Clinton’s awkward history on trade policy

Posted on September 29, 2016

Democratic presidential candidate Hillary Clinton speaks during a campaign stop at the University Of New Hampshire in Durham, N.H., Wednesday, Sept. 28, 2016. (AP Photo/Matt Rourke)©AP

If Donald Trump exposed any policy weakness in Hillary Clinton during an otherwise shaky performance at this week’s first US presidential debate, it was in her position — and history — on trade. 

By tying Mrs Clinton to the unpopular North American Free Trade Agreement, which her husband signed into existence, and a Pacific Rim pact she now opposes but once regularly praised as secretary of state, Mr Trump was targeting the disgruntled blue-collar voters at the heart of his strategy to win the White House. He also came close to rattling her. 

    “Your husband signed Nafta, which was one of the worst things that ever happened to the manufacturing industry,” Mr Trump said early in the debate. “And now you want to approve [the] Trans-Pacific Partnership. You were totally in favour of it! Then you heard what I was saying, how bad it is, and you said: ‘I can’t win that debate’. But you know that if you did win, you would approve that, and that will be almost as bad as Nafta!” 

    “Well, that is just not accurate,” Mrs Clinton responded, launching into a defence of her husband’s economic record before trying to change the subject. 

    Thanks to the issue’s resonance in industrial battleground states such as Ohio and Mr Trump’s bellowing on the subject, trade and trade agreements such as the TPP have played an outsized role in this year’s US presidential politics. While she is undoubtedly more comfortable with the nitty gritty of trade policy than her Republican rival, this focus has put Mrs Clinton in an uncomfortable place. 

    The irony of this year’s debate is that polls show support for trade agreements has been growing among US voters, particularly Democrats.

    Chart: What Americans think foreign trade means for the US
    Chart: Democrats warm to trade agreements

    But the problem for Mrs Clinton is that, over the past quarter century, she has outlined a multiplicity of ideas on trade. If she once served on the board of Walmart and has been criticised in this campaign for her ties to Wall Street, she has also expressed views that would be at home at an anti-globalisation rally. 

    In a 1999 speech in Paris, Mrs Clinton called for the ripping up of the “financial architecture” born at Bretton Woods. “We now have to face up to creating a new architecture that will help us tackle runaway global capitalism’s worst effects,” she said. 

    People who have worked closely with Mrs Clinton say she has long had a more cautious approach to trade than her husband, who oversaw the three most consequential events in US trade policy of recent decades: the birth of Nafta, the success of the Uruguay Round and China’s accession to the World Trade Organisation. 

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    TTIP Petition Is Presented To The European Commission...LONDON, ENGLAND - OCTOBER 07: Campaigners against the Transatlantic Trade and Investment Partnership (TTIP) inflate a 'Trojan Horse' outside the European Commission at Smith Square on on October 7, 2015 in London, England. A Europe-wide petition demanding an end to TTIP has reached over 3,000,000 signatures today with over 500,000 of signatories coming from the UK. TTIP is a controversial free trade deal between the European Union and the United States that promises multilateral economic growth. Critics of the trade agreement that it threatens EU food and environmental safety laws as well as the sovereignty of national governments which could be sued for damages by foreign investors wide ranging government actions that they can claim have threatened their profits. (Photo by Rob Stothard/Getty Images)

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    On trade, “Hillary is not Bill. I can tell you that for sure”, says Jared Bernstein, a former economic adviser to vice-president Joe Biden. “What I am hearing now is more consistent with the Hillary Clinton that I have known for a couple of decades.” 

    As he campaigned for the presidency in 1992, Mrs Clinton was among those lobbying Bill Clinton to oppose Nafta. “Within the family of advisers in 1992 she was just more sceptical about Nafta,” says Paul Begala, a longtime political adviser to the Clintons who heads an independent group backing Mrs Clinton’s bid for the presidency. 

    However, Mrs Clinton also then went on to speak glowingly about the deal with Canada and Mexico both as first lady and as a senator from New York. “I think Nafta is proving its worth,” she said in 1996. 

    Her campaign maintains that she has for more than a decade advocated Nafta’s renegotiation. But she has found herself in a similarly problematic situation with the TPP. 

    Mrs Clinton has grown increasingly unequivocal in opposing the TPP, which was signed by the US, Japan and 10 other countries this year but must still be ratified by Congress. Her concerns include that it does not contain suitably robust provisions on currency manipulation, labour or the environment. 

    “I oppose [the TPP] now, I’ll oppose it after the election, and I’ll oppose it as president,” she said during an August economic policy speech. 

    But as secretary of state under Mr Obama she called the TPP “cutting edge” and the “gold standard”. 

    Moreover, the Obama administration’s push to secure the TPP’s ratification before he leaves office has fed suspicions she could shift again. 

    The consensus in Washington is that after this year’s campaign Mrs Clinton would not rush to breathe life into the TPP were it to fail to get through Congress in the coming months. 

    But Mickey Kantor, who as US trade representative under Bill Clinton once jousted with Mrs Clinton over Nafta, says Mrs Clinton would have no choice but to eventually pick up the pieces. “We have never, ever in the United States not ratified a trade agreement that we have negotiated,” he says. 

    Beyond the TPP, Mrs Clinton has pledged to appoint a special trade prosecutor to step up the fight against countries that engage in unfair trade and to get tough against China. 

    Like Mr Trump, she has yet to take a campaign position on the three-year-old push for a Transatlantic Trade and Investment Partnership with the EU. “Secretary Clinton will evaluate any future trade deal, including with Europe, based on whether it will create American jobs, raise wages, and enhance our national security,” says a spokeswoman for the campaign. 

    But advisers say Mrs Clinton’s desire to reinvent how the US negotiates trade agreements could benefit the TTIP. 

    Key to that is the opposition Mrs Clinton laid out in her 2014 book, Hard Choices, to provisions that would give investors special rights to sue governments. Those Investor-State Dispute Settlement mechanisms have been a target of ire for TTIP opponents in Europe and Mrs Clinton’s willingness to drop them would be a game-changer. 

    “It actually gives me some hope on TTIP,” says one adviser. “I think there’s a deal to be done there.”

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