New commerce chief must help restore nation’s faith in trade

Wilbur Ross has been confirmed as the new secretary of commerce. Apparently, Ross is on board with Trump’s denunciation of “disastrous” trade deals and their “stupid” negotiators, although, in his confirmation, his vow was only to oppose deals, like the North American Free Trade Agreement (NAFTA), that he did not consider “sensible.” 

From his experience of having companies bankrupted, in part, by international competition, Ross brings valuable experience to Trump’s intentions to negotiate bilateral trade deals, while modifying or scrapping multilateral or regional agreements.

{mosads}However, without attention to the broader questions of international trade, this approach will fail. Ross’ first order of business has to be a restoration of some consensus that international trade is capable of benefitting the nation and the average American.

Trump overthrew Republican orthodoxy to denounce trade deals that opened up international markets. Even before trying to hang NAFTA and China’s World Trade Organization accession around Hillary Clinton’s neck, he used trade as a key issue to eliminate his 16 rivals for the Republican nomination.

On the Democratic side, Sen. Bernie Sanders (I-Vt.) provided a full-throated attack on trade as a threat to American working men and women. Hillary Clinton followed suit, offering no defense of trade deals negotiated during her husband’s administration, while opposing the Trans-Pacific Partnership (TPP) that she once called the “gold standard” of such agreements.

During the Cold War, trade had often been an important part of an American foreign policy designed to forge alliances while, simultaneously, containing the ambitions of the Soviet Union. But even in the Cold War era, securing congressional support for trade agreements became more difficult as America faced rising competition from recovering European nations and Japan.  

In the post-Cold War era, trade has become ever more controversial. Now, the recent campaign has completely shattered any political consensus on the value of international trade.  What happened? Economists stress that, in both theory and practice, international trade has been one of the chief drivers of increasing national wealth.

However, some of these same economists say that while a nation’s overall wealth increases with trade, the major economic benefits go to managers and owners. Average Americans receive much less benefit.  

Most disastrously, from a political perspective, many average Americans pay for this wealth increase with low wage growth and job losses. It is this focus on job loss that has driven the changing consensus on trade. 

Trade is too important to the economic health of the United States and its average citizens to be consigned to the dustbin of politics. No nation in the history of the world has been able to increase its prosperity solely by constricting trade. The United States tried and failed with the Smoot-Hawley Tariff in the middle of the Great Depression.

A tariff so high as to be exclusionary only made matters worse in the 1930s. Indeed, the economic growth of our nation since World War II has been premised on the free movement of commerce in domestic and international markets. 

Regardless of the benefits, international trade will be the proverbial “baby thrown out with the bathwater” unless means can be found to rebuild a political consensus in favor of trade. The laboring oar for this effort should fall to the secretary of commerce. 

What is the right path ahead for future trade agreements? The first principle must be to benefit the American worker.  If this standard cannot be met, there is little hope of changing the anti-trade ethos that has emerged from this year’s elections. 

Where there are infractions of agreements harmful to the average worker, there must be visible steps taken to enforce U.S. worker rights. Where there are provisions that are doing unjustifiable harm, there must be renegotiation. Where there are practices inadequately addressed, such as currency manipulation, there must be measures to  deal with them forthrightly.  

However, no amount of focus on trade agreements can rectify the low political esteem to which trade has fallen. Rather, there must be a broader approach that includes a revival of the competitiveness agenda that has had success in building jobs through increased exports.

Started by President Reagan and continued under the first President Bush and President Clinton administrations, this emphasis on factors that helped the U.S. “compete not retreat” in international trade produced emphatic pro-trade results.  

Future trade agreements must be embedded in a broader competitiveness approach. This approach should include a comprehensive investment strategy that ranges from infrastructure, to research and development, to training and education, to export promotion.     

America has been the innovation capital of the world. To build an innovative future, the country needs to maintain the entire innovation system that depends on a manufacturing base, a technically-advanced workforce, and a trade and export policy that opens markets for the fruits of innovation. 

The country needs an approach that restores opportunity to communities negatively affected by trade, technology, organization, international agreements and foreign policy initiatives. Commerce can, through its Economic Development Agency, take the lead in helping attract new industries and exploiting an affected community’s comparative advantage.

In a sense, the new secretary of commerce, in conjunction with both labor and business stakeholders, should get to where Reagan’s Commission on Industrial Competitiveness helped position policy three decades ago. The country must, in the words of that commission, “meet the test of international markets while simultaneously … expanding the real income of its citizens.”  

For Trump supporters, this competitiveness standard, not protectionism, should be the true measure of conservatism in international trade. Trade policy grounded both in revision and competitiveness can help bring about the change that apparently figured so prominently in Trump’s victory.

Kent Hughes is a public policy fellow at the Wilson Center, an international center for scholars focused on the social sciences. Hughes served as associate deputy secretary at the U.S. Department of Commerce, president of the private sector Council on Competitiveness, and in a number of senior positions with the U.S. Congress.

Raymond Vickery is a global fellow at the Wilson Center. Vickery served as U.S. assistant secretary of commerce, trade development in the Clinton administration.

The views expressed by contributors are their own and not the views of The Hill.