Obama’s Free Trade Deal Puts Hillary on the Hot Seat

Obama’s Free Trade Deal Puts Hillary on the Hot Seat

Will Hillary Clinton support President Obama’s push for the granddaddy of all trade agreements – the Trans-Pacific Partnership? Voters – and especially Democrats - want to know, and the former First Lady isn’t talking.  

Hillary Clinton has a big problem. She’s running for president on her husband’s economic policies, which voters remember fondly, and on President Obama’s foreign affairs strategy, which she helped to craft. One is hateful to the Left while the other is deemed a failure by the Right. For the next (interminable) 18 months, she will play defense, trying to divorce herself from Bill’s welfare reform and financial deregulation as well as Obama’s Syria policy.

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Nothing, though, may prove as toxic to her liberal supporters as her former support of NAFTA and “free trade” – an issue looming large as President Obama pushes for fast-track authority from Congress in order to pass the TPP. Batten down the hatches.    

NAFTA, in effect since 1994, has long been considered one of Bill Clinton’s signature achievements, helping to foster U.S. growth. Trade has more than tripled among the three countries involved – Canada, Mexico and the U.S. - since the pact was adopted; access to lower-cost labor helped some U.S. industries compete globally. The agreement furthered trade liberalization already occurring in Mexico, which helped bolster that country’s middle class and provide a growing market for U.S. goods. Mexico is the second-largest export market for the U.S. after Canada.

Labor advocates, however, complain that NAFTA was a handout to big corporations that came at the expense of workers. A report in 2011 from the left-leaning Economic Policy Institute claimed the agreement had cost the U.S. nearly 700,000 jobs.

Related: Democrats Enraged Over Closely Guarded Trade Deal

Critics point to the worsening of our trade deficit with Canada and Mexico as proof that NAFTA was a net negative for the U.S. However, the numbers are distorted by oil; 40 percent of U.S. crude imports in 2013 came from Canada and Mexico. Excluding petroleum products, the U.S. has had a merchandise trade surplus with our NAFTA partners since 2011. 

The U.S. did lose manufacturing jobs in the years after NAFTA became law, but the trade pact was not the sole villain. Some jobs went to Asia and some to automation. Still, it is clear that in some sectors, especially auto-related industries, loosened barriers led to production moving south of the border. (Mexico’s share of North American vehicle production rose from 3 percent in 1987 to 20 percent in 2014.) This exporting of manufacturing helped U.S. automakers compete with lower-cost Asian rivals; without the access to cheaper labor, our companies might have been in trouble.

Note to Big Labor: Companies that go bust employ zero workers. The threat is not so far-fetched. During the financial crisis Americans had to bail out our car companies; people were stunned to learn that GM’s average labor rate for its unionized workers was $73 per hour, multiples of those faced by competitors. NAFTA helped. While we import cars from Mexico, we also buy parts, which are then assembled into vehicles in U.S. plants. To put our complicated interlocking production relationships in perspective, the Congressional Research Service reports that some 40 percent of the content of goods imported from Mexico is made in the U.S.; the equivalent number from China is 4 percent.

Related: Lawmakers Closer on Fast Track Trade Deal

The perceived damage done by NAFTA hangs over President Obama’s new trade venture, the TPP, and over Hillary Clinton’s campaign. The White House is seeking to renew fast-track authority so the president can win an up-or-down vote from Congress on the huge Asia-centered deal. Obama is running into opposition mainly from Democrats bowing to labor unions and environmentalists, and is looking for support from Republicans. The argument puts Hillary in a bind. Will she be loyal to her husband and to her former employer, or to her liberal supporters?

As First Lady, Hillary couldn’t say enough nice things about NAFTA and free trade. As a senator and first-time presidential candidate, she became more guarded, musing that the agreement had “hurt a lot of American workers.” Once on Obama’s payroll, she jumped back aboard the free trade express, writing in her memoire, "It's safe to say that the TPP won't be perfect. No deal negotiated among a dozen countries ever will be - but its higher standards, if implemented and enforced, should benefit American businesses and workers." This endorsement lands her in a pickle today.  

Progressives like Senators Elizabeth Warren and Bernie Saunders have issued withering critiques of the giant trade agreement and are fighting it tooth and nail. Saunders claims TPP is the latest in a string of “failed trade policies” that have “pushed down wages for American workers and led to the decline of our middle class.”

Warren recently rallied opponents by claiming the deal will “help the rich get richer and leave everybody else behind….” Indicative of the rift the pact has created among Democrats, President Obama flatly told Chris Mathews recently that Warren is “wrong” on the issue.

Related: Clinton Faces Early Test on US-Pacific Rim Trade Deal Fight

They are just the tip of the iceberg. The day before President Obama gave his most recent State of the Union address, 564 left-leaning organizations sent a letter to Congress opposing granting the fast-track legislation that would facilitate passage of the TPP.

The White House wants (and perhaps needs) the 12-country deal to bolster our presence in Asia. The TPP is seen as countering China’s recent success in launching a new regional infrastructure bank, a project joined by more than 50 nations despite objections from the U.S. With Japan’s Prime Minister Abe heading to Washington later this month, President Obama is pressing to move forward. 

Meanwhile, Mrs. Clinton says the U.S. should be “willing to walk away” from any deal that doesn’t protect our workers and the environment. The presumed Democratic candidate, who has offered few policy opinions of late, failed to say whether the TPP meets that test. Then, from the protected cocoon of her minivan “Scooby,” she isn’t saying much at all.

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