Larry Summers has written a very peculiar op-ed on the Trans-Pacific Partnership trade deal. If you just read the top, you would think Summers is a rabid supporter of the trade deal who is furious over its struggle in Congress. But if you keep reading, you find something that looks a whole lot like a case for why Congress should reject the TPP and simply move on to more pressing matters.
Summers begins by framing the House's rejection of Trade Adjustment Assistance as a "catastrophe for US leadership," comparing it to the defeat of Woodrow Wilson’s League of Nations. He worries that "repudiation of the TPP would neuter the U.S. presidency for the next 19 months" and "reinforce global concerns that the vicissitudes of domestic politics are increasingly rendering the United States a less reliable ally."
So far, so good for the Obama White House, where Summers served as director of the National Economic Council. But then the piece takes a turn: Summers dismantles the administration's case for the TPP and argues that the American political system would be better off spending less time on trade deals altogether.
"The era of agreements that achieve freer trade in the classic sense is essentially over"
Summers begins by making an oft-missed point: the trade deals of today are not like the trade deals of yesteryear. For one thing, they're not really about trade.
He writes that "the era of agreements that achieve freer trade in the classic sense is essentially over." The remaining tariff and quota barriers are "small," and today's trade deals are really about regulatory harmonization and intellectual property — and these provisions need to be assessed on a case-by-case basis.
Summers's conclusion won't be of much help to his colleagues who are trying to sell a trade deal they can't yet show the public: "a reflexive presumption in favor of free trade should not be used to justify further agreements," he writes.
But Summers isn't done. He goes on to question whether it's worth putting this much focus and attention into trade deals at all. He says the US would have been better off if the time and energy that's been sunk into the TPP fight had gone instead to "reform of the International Monetary Fund and adequate funding for international financial institutions and the United Nations."
From there, he delivers a thinly veiled warning to the Obama administration, which has been telling anyone who will listen that the TPP needs to pass because America's failure to show economic leadership will let China fill the vacuum. "Political necessity has in recent weeks led advocates to increasingly aggressive formulations about how the TPP enables us to gain advantage at the expense of China," he writes. "We may come to regret this provocation."
Finally, he says that deals like TPP are addressing the wrong problem. A generation ago, he says, "the challenge was to enable new markets to emerge." But today the challenge "is less to increase globalization than to make the globalization we have work for our citizens."
With friends like this, the TPP doesn't need enemies
Summers isn't a TPP opponent — at least, I don't think he is. But he sure doesn't sound like a supporter. And this is, increasingly, the Obama administration's problem around the TPP. There just aren't many high-profile voices making a case for the TPP on the merits, as opposed to on more abstract grounds like showing US leadership or promoting free trade or muscling out China.
But as the Obama administration learned last week, the abstract arguments for their trade deal aren't trumping Congress's very specific concerns.
Perhaps the most significant claim Summers makes about the TPP is that it really isn't that important one way or the other. And Summers isn't alone in this: pretty much every economist I've talked to thinks trade deals like the TPP are overblown.
This is more crucial for the psychology of TPP opposition than most realize. Congressional Democrats might cross organized labor over a policy they really think is important, but they're not going to do it over a policy they don't think is that important. Opposing TPP has become a reasonably cheap way to make organized labor happy while showing some independence from the Obama administration. The Obama administration has responded by ratcheting up the stakes in their arguments on the TPP — suggesting its defeat would be a huge blow to America's global leadership role, or that TPP is crucial to America's competition with China — but they're not getting much support on those grounds.