Trump should pursue bilateral trade deals, starting wtih Britain
HOURS after scrapping the Trans-Pacific Partnership, the Trump White House explained that the president supports “free and fair trade.”
TPP couldn’t get through the last Congress, so it was already stalled indefinitely. But it is not just for that reason that scrapping it now contains a certain logic. It was a flawed deal, as any deal that requires the signatures of a dozen countries is likely to be. So one can oppose a specific deal such as the TPP while at the same time supporting free trade in general.
The important thing is for President Trump not to wield sweeping and ill-defined support of “free and fair trade” as a way to oppose all trade liberalization when it comes to particulars.
If Trump really does want to help the economy grow and protect workers, he should move swiftly on the trade strategy White House Press Secretary Sean Spicer declared repeatedly in Monday’s briefing, which is to pursue one-on-one deals with key nations. Trump ought to start with a deal with Britain. Last summer, the British decided to leave the European Union and repatriate sovereignty to their parliament in Westminster. They chose democracy rather than rule by the bureaucratic oligarchy of Brussels, ignoring pressure from fans of centralized power, among them President Obama. Obama told British voters that if they left the EU they’d find themselves at the “back of the queue” when it came to trade deals.
Trump and Vice President Mike Pence have said instead they intend to move Britain to the front of the line. With British Prime Minister Teresa May visiting Washington on Friday, Trump can make good on that policy and get the ball rolling on his first bilateral trade deal.
The populist argument against free trade is that it drives down wages for low-skilled workers by facilitating the offshoring of manufacturing jobs, and that the lower prices this brings to consumers do not offset the lost wages among the lower-skilled. (No doubt this feels true, but really it is just that sharp local pain is more acute than slight increments of a more damaging general malaise.)
But this is not a debate necessary when it comes to a trade deal with Britain. Britain is a high-wage economy, so lowering trade barriers doesn’t risk exporting jobs from America. A trade deal with Britain would bring all the benefits of free trade, with none of the costs Trump worries about.
Britain’s tariffs have been low within the EU and they are unlikely to rise once the country takes its leave from the continental customs union a little over two years from now. Much of the gain from an agreement with London could, therefore, come from reducing non-tariff barriers that block easy access to each other’s markets.
We’re confident Trump and his supporters will soon see the benefits of a bilateral trade agreement with Britain, and we hope the administration doesn’t stop there. For instance, facilitating trade with Asia needs to be a key strategic goal.
Trump has spent enough time in business to realize that commerce and trade aren’t zero-sum games. All parties can gain from free and open trade, and eventually, Trump should pursue bilateral agreements with the rest of the world. Beginning with Britain is a good start.