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Clinton’s Bad Trade

Responding to a charge of inconsistency, John Maynard Keynes once reputedly delivered this withering putdown: “When the facts change, I change my mind. What do you do, sir?”

Hillary Clinton seems to be consciously echoing Keynes’s rejoinder in parrying accusations of flip-flopping this season. She is not really flip-flopping, she assures us. Rather, she is simply adjusting to ever -changing facts.

Here’s how she put it in one of the Democratic presidential debates: “Actually I have been very consistent. Over the course of my entire life, I have always fought for the same values and principles, but, like most human beings—including those of us who run for office—I do absorb new information. I do look at what’s happening in the world.”

In reality, even by the normal standards of American politics, Clinton’s inconsistencies have been breathtaking. And in no area has this been so obvious—and so electorally significant—as in international trade.

She is right, of course, that new facts do sometimes emerge. And old ones can sometimes lose their salience. Her problem, however, is that the facts in her universe seem not so much to be changing as ducking and weaving.

Clinton started out a free-trader, then turned against new trade deals, only to switch back to supporting them, and then come out against them once again. Thus, in sharp contrast to other policy thinkers, for whom tearing away from the trade lobby has been a one-way street, Clinton has reversed herself several times.

The more closely you examine her record, the more perplexing it seems. What can be said for sure is that new information hasn’t had much to do with her shifting views. Virtually the only new information Clinton has had to “absorb” has been polling data showing that more and more American voters are hopping mad. They have had enough particularly of free-trade deals with nations that never seem to reciprocate America’s commitment to market openness.

According to her apologists, Clinton has been a closet trade skeptic all along, but as First Lady she couldn’t say so out of loyalty to Bill. This version was notably floated by Huffington Post politics editor Sam Stein in 2008 but, as the New York Daily News commentator Kenneth Bazinet pointed out, Stein’s account, relying heavily as it did on the testimony of a single prominent trade lobbyist and Clinton crony, did not withstand the laugh test.

The “closet trade skeptic” story has also been peddled in books by Sally Bedell Smith and Carl Bernstein. It may be relevant to point out, however, that both wrote their volumes long after Clinton and her husband left the White House. Their books, moreover, just happened to have been published in 2008, a time when, in the thick of her first presidential run, Clinton was frantically trying to fabricate a record of trade skepticism.

All the real evidence suggests that as First Lady, she did not diverge much in principle from Bill’s energetic efforts to lower America’s trade barriers. Rather she differed on priorities. Whereas Bill chose as his priority to shepherd the North American Free Trade Agreement (NAFTA) through Congress, Hillary regarded NAFTA as competing for time, attention, and legislative support with her own pet project, the ambitious “Hillarycare” health plan.

Once Hillarycare foundered in 1994, however, she came out clearly for NAFTA. In March 1996, for instance, she commented: “I think everybody is in favor of free and fair trade. I think NAFTA is proving its worth.” Her comments seemed all the more striking for the fact that they were made to members of the UNITE garment workers’ union, which had good reason to hate NAFTA.

Then in an address to the Corporate Council on Africa in 1997, she disclosed an unambiguously ideological commitment to trade liberalization. “Look around the globe,” she said. “Those nations which have lowered trade barriers are prospering more than those that have not.” She had evidently tuned out the massive contrary evidence of countless highly successful mercantilist economies throughout history, most obviously post-Mao China.

The following year, she returned to NAFTA’s defense at the World Economic Forum in Davos, praising corporations for mounting “a very effective business effort in the U.S. on behalf of NAFTA.” This presumably referred to corporate America’s massive effort to buy congressional support for the deal.

So much for her First Lady years. Once they were over, she was free to set her own agenda. If it was really true that she was uncomfortable with Bill’s trade agenda, now was the time to hint as much. Just a month after moving out of the White House, she formally announced a run for the U.S. Senate. The state she chose to represent happened to be New York, whose manufacturing was already on the ropes thanks to ill-considered trade policies, not least NAFTA.

