For a politician widely considered such a policy wonk that she’s often stayed in the weeds at the cost of boring voters, Hillary Clinton gave an awfully sketchy picture of her views on trade and globalization in her ballyhooed economics speech in Michigan yesterday. In fact, the Democratic presidential nominee’s views so far contain fewer specifics, and her overall approach for dealing with the trade challenges that have caught fire in this campaign is much less coherent, than those of her Republican rival, Donald Trump (whose own proposals on the subject, I’ve noted, fall short in many analytical and prescriptive respects).
Let’s start with the big picture – i.e., the fundamental reasons why American trade policy has gone off the rails according to the candidates. Even if you don’t agree with it, you’ve got to agree that Trump’s critique is coherent. As he’s emphasized time and again, the United States has long run big trade deficits that have killed lots of jobs both because protectionist foreign governments are determined to grow by racking up big surpluses with America, and because multinational corporations and their Wall Street bankers have successfully pushed Washington to sign trade agreements that fuel these deficits by encouraging companies to supply the U.S. market from abroad, not domestically.
Clinton’s speech actually revealed that she agrees on these scores with Trump:
“It’s true that too often, past trade deals have been sold to the American people with rosy scenarios that did not pan out. Those promises now ring hollow in many communities across Michigan and our country that have seen factories close and jobs disappear.
“Too many companies lobbied for trade deals so they could sell products abroad but then they instead moved abroad and sold back into the United States.
“It is also true that China and other countries have gamed the system for too long.”
But (again, whether you agree with it or not) Trump’s promised policy follow-through dovetails with his analysis. He’ll negotiate better deals that prioritize boosting American growth and jobs on net, and enforce them with tariffs. Moreover, he’ll impose stiff duties on the products of those companies that move overseas and “sell back into the United States.”
Clinton’s remedies? She, too, pledges “to finally make trade work for us, not against us.” She will “stop any trade deal that kills jobs or holds down wages – including the Trans-Pacific Partnership [TPP].” But she says nothing about what concrete provisions need to be placed in new trade deals to achieve those goals. And she seems to think that existing deals can be improved sufficiently by ramping up “enforcement by appointing, for the first time, a chief trade prosecutor, I will triple the number of enforcement officers, and when countries break the rules, we won’t hesitate to impose targeted tariffs.”
As I’ve explained before, this approach faces three insurmountable obstacles to success. First, even a much greater government enforcement effort would be pathetically inadequate to monitor the factory complexes of even smallish countries like Vietnam for violations of current protections in trade deals against repressing workers and egregiously polluting the environment. How much more in the way of resources and personnel would be needed to keep track of the gargantuan Chinese manufacturing sector?
Second, she seems satisfied with the current domestic U.S. system for helping individual American companies and industries fight foreign violations of domestic and international trade rules covering practices like illegal subsidies, dumping, and intellectual property theft. Yet even taken on its own terms, the American trade law apparatus is a proven failure for reasons that have been obvious for decades. It’s reactive. It’s piecemeal. And its legalistic procedures are sadly ineffective against foreign governments that don’t share America’s rule of law tradition, and its associated transparency. Therefore, gathering evidence is all but impossible.
Third, as I’ve just written, the dispute-resolution systems created by individual U.S. trade agreements and by the World Trade Organization that was set up in 1995 serve as powerful checks on America’s ability to use its national trade law system unilaterally. The reason? In all these agreements, Washington has agreed to structures that treat it as simply one among equals even though access to its gigantic market is invariably the global economy’s paramount prize. And as a result, America is continually outvoted by export-dependent countries determined to keep its markets much more open to their products than vice versa.
Clinton also appears to labor under major illusions about the global politics of achieving even the limited trade policy tweaking she seems to favor. Like many long-time trade policy critics in the Democratic party and on the political Left, she has taken to lambasting Trump on social media for threatening to “start a trade war with China” – and presumably the other countries she agrees have “gamed the system for too long.”
But how do they think these countries will react to any serious, genuinely promising efforts to eliminate or offset their predatory trade practices? By embracing them with open arms? Does she expect no push-back at all? And when it comes, how will she deal with it?
Moreover, Clinton’s views of America’s leverage are difficult, at best, to understand. On the one hand, she charged that Trump’s trade “approach is based on fear, not strength. Fear that we can’t compete with the rest of the world even when the rules are fair. Fear that our country has no choice but to hide behind walls.” She insists that “America isn’t afraid to compete.” And yet she seems to be the candidate who’s cowed by the prospect of trade wars – which indicates that Clinton believes America lacks the leverage to prevail when push comes to shove. Why, then, does she think that her strategy will succeed? Because of the power of persuasion?
Clinton’s trade policy criticisms this year have been widely seen as campaign-driven – and therefore untrustworthy, especially among supporters of her former Democratic presidential rival Bernie Sanders and others on the Left. If they read this latest economics speech critically, they’ll find little reason to change their views of her trade policy positions as quintessentially political – and therefore all too ephemeral – constructs.