The Trade Deal and U.S. Security: Don’t Believe the Hype

“Patriotism,” as Samuel Johnson warned, “is the last refuge for a scoundrel.” As the administration has ratcheted up the pressure to pass fast track authority that will grease the skids for the Trans-Pacific Partnership (TPP)accords, it increasingly invokes national security as the central rationale for the treaty, with the president warning that “we must write the rules” or China will.

Even the administration’s own figures suggest there will be little economic benefit from the accords – and those estimates have always slighted the cost in jobs and wages at home. The hype now exceeds all limits. We keep hearing about the 95 percent of consumers that live outside the U.S., as if this treaty were about them. But the treaty excludes the major population centers of Asia – China, India, Indonesia. 550 million of the 750 million included are in the Americas, not in Asia, most of whom we already have agreements with. And the Asian Pacific Economic Council, established at America’s behest, already includes all of the major countries, including China and Russia, and aims to move to free trade by 2020.

For the treaty to make a major contribution to changing our failed trade policies – which even President Obama admits haven’t lived up to the hype – it would have to deal with currency manipulation. But that reality is explicitly not on the table.

So the administration falls back on the China threat: If we don’t act, China will write the rules. Now Clyde Prestowitz, Director of the Economic Strategy Institute and former counselor to the Department of Commerce under Reagan, exposes the emptiness of these claims.

Fifteen years ago, he notes, the same experts were insisting that it was a national security imperative to integrate China into the World Trade Organization and make it a “responsible stakeholder in the global system.” Since then, China has played by its own set of rules, racking up massive trade surpluses, using currency manipulation, impediments to its markets, suppressed wages and lax environmental rules to lure companies to ship jobs and factories to China. Now China has trillions in reserves and is moving to consolidate its position.

As Prestowitz notes, “Even as [America’s Asian allies] negotiate the TPP, they are already writing the future rules of trade with China by negotiating to join China’s proposed Regional Comprehensive Economic Partnership (RCEP), by rushing to become founding members of China’s Asia Infrastructure Investment Bank, and by concluding bi-lateral free trade agreements such as those between Australia and China, and Singapore and China.”

China is investing billions in roads, rail, piping, shipping to build a “new silk road,” connecting China to Europe, the Middle East and East Asia. China has the money; the countries desperately need the investment. Whether TPP passes or not, China will write its own rules.

As Prestowitz concludes: “The truth is that the TPP is mostly a solution looking for a problem. It is the knee jerk, orthodox reaction of an outdated foreign policy elite to a misperceived threat in a world they no longer understand, if they ever did. In truth, the agreement itself may well be more of a risk to than a defense of U.S. national security.”

America’s true security imperative is to rebuild our economy and our middle class here at home. Balancing our trade would help, since it is hard to run a full employment economy while carrying $500-billion-a-year trade deficits, the equivalent of Americans spending $500 billion a year abroad rather than at home. The lost demand is difficult to replace, particularly with Congress dominated by austerity hawks. But TPP will most likely add to our deficits, not decrease them. That’s why its advocates focus on the benefits of increasing exports without ever mentioning the costs of increased imports.

The president says this is a 21^st century trade agreement, but there’s nothing new about this. The structure is the same, the assumptions the same, the arguments the same. It is hard to imagine why the results won’t be the same: more deficits, more jobs lost abroad, more pressure on wages at home.