’s safe to say the TPP won’t be perfect — no deal negotiated among a dozen countries ever will be” but it is “the economic pillar of our strategy in Asia.” That’s still true.

By arguing the opposition’s case, Clinton makes it less likely that Congress will ratify the TPP, whether or not she wins the presidency, and rejecting the agreement would undermine America’s long-term strategy in Asia.

If this is genuinely her new position, she’s wrong, and if disingenuous, she’s wrong to put her campaign ahead of the country.

Besides, this won’t stop Democratic primary voters who oppose free trade from going Sanders.

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