Bankers Win, Workers Lose
12:00 AM, Dec 14, 2013 • By IRWIN M. STELZER
“The action is in the regionals,” the University of California’s Kati Suominen tells the press. And whether that “action” reduces trade barriers will depend on America, the world’s biggest market. Which puts President Obama at center stage, with congress waiting in the wings. The president dearly wants to make successful conclusions of these various regional negotiations part of his legacy. For one thing, he is convinced that freer trade would spur U.S. exports, accelerate now-anemic economic growth, and create jobs. For another, his hope that Obamacare would provide an enduring legacy and a place on Mount Rushmore is fading as the difficulties inherent in his health care revolution become apparent. Bringing free trade to the world might have to do as a substitute, although lesser, legacy than bringing affordable health care to all Americans.
But wishing won’t make it so. For example, to make the U.S.-EU deal happen, French president François Hollande will have to risk alienating his powerful farm bloc by lowering the barriers to imports from more efficient US agriculture. And Obama will have to face down his trade union and environmental supporters who fear increased competition from countries with lower labor, health and safety, and green standards, and China-bashers among the Senate Democratic leadership team who want currency manipulation outlawed. Or say they do.
The TPP also needs such muscle as a politically wounded American president can muster. Obama’s low approval rating (around 40 percent) make it difficult for him to wring concessions from textile, apparel, dairy and sugar interests and their congressional supporters, concessions some countries are demanding in return for giving U.S. pharmaceutical and entertainment companies stronger protection for IP rights, which would raise the prices of drugs and audio-visual products in importing countries.
Most important, the president must have what is called fast-track authority—the right to put any deal before Congress on a take-it-or-leave-it basis, no amendments to protect some local special interest allowed. Although 170 of the 435 members of the House have signed letters opposing such authority, betting here is Congress will give Obama what he wants. In return for the president's agreement to have his negotiators demand consideration of currency manipulation, congressional negotiators have agreed to recommend to the House and the Senate that the president get the authority he seeks. Both bodies are unlikely to ignore that recommendation.
Trade policy has winners and losers. If the president can push his trade agenda through Congress, owners of IP (his rich Hollywood backers), and sellers of financial services (the bankers Obama despises except when fund-raising in New York) will be big winners, and middle class workers competing with foreign and state-supported manufacturing enterprises the losers. That would further exacerbate the income-inequality Obama is pledged to ameliorate, but that’s a story for another day.
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