Old Wine in Old Bottles
Ambassador Froman, for whom I worked on PRC WTO litigation at the end of the Obama Administration, has a new piece out in Foreign Affairs. It’s about where we should go with trade policy. It’s got some good, some bad, and some ugly. But when all is said and done, the article is an elaborate set of matryoshka dolls — with TPP at its core.
The Good
Ambassador Froman, perhaps the last truly neoliberal American trade representative (Ambassador Lighthizer and Greer being a mixture of neoliberal and post-neoliberal), recognizes that the ancien trade regime is fini. He writes: “clinging to the old system and pining for its restoration would be deluded and futile.” This acknowledgement is significant, precisely because he is the last truly neoliberal American trade rep. In office, he was invested in trying to make the WTO work; he was also the ultimate architect of TPP and TTIP, two trade agreements that died on the vine in the United States.
Ambassador Froman is looking to find a pathway out of a unilateral and power-based system that could spiral out of control. Good!
The Bad
Still, for all its pretensions about out with the old, in with the new, the article is, at its core, out with the old, in with the old. He emphasizes the limits of the WTO (exaggerating them, if that’s possible) and suggests we will move to a patchwork system of diverse types of agreements. That is, of course, where we already are, so this is more descriptive than innovative.
Yet Ambassador Froman’s theory of trade is the same as the theory of trade that led to the WTO in the first place. He writes “{f}rom a purely economic point of view, this {emerging system} would be suboptimal and less efficient than the global trading system was.” (emphasis added) The idea that just removing all your trade barriers and you’ll have an optimal and efficient system is the classic Milton Friedman/Bob Rubin/Larry Summers view of international economics that led Reagan to launch the negotiations that would lead to the WTO and Clinton to get them done. Thus, the theory of change in the article is, when all is said and done, a theory of sameness.
The failure to grapple with the need for structural change after the pandemic exposed the lethality of supply chain concentration means that the analysis offered is defective. And so Ambassador Froman writes: “the negotiation of traditional trade-liberalizing agreements appears to be off the table politically, at least for now.” Politically? How about analytically? The Biden Administration made clear that we could not responsibly do “traditional trade-liberalizing agreements” without ensuring that we solved for the shortcomings exposed by the pandemic. Fresh thinking is out there: this, for example, is closer to the mark.
It should go without saying — yet apparently has to be said — that a system that incentivized Rana Plaza, forced labor, and environmental degradation was itself “suboptimal.”
The Ugly
Given the foregoing, it is no surprise that among the proposed solutions is, inevitably, the same solution Ambassador Froman was chasing a decade ago: TPP. He proposes it even as he contends that “{t}he challenge is to create a system of rules outside the rules-based system of old.”
But TPP is the rules-based system of old. The title of the article includes a call for “remaking the rules” of the rules-based order, yet in pitching TPP, he reveals that he is, in the end, less interested in remaking the rules than he is in reupping the ones he himself negotiated — all while noting that “nostalgia is not a strategy.”
Let’s review the TPP rules and how they fit into today’s world:
Supply chain rules that lock in the dependencies on the PRC we are supposed to be trying to diversify away from.
Digital trade rules written by and for the same tech monopolists who think democracy is for chumps.
Intellectual property rules written by and for the pharmaceutical companies who prefer to pay (minimal) taxes in Ireland while monetizing R&D funded by the American taxpayer.
Regulatory coherence rules designed to frustrate the ability to regulate in the public interest.
Last-gen labor rules that look good on paper but never get enforced.
Fluffy environmental rules designed to pretend an agreement is progressive when it is anything but.
TPP was an agreement gasping for air in the United States during its prime, even as Mitch McConnell and Paul Ryan and Barack Obama and Mike Froman all used the same talking points. McConnell, who swore he’d never let Obama have a victory, was happy to give him this one. Joe Biden was Obama’s Vice President and still wouldn’t resuscitate TPP when he became President. Not for lack of trying by TPP boosters within the White House, and without – the same crowd that gave us IPEF, where the trade pillar failed because … it looked too much like TPP. Nostalgia is indeed not a strategy.
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There’s more I could say on “tradeoffs” and the pro forma invocation of “place-based” economic policies, none of which was a concern for the optimality/efficiency crowd in 2015 — indeed, the Obama Administration wanted to slash funding to retrain workers even as it was hawking TPP. For now, let me just say that I have sympathy for those who put their heart and soul into negotiating TPP, only to watch it twist in the wind.
“This ongoing need to defend priors, while dressing them up as new thinking, is both analytically bankrupt and politically tone deaf.”
But this ongoing need to defend priors, while dressing them up as new thinking, is both analytically bankrupt and politically tone deaf. The toxicity of TPP (which Sherrod Brown, Sandy Levin, and organized labor desperately, and unsuccessfully, tried to get the Obama Administration to understand in real time) facilitated the rise in 2016 of the person breaking the system – the whole system -- as we speak. A foreign counterpart from a CPTPP country said as much privately: “We did this.”
If you enjoyed the pandemic shortages, then by all means, TPP is a great idea.
If you enjoyed inflation induced by supply chain shocks, then by all means, TPP is a great idea.
If you like “non tariff barrier” rules written by monopolists -- if you like the whole neoliberal kit-‘n’-caboodle -- then by all means, TPP is a great idea.
But if you understand, with any depth, that the old system is well and truly done for, then TPP is done for too. Offering it as the path forward isn’t even giving us old wine in new bottles: it’s giving us old wine in old bottles.
The old wine was a labor of love for those who stomped the grapes.
But it’s corked all the same.