Yet she not only did not express reservations about NAFTA, she continued to champion it. She praised it, for instance, in her 2003 book, Living History. As late as 2004 she was presenting it as on balance “good for New York and America.” Her only quibble was a minor one: Canada had not fully lived up to its promises to buy U.S. agricultural products.

Putting NAFTA aside, her record has still largely been one of support for liberalized trade. In September 2000, even before she won her Senate seat, she came out for permanent normal trade with China. In subsequent years she backed controversial trade deals with Jordan, Chile, Singapore, Australia, Morocco, Oman, and Peru.

The first serious evidence that she might be tacking away from her prior commitments came in 2005, when in a Senate vote she opposed the Dominican Republic-Central America Free Trade Agreement (CAFTA). There was, however, less to this than met the eye. Given the haste with which she was later to resume a pro-free trade stance, her CAFTA vote in retrospect seems to have been no more than a cynical effort to build some credibility with the Democratic left. Certainly she did nothing to undermine the deal, which was sure to pass the Republican-controlled Senate, and pass comfortably, without her.

Then came her January 2007 announcement of her presidential run. Suddenly she needed maxed-out anti-trade credentials. One result was this rueful statement at her campaign website: “NAFTA was negotiated more than 14 years ago, and Hillary believes it has not lived up to its promises.”

Of course, it was to be Barack Obama not Hillary Clinton who won out in 2008. But one of President Obama’s first moves was to name Hillary his secretary of state. In that capacity she lost no time demonstrating once more her usefulness to the trade lobby. This was particularly obvious in her promotion of the Trans-Pacific Partnership (TPP). If enacted, it promises to be America’s largest single trade deal. With the possible exception of Obama himself—for whom it is the centerpiece of his “pivot” to Asia—no one has worked harder in laying the groundwork for it and promoting it than Hillary Clinton. Although she was not involved in the day-to-day negotiations, her first official trip as secretary of state was to Japan, Indonesia, South Korea, and China. (All are parties to TPP except for China, whose concerns about exclusion have needed to be assuaged.)

At various times before she left the State Department in 2013, Clinton’s descriptions of the deal included words like “exciting,” “innovative,” “ambitious,” “groundbreaking,” “cutting-edge,” “high-quality,” and “high-standard.” In November 2012, on a visit to Australia, she waxed positively rhapsodic: “This TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field.”

What a difference a few years make: in a move that brought gasps from various quarters, not least the Obama White House, she announced last year she had turned against the deal. Her explanation: “I don’t believe it is going to meet the high bar I have set.”

Yet the fact is that the deal she has now rejected had already been substantially negotiated when she made her “gold standard” remark in 2012. The real problem with the deal—the reason why the Obama administration has yet to put it to Congress—is that even compared with other trade treaties, the TPP is particularly radioactive with popular opinion. Not only does it presage increased wage competition from such nations as Malaysia and Vietnam but it also rewards Japan, a nation that has demonstrated consistent bad faith in reneging on countless market-opening promises over the last half-century.

(Even today, three decades after Tokyo declared the Japanese car market “one of the world’s most open,” that market remains a high-profit sanctuary for the Japanese auto industry. Not only are the Detroit companies’ American offerings excluded but so are their European ranges. The Koreans are completely excluded too. Except for a token handful of luxury European brands, the Japanese car market is virtually entirely Japanese.)

Clinton’s supporters claim that her zigzagging betokens nothing more than careful evaluation of each succeeding trade deal. Here’s how Gene Sperling, a former top economic adviser to Bill Clinton, has put it: “Some people are generally pro-trade or anti-trade. She’s case-by-case on trade.”

But this is hardly the whole story. She has never been able to demonstrate why if NAFTA was wrong in 2007 it had been right just a few years earlier. Nor for that matter has she ever identified any economically significant difference between CAFTA, which she selectively rejected, and any of the many very similar trade deals she supported.

