The Corner

National Security & Defense

An Important First Step for Trade Promotion Authority

Earlier this week, several prominent conservative and libertarian organizations signed a letter in support of granting the President trade promotion authority (TPA). Later in the week, both House and Senate committees voted to move the bill. Senator Elizabeth Warren (D., Mass.), tribune of the left, vehemently opposes it. No surprise there (and her stance is forcing Hillary to the left on the issue). Yet, some conservatives in Congress appear surprisingly eager to join with Warren. This is a mistake.

There may be a misapprehension among some conservatives that if American businesses suffer as a result of freer trade, then free trade is a bad thing. This “economic nationalism” has been around with us for a long time—so much so that none other than Adam Smith saw fit to debunk it back in 1776:

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy…If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.

David Ricardo built on Smith’s insights by developing the principle of comparative advantage. To put it another way: Tom Brady may be very good at something we don’t know about – perhaps he’s a fantastic auto mechanic – but it makes more sense for him to play football and pay someone to fix his vehicles, even if he’s not as good a mechanic as Brady. The same applies to nations.

Other conservatives look askance at what they see as favors to big businesses in trade deals – the idea of freer trade as crony capitalism. In fact, trade deals make it harder for businesses to lobby for cronyist carve-outs and exemptions, as they lay common ground rules and expectations. Moreover, smaller disruptive firms tend to benefit from the decrease in the cost of supplies. And all consumers benefit from the lower cost of goods (this last point is why currency manipulation should not be included in the agreements).

Of course, it is possible that the President comes back with a bad deal. Many recent trade agreements have included provisions that read like a wish-list of American labor and environmental lobbies that developing nations cannot afford, and it is possible that this will be true to an even worse degree in the current negotiations. In fact, my organization, the Competitive Enterprise Institute, opposed ratification of the North American Free Trade Agreement (NAFTA) after it had been negotiated because it contained too many of these labor and environmental provisions.

But that is exactly why TPA is the best vehicle for the negotiations – it sets bounds on what the President can negotiate and assures our trading partners that Congress will not impose a host of special interest dictates on trade deals at the last minute.

Moreover, TPA is a tool, not a goal. Supporting TPA does not imply support for the Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership,, or any other trade deal.

If there remain any doubts, recall that the Reagan administration used TPA to negotiate important trade deals for the U.S., with Israel (1985) and Canada (1988). The Bush I administration used it to complete NAFTA and Clinton moved the final deal through Congress. The Bush II administration concluded negotiations on FTAs with Chile (2003), Singapore (2003), Australia (2004), Morocco (2004), Dominican Republic/Central America (2005), Oman (2006), Peru (2007), Colombia (2011), South Korea (2011), and Panama (2011).

TPA has a long and honorable history of conservative support. It needs it again now, lest the GOP’s Elizabeth Warren wing prevail.

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