FDR Would Have Supported the TPP; Congress Should, Too | Commentary
On Dec. 7, we remembered the Japanese attack on Pearl Harbor 63 years ago, an event that fundamentally transformed America’s role in the world from isolationist to global superpower. That tragic day firmly entrenched America in an important and sustained engagement in East Asia that lasts to this day.
Over the past several decades, America’s economic and security interests have been closely intertwined with East Asia — Japan during the 1940s, Korea in the 1950s, Vietnam throughout the 1960s and 1970s, and China since the early 2000s. Japan and Korea are now close U.S. allies who have helped the U.S. manage the most important strategic challenge we currently face in a growingly assertive China.
In fact, the U.S. is currently leading the biggest trade negotiation in American history: the $2 trillion Trans-Pacific Partnership, a state-of-the-art trade agreement between the U.S., Japan and 10 other countries in the Asia-Pacific region. The TPP will eliminate foreign tariffs on most U.S. exports and set up new rules of the road that will make it easier for U.S. companies, large and small, to sell more of their products and services. The TPP would also clamp down on the type of state-owned enterprises that currently dominate the Chinese economy, leaving China outside of the TPP framework.
While there are some critics who argue that U.S. policymakers ought to be more focused on the problems underlying our domestic economy, it’s important to acknowledge the TPP will help grow the U.S. economy. Exports increasingly contribute to a larger percentage of our gross domestic product. Roughly 50 percent of exports come from the manufacturing sector, and exports-related manufacturing jobs pay an 18 percent wage premium. Specifically, the TPP is estimated to create $78 billion per year in income gains for U.S. workers, driven by $123 billion per year in additional exports, according to the Peterson Institute.
Let’s not forget that America has a long history of using economic and trade diplomacy to achieve foreign policy goals. Just a few years after the Great Depression, Franklin D. Roosevelt advocated for the passage of the Reciprocal Tariff Agreements Act in 1934 (providing the model for modern free trade agreements) to support our relationship with the Soviet Union. In later administrations, President Harry S. Truman utilized the Marshall Plan to affirm our standing in Europe; President John F. Kennedy leveraged the Trade Expansion Act to secure the Western Alliance; and President Bill Clinton pushed NAFTA to strengthen North American economic integration.
Now, President Barack Obama is driving the TPP to maintain American leadership in East Asia as part of his “Asia pivot” strategy. While the TPP is one of the most promising areas of potential collaboration between the administration and the new GOP-led Congress, if the TPP does not win passage, America’s position in Asia will inevitably decline, and China will pick up the slack. We risk losing access to the fastest growing markets in the world, and our allies in the region will undoubtedly take notice.
In fact, during the Asia Pacific Economic Cooperation summit in Beijing last month, Chinese President Xi Jinping announced that Asia-Pacific countries should speed up free trade talks to spur economic growth. He was not referring to the TPP, but rather to an alternative, watered-down framework that China is pushing in the hope of diverting our trading partners from the TPP.
The TPP is undoubtedly scary for some observers, as the pace of globalization has rapidly accelerated in recent decades. These forces present enormous opportunities and challenges for America, even as the U.S. remains the top exporter in the world (yes, even more so than China). If we are to continue competing successfully in an increasingly interconnected world, we must re-focus on ensuring that our workers — in the most productive workforce in the world — have the investment, training and opportunities they need to succeed. To do so, we must better engage our private sector to step up and play a bigger role in helping to find new solutions for the new economy.
Sustaining the hard-won influence America earned through decades of leadership in the Asia-Pacific region, and maintaining our economic growth, depends on congressional passage of the TPP. FDR understood this strategy 80 years ago, and it is even truer today.
Steven G. Glickman is an adjunct assistant professor at Georgetown University, a Truman National Security Project fellow and the former director for International Economic Affairs at the White House National Security Council.