Another possible explanation is that she is fundamentally a doctrinaire free-trader who, during electoral seasons, has had to hide her true views from the great unwashed. This is the assessment of Steven Rattner, a Clinton fundraiser and co-founder of Quadrangle Group LLC, a New York buyout firm. In a comment to Bloomberg during her previous presidential run, he described her as “committed to free trade and to the growing role of the international economy.’’ He added: “She would absolutely do the right thing as president.’’

“Right thing” in this context can be taken to mean the wrong thing for most Americans. Rattner evidently meant she would favor the interests of Wall Street over those of Main Street.

thisarticleappears julaug16 [1]One thing is for sure: as Kevin Kearns has pointed out, she seems never to have investigated the counterarguments to free-trade ideology. Kearns, who heads the U.S. Business and Industry Council, an association of domestic manufacturers, has noted:

For all her alleged smarts and homework, nothing Hillary Clinton has said or done demonstrates that she understands that free-trade theory is based on a model with a highly flawed set of assumptions (full employment, no exchange rate cheating, no cross border investment flows, and so on). She seems unaware that in practice, not only does the theory not work as advertised, but that it inexorably undermines the U.S. industrial base, with all that that means for American jobs and wages.

Which is the real Clinton, the trade supporter or skeptic? Either way, the problem is that her trade record feeds one of the most damaging of the public’s negative perceptions of her: she is not trustworthy. Notwithstanding her claims to the contrary, she seems to have no enduring values and, lacking an eye on the long term, constantly allows short-term expedience to dictate her actions.

Eamonn Fingleton is the author of In the Jaws of the Dragon: America’s Fate in the Coming Era of Chinese Hegemony [2].

12 Comments (Open | Close)

12 Comments To "Clinton’s Bad Trade"

#1 Comment By balconesfault On July 27, 2016 @ 3:51 am

I don’t have a problem with free trade agreements. I have a problem with free trade agreements that don’t build in auditable and enforceable provisions to protect the environment, worker safety, and worker rights to unionize. And I absolutely hate those free trade agreements that codify penalties against countries whose environmental standards can be ruled as “anti-trade”.

I can understand Bill Clinton’s strategic reasons behind NAFTA, just as I can understand Obama’s strategic reasons behind TPP. But NAFTA was seriously flawed because it omitted the protections I noted above, and given the heavy participation of corporate interests behind closed doors in drafting the TPP I have little faith it will be better. What we need is smart free trade that keeps countries from “rushing to the bottom” in how they treat their workers and environment in the quest to produce cheaper goods.

#2 Comment By Viriato On July 27, 2016 @ 7:47 am

Oh, she has enduring values, all right. They’re just not values that benefit working-class and middle-class Americans. She is a neoliberal through and through.

#3 Comment By Clint On July 27, 2016 @ 2:31 pm

Trump ripped Clinton’s Flip Flop,
“She lied about TPP. She was for TPP; she saw me on television knocking the hell out of it because it’s a horror show it’s going to kill all our jobs, it’s going to be almost as bad as NAFTA, maybe worse, which her husband signed, which destroyed this country, destroyed manufacturing in the United States.”

Hillary Clinton is a Trade Fraud.

#4 Comment By Ken Zaretzke On July 27, 2016 @ 4:18 pm

When the many people who are left unemployed or underemployed by free trade and the decline of manufacturing get up their gumption and protest–as, for example, by throwing a (well-manufactured) shoe in disgust–there is only one kind of response they can expect from Hillary and her minions…

#5 Comment By barry schiller On July 27, 2016 @ 6:01 pm

I have a mixed view of Clinton’s record, but this analysis seems correct, she cannot be trusted on trade issues no matter what your view is. (Can Trump?)
On the other hand, I think she has generally consistently shown support for measures protecting childrens health, women’s reproductive freedom, civil rights for African-Americans

#6 Comment By Rurik On July 27, 2016 @ 7:34 pm

“Manufacturing won’t find a friend in Hillary.”

