TAA and TPA: Together Again. And Not Necessarily For the Good.

August 5, 2013

It’s that time again; time for supporters of trade liberalisation to question the value of enhanced training and welfare programs for those who lose their jobs because of import competition, and for trade-skeptics to ask why we need trade liberalization at all.

This argument traditionally takes place in the context of the debate about renewing (or, as in 2009, expanding) the Trade Adjustment Assistance (TAA) program, and whether it should be linked to renewal—or, in the current context, reinstatement—of trade promotion or “fast-track” authority, power granted to an administration to negotiate trade agreements and submit them to Congress for an up-or-down vote with no scope for deal-killing amendments. The two have traditionally been combined so legislators who would not normally support any procedural mechanisms to ease trade liberalisation (e.g., those close to labor unions) feel politically covered to do so. I’m not a fan of the TAA program for many reasons, which I summarized for the Downsizing Government website, and in any case I have long suspected that renewing TAA doesn’t really buy much support for trade liberalization any more.

Apparently Sen. Orrin Hatch (R-UT) agrees, and said he is fed up with the deal:

Senate Finance Committee Ranking Member Orrin Hatch (R-UT) this week made clear that he sees a potential obstacle to moving a new fast-track or Trade Promotion Authority (TPA) bill in the demands by Senate Finance Committee Chairman Max Baucus (D-MT) and the Obama administration that it be linked to an extension of the expiring Trade Adjustment Assistance (TAA) program.

“One of the problems with TPA is that they want to push TAA, which generally has [sic] union encroachment on free trade,” Hatch told reporters after a July 30 speechto the American Enterprise Institute.

Asked whether he would oppose combining the two bills, Hatch said he would have to wait and see whether TAA is “just another improper gift to the unions.”  [Source: Inside U.S. Trade, July 31, 2013, subscription required]

The UAW responded to Senator Hatch’s comments by essentially refusing to support renewing TPA under any circumstances, pocketing the expanded TAA as payment for past liberalisation rather than inducement to acquiesce to more. From Inside U.S. Trade yesterday:

The United Steelworkers (USW) union today (July 31) blasted comments by Finance Committee Ranking Member Orrin Hatch (R-UT) that Trade Adjustment Assistance (TAA) amounts to a “gift” to labor unions.

In a statement, USW President Leo Gerard challenged Hatch to ask the workers and companies in his state who have filed for TAA if they see the program as a gift. “Most of them likely would question whether, after getting kicked in the teeth by international trade, the provision of an economic Band-Aid is a gift or something they are due because of failed government policies which cost them their jobs,” he said…

In the USW statement, Gerard also indirectly criticized President Obama’s request yesterday for fast track, also known as Trade Promotion Authority (TPA)…

The diminishing power of TAA to buy votes for trade liberalization should hardly surprise: for years now, under administrations contolled by both major political parties, trade policy has been touted as a job-creator and deficit-reducer. It may well do all of those things in some cases, but promoting trade agreements as deficit killers is asking for trouble in a relatively savings-poor economy like the United States. When the deficit persists (or worsens), people feel they were sold a lemon, and support for trade liberalization erodes on the basis of “fool me once…”

The Washington Times had an interesting story earlier this week on precisely this topic of selling trade liberalization, pointing out that Obama’s United States Trade Representiative has travelled more domestically than internationally. That was deliberate, as former USTR Ron Kirk said in a quote for the story: the Obama administration wanted to speak to Americans rather than foreigners, in the hope of listening to their concerns about trade, and to promote the agreements it had decided to pursue. A domestically-focussed road show would, the administration hoped, drum up support for those agreements:

In all, Mr. Obama’s trade representatives have visited 53 U.S. cities, compared with 46 overseas cities and nations since 2009, the records show.

And that, says the just-departed trade representative, was no accident. Ron Kirk said he deliberately traveled the country in a campaign-style effort to listen to and change the minds of labor unions and others who have tried to slow trade deals because of concerns about wage competition, human rights and outsourcing.

“As much as I enjoyed representing the United States around the world, if we were going to be moving forward with an aggressive trade agenda, we’re going to have to not just go to Geneva, Paris and Beijing and Africa; we were going to have to go to places like Detroit and Pittsburgh and Maine,” Mr. Kirk, a former mayor of Dallas, said in an interviews. “We didn’t just go and preach the gospel of trade; we listened.”…

I made a conscious decision to invest as much time engaging domestic stakeholders about how to rebuild and move forward our trade policy, [rather] than just the conventional wisdom that all you do is just go negotiate agreements and shove them down everybody’s throat,” he said.

The Washington Times story had an obviously disapproving tone, so much so that it may as well have been an editorial, but I think there’s something to Mr Kirk’s theory, even if I suspect he was “listening” to the wrong people. And, contra the Washington Times, I would agree with Mr Kirk that much of the job of trade advocates involves overcoming domestic opposition. However, surely the value of such a roadshow depends on the message being conveyed. If Mr Kirk based his speeches not on talking up exports and job creating, but rather on a principled case for free trade – one based on the idea that people’s freedom to trade is paramount, and that interfering in people’s freedom is morally wrong and just a hidden form of crony capitalism – I think it would have been more effective, not to mention more honest. As my colleagues Dan Ikenson and Scott Lincicome said a couple of years ago:

…government intervention in voluntary economic exchange on behalf of some citizens necessarily comes at the expense of others and is inherently unfair, inefficient, and subverts the rule of law. At their core, trade barriers are the triumph of coercion and politics over free choice and economics. Trade barriers are the result of productive resources being diverted to achieve political ends and, in the process, taxing unsuspecting consumers to line the pockets of the special interests that succeeded in enlisting the weight of the government on their side.

Protectionism is akin to earmarks, but it comes out of the hides of American families and businesses instead of the general treasury…[emphasis added]

Only when that message is the main driver of trade advocates’ arguments will this perennial cycle of “trade liberalization creates jobs and improves the trade deficit” vs “that’s what you told us last time, and where’s our money?” be abandoned for the fruitless distraction that it is. In the meantime, I guess we will all be subjected to the usual mess of claims about how much trade creates vs. destroys jobs, and who deserves what compensation. 


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