[CTC] WSJ: Free Trade Loses Political Favor

Thu Mar 10 07:52:07 PST 2016

Free Trade Loses Political Favor
Republican backing fades as voters voice surprising skepticism; Pacific pact seen at risk
ENLARGE
By BOB DAVIS
Updated March 9, 2016 11:34 p.m. ET
180 COMMENTS <http://www.wsj.com/articles/free-trade-loses-political-favor-1457571366#livefyre-comment>
After decades in which successive Republican and Democratic presidents have pushed to open U.S. and global markets, resentment toward free trade now appears to have the upper hand in both parties, making passage this year of a sweeping Pacific trade deal far less likely and clouding the longer-term outlook for international economic exchange.

Many Democrats have long blamed free-trade deals for big job losses and depressed wages, especially in the industrialized Midwest, which has been battered over the years by competition from lower-cost manufacturing centers in countries like Japan, Mexico and China.

But one big surprise Tuesday was how loudly trade fears reverberated among Republican voters in the primary contests in Michigan and Mississippi—evidence, many observers say, of a widening undercurrent of skepticism on the right about who reaps the benefits from loosened trade restrictions.

Donald Trump, the leading contender for the Republican presidential nomination, has expressed fervent opposition to the Trans-Pacific Partnership pact and other trade deals, as has Sen. Bernie Sanders on the Democratic side. Democratic front-runner Hillary Clinton, whose husband signed the North American Free Trade Agreement as president in 1994, now also opposes the Pacific deal and has increasingly voiced doubts about trade in terms similar to those of Mr. Sanders.

Mr. Trump won the Michigan and Mississippi primaries by wide margins, and among voters who were trade skeptics, his margin of victory surpassed his overall margin. Trade jitters also helped propel Mr. Sanders to a narrow victory in Michigan, where he frequently lambasted Mrs. Clinton for backing Nafta and for being late in opposing the unratified TPP pact between a dozen Pacific rim nations.

According to Michigan exit polls, Democratic voters who believed trade deals reduce U.S. jobs backed Mr. Sanders by a 56% to 41% margin. And in Mississippi, it was Republicans who said trade was a job killer, not Democrats, according to exit polls. Democrats there by a 43% to 41% margin said trade boosted job growth.

“In some ways, the Republican Party is becoming like the traditional Democratic Party” in its opposition to free trade, said Tony Fratto, a former official in the George W. Bush administration who now consults with business on trade issues. In recent years, he said, voters had joined the ranks of Republicans because of opposition to President Barack Obama, rather than a commitment to traditional GOP positions such as favoring free trade.

ENLARGE
Since Congress approved Nafta, trade has become an increasingly divisive political issue. Democrats have taken the lead in opposing new deals, saying the U.S. loses millions of jobs due to imports produced by far cheaper labor in less developed countries. Democratic support for free trade has declined over the years. Last year, only 28 Democrats in the House voted to give President Obama so-called fast-track authority to negotiate trade deals, compared with 102 who voted for Nafta.

Less noticed has been faltering support among Republicans. In a June 2015 Wall Street Journal/NBC news poll, taken shortly after the fast-track vote, overall respondents, by 34% to 29% margin, said free trade hurt the U.S. But Republicans were far more negative than Democrats. GOP voters, by 38% to 28%, said free trade harmed the U.S., while Democrats said trade helped by a 35% to 29% edge.

Mr. Trump, who regularly argues that the U.S. has been fleeced in trade negotiations with Mexico, China and Japan, has capitalized and expanded on that anti-free-trade sentiment, said Patrick Buchanan, a populist Republican who used the trade issue to power his challenge to President George H.W. Bush in 1992.

Free trade has become what Mr. Buchanan calls “a voting issue”—meaning one that attracts voters who care intensely about that particular measure—akin to gun rights and abortion. “I don’t think you can negotiate a free-trade deal and have it go through,” Mr. Buchanan said.

Indeed, Tuesday night’s results show how difficult it would be in this environment for congressional Republican leaders to seek passage this year of the TPP, a pact the White House sees as a linchpin to its commercial and foreign-policy strategy to compete with China—which isn’t a party to the deal—in the Pacific region. Republican support helped keep the pact alive last year against heavy opposition from Democrats, but the GOP backing has weakened sharply in recent months.

Rep. Walter Jones, a North Carolina Republican who generally opposes free-trade deals, said that the primaries would slow any effort in Congress to consider the TPP, which was finished last year but needs congressional approval. A vote on the trade deal “would create a campaign issue,” he said. “If the leadership starts pushing [TPP], it would be a negative” for the trade deal.

Last year, Congress approved fast-track trade authority by a 219-to-211 vote. Fast-track approval means Congress can approve or disprove trade pacts but not amend them. Fifty-four Republicans opposed the bill, which was widely seen as a prelude to a vote on TPP. Mr. Jones estimates that at least an additional 20 to 25 Republicans would now oppose the deal itself. Proponents of the trade bill have similar estimates.

Rick Manning, president of the conservative Americans for Limited Government, said an anti-free trade position has become a natural fit for Republicans worried about big government. That’s because the deals benefit politically connected companies that can get the ear of U.S. negotiators, he argued. Trade deals represent “corporate cronyism at its worst,” he said.

In a survey of 1,200 people conducted for his group by Caddell Associates, Republicans by a 59% to 4% margin said trade deals benefited “other countries” more than the U.S. Fourteen percent said both sides benefited equally.   Among Democrats, the edge was 35% to 12% for other countries, with 26% saying both sides benefited.

For years, trade experts dismissed opponents’ claims of widespread harm caused by trade deals. Trade rejiggered jobs so that those laid off would be able to find new work after a period of retraining, according to many experts. 

But more recently, there has been a rethinking of the costs, spurred in part by the work of economists David Autor of the Massachusetts Institute of Technology, David Dorn of the University of Zurich and Gordon Hanson of the University of California at San Diego.

In a 2013 paper called “The China syndrome,” <http://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.103.6.2121> the three economists attributed one-fourth of the decline in U.S. manufacturing employment between 1990 and 2007 to competition from Chinese imports. In a follow-up paper this year <http://www.ddorn.net/papers/Autor-Dorn-Hanson-ChinaShock_New.pdf>, the three found that employment in the U.S. is “remarkably slow” to rebound from Chinese import competition with wages and labor-force participation remaining depressed for at least a decade.
Mr. Fratto, the former Bush administration official, said the stronger opposition to trade puts more of an onus on the Obama White House and businesses to explain the benefits of trade, which include improved productivity for competing firms and a greater array of imports and lower prices for consumer goods. Trade deals were often promoted as a way to improve U.S. standing in the world by deepening relations with allies, he said, rather than the ways it benefited ordinary Americans.

Write to Bob Davis at bob.davis at wsj.com <mailto:bob.davis at wsj.com>
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