And America itself won’t find a friend in lovestruck-for-Putin Trump.

#7 Comment By Clint On July 27, 2016 @ 11:25 pm

Since Hillary Clinton’s goofy “overcharged” failed “reset” button, Russia has gone on to annex Crimea, helped foment unrest in eastern Ukraine, and challenged NATO member states with provocative military actions.

Hillary helped Obama restart the cold war with Russia.

#8 Comment By EliteCommInc. On July 29, 2016 @ 8:26 am

“On the other hand, I think she has generally consistently shown support for measures protecting childrens health, women’s reproductive freedom, civil rights for African-Americans.”

She would have been better off as would those children had she supported mother’s and father’s expected to raise those children And trade agreements that didn’t throw their parents under the bus would have been the first place to start.

No is interfering in women’s productive. The only interference is to prevent the murder of children in or out of the womb, because women thinks her value supersedes another human beings, a defenseless human being at that. The suggestion that someone who advocates killing a child in the womb cares about the health of children is not only missing the cynical view of human worth, but embracing the hypocrisy.

#9 Comment By Divine Right On July 29, 2016 @ 11:22 pm

Prediction:

If Clinton wins, she’ll announce that some substantial revision has been made to the TPP and now it’s a great deal – total different from NAFTA. She’ll then sign it while claiming in her re-election campaign that she didn’t flip-flop because “changes were made.” In reality, she will have outright lied about opposing the TPP and whatever revision or addition to it will be trivial. The result will be higher trade deficits and continued economic stagnation or even decline.

#10 Comment By Reinhold On July 31, 2016 @ 7:22 pm

“free-trade theory is based on a model with a highly flawed set of assumptions (full employment, no exchange rate cheating, no cross border investment flows, and so on).”
Huh? No “cross border investment flows”? That is literally the whole point of the trade agreements: free movement of capital, foreign direct investment. How could that be an assumption of ‘free trade theory’?

#11 Comment By alex On September 27, 2016 @ 3:23 am

elitecom, well republicans are generally pro-life until birth, if ok to cut less than 1% of the budget and eliminate life-saving-transplants for medicaid patients, but yet somehow how find tax breaks and money to renovate stadiums and veterans roof buildings (not the hospital a memorial), then brewercare is for you, $2 million for algare research was found.

Of course, when it comes to socialistic medicare, GOP wants the senior vote, which is why they won’t touch it,though some want a voucher, nevermind most seniors double the cost then what they pay into it, then there’s social security,some get more or less than what they put into it. Just because you and your spouse put in double or triple then the couple next door doesn’t mean your entitled to double or triple the benefit,but your neighbor might.

#12 Comment By alex On September 27, 2016 @ 3:29 am

I find it ironic that trump attacks hillary on trade, its a theory that existed during hoover era, if we follow the gop platform and eliminate minimum wage,worker protections,etc and go back to the early 20th century then companies don’t need to import or make stuff in china,where regulations,labor,etc are lax.

On the liberal hypocrisy side they talk about fair trade, however many free trade agreements make things fairer to the US, poor countries that export products often already had tariff reductions on their products.

No fan of hillary,but global warming on the chinese,tpp has to do with china,it seems trump like clinton is pandering.

Imagine a liberal hippie went to south american and had to pay duty on the stuff they brought back to us,souvenirs,food,coffee,drinks,herbs, you name it, liberals fair trade would work both ways to protect the us from being sidelined.

And then trumps defense of socialist ss,medicare, but then first he says no cuts to medicaid,then block granting it,which is a cut, of course conservatives won’t tell you that before medicaid which needs reform, you the child were responsible for the bills, and responsibility for the elderly parents, some states still have laws, and of course you can’t police the seniors if they abused you,made bad life choices,alcohol,drugs,etc