Laissez Fair Trade?

by Roy Allen Howell

Politicians like to talk about "fair trade." Trade is a hot-button issue on the presidential campaign trail, but what do the candidates mean when they talk about "fair" trade? Are they taking advantage of nationalist sentiment to propel their campaigns, or do they hold a deep-rooted protectionist ideology?

GOP front-runner Donald Trump has said repeatedly that "we need fair trade, not free trade." Democratic front runner and former Secretary of State Hillary Clinton, who condemned the US-Korea Free Trade Agreement as unfair, has also come out against the Trans-Pacific Partnership (TPP). Her rival Senator Bernie Sanders has emphasized "fair trade" to a much greater degree, saying, in essence, that the U.S. should not be trading with any country that does not have labor and environmental regulations up to his standards. Both of the other remaining GOP candidates have also made reference to "fair trade:" Senator Cruz in a recent campaign ad in which he promises to "stand up for fair trade and bring back our jobs from China" and Governor Kasich several times during Republican debates, saying, "We want to have free trade, but fair trade." Back in North Carolina, Democratic Representatives G.K. Butterfield and David Price, along with Republican Walter Jones, wrote to the Secretary of Commerce in response to an influx of low price Chinese imports pleading for "relief that will restore fair trade to the tire sector."

But, while many politicians advocate for "fair trade," they don't all want the same thing. When it comes to politics, though, they do all share one common goal: to win. Donald Trump, the real estate mogul who has undoubtedly benefited substantially from cheaper imports, calls the current trade regime "unfair" given the large trade deficits with countries like China and Mexico. Bernie Sanders, on the other hand, believes free trade to be "unfair" because the countries from which we import have less-stringent labor and environmental standards. Both, however, believe free trade to be "unfair" to American workers who can't compete with low-cost labor overseas (or over the Rio Grande).

Governor Kasish's call for "fair trade," alternatively, he says, is simply one for better enforcement of our current trade deals, including the ability to raise tariffs on steel imports upwards of 200 percent. For Trump and Sanders (and to a lesser extent, Kasich), "fair trade" is a euphemism for protectionism, which has rightly become a dirty word in politics. For Secretary Clinton and Senator Cruz, however, "fair trade" is just part of the political game.

Secretary Clinton, whose husband signed the North American Free Trade Agreement (NAFTA) in 1993 and who advocated for the TPP while part of the Obama administration, has seemingly made an opportunistic shift, likely in order to fend off the insurgent candidacy of Senator Sanders. Senator Cruz likewise changed his vote on Trade Promotion Authority (TPA) over a provision in the leaked Trade in Services Agreement (TiSA) that didn't fit his campaign's hard-line stance on immigration. Further, his recent call for explicitly "fair trade" sounds eerily similar to the rhetoric of his chief rival for the Republican nomination. While both he and Mrs. Clinton have demonstrated support for freer trade in the past and still probably would in most instances, in the midst of tight races for their parties' nominations, they're playing politics, vying for voters who feel that, at least, "fair" trade is in the best interest of everyday Americans.

But, the truth of the matter is that free trade is the most fair trade policy. Trade is not a zero sum game; it doesn't create winners and losers. Trade incentivizes fair market practices, and a truly free international trade system discourages countries from skewing trade gains and prevents well-connected industries from acquiring an unfair market advantage. Mr. Trump and Senators Cruz and Sanders want to bring back jobs from China? Perhaps they should consider loosening regulations on American businesses and breaking up powerful labor unions to attract investment. That's what South Carolina has done. The Palmetto State is ranked in the top four in terms of jobs from foreign direct investment and was just named fDi Magazine's National Champion. It's time for these politicians to drop the "fair trade" rhetoric and start talking about trade policies that really work.

 

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