Elizabeth Warren’s vision for changing America’s trade policy, explained

Elizabeth Warren released a plan Monday that challenges the way American presidents have thought about trade policy since the Cold War — rejecting the premise that deals should be about business interests in favor of a progressive agenda.

President Trump’s pitch to white working-class voters has involved plenty of culture war politics, but also a striking break with the free trade policies adhered to by most Republicans over the past generation. That’s left Democrats divided and puts the question of trade policy at the center of the Democratic primary. Some want to continue in the tradition of Presidents Clinton and Obama, who signed big trade deals with American partners. But most congressional Democrats opposed NAFTA in the 1990s and the Trans-Pacific Partnership in 2015-’16.

Warren’s plan is a rejection of that legacy, but also a counterpoint to Trump, who sees trade negotiations primarily through the lens of helping American exporters. For Warren, the key issue isn’t American interests versus those of foreigners, but wages and environmental protections versus the shared interests of multinational companies in sloughing off regulation.

Warren wants to change who makes trade deals

Every critic of trade deals makes essentially the same argument: Elites get together at the bargaining table and sell out American workers.

To Trump, in a practical sense, that amounts to a focus on reducing bilateral trade deficits. His standard approach is to take a country that runs a trade surplus with the United States, and then threaten to raise taxes on that country’s exports. This risks retaliation against American exporters, but Trump’s logic is that since a trade deficit is bad, at the limit, a cycle of retaliation that leads to no trade whatsoever is good for the United States. This gives him leverage, he thinks, to extract concessions that will boost American exports.

That appears to reflect Trump’s sincere misapprehensions about trade deficits, but also his preference for wheeling and dealing over systematic policymaking. But critically, while it in some ways represents a big change from how the Bush, Clinton, Bush, and Obama administrations thought about trade on a structural level, it’s somewhat similar in that it involves having US trade negotiations act as proxies for US business interests.

Warren’s plan is fundamentally different.

At a systemic level, she says she wants to “ensure that there are more representatives from labor, environmental, and consumer groups than from corporations and trade groups on every existing advisory committee” and to “expand the current list of advisory committees to create one for consumers, one for rural areas, and one for each region of the country, so that critical voices are at the table during negotiations.”

The point is to try to make trade policy responsive to a different set of interests, while also requiring public disclosure of negotiating drafts so Congress doesn’t end up faced with a binary choice between not doing deals and only doing deals that were hashed out by business interests behind closed doors.

That means, in theory, that trade deals would get done that are much more focused on advancing environmental goals and protecting labor rights than on expanding American exporters’ access to foreign markets.

Warren’s nine-point test for a trade deal

Of course, in a practical sense, requiring a wider circle of consultation and a less streamlined process makes it less likely that new deals will be made. This is clearly not a huge concern for Warren, because beyond substantive reforms, she lays out a nine-point eligibility test for even considering a trade deal that is by design extremely stringent.

The conditions are worth quoting in full since they are detailed and specific but also notable for the fact that the United States does not meet the criteria:

• Recognize and enforce the core labor rights of the International Labour Organization, like collective bargaining and the elimination of child labor.

• Uphold internationally recognized human rights, as reported in the Department of State’s Country Reports on Human Rights, including the rights of indigenous people, migrant workers, and other vulnerable groups.

• Recognize and enforce religious freedom as reported in the State Department’s Country Reports.

• Comply with minimum standards of the Trafficking Victims Protection Act.

• Be a party to the Paris Climate agreement and have a national plan that has been independently verified to put the country on track to reduce its emissions consistent with the long-term emissions goals in that agreement.

• Eliminate all domestic fossil fuel subsidies.

• Ratify the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

• Comply with any tax treaty they have with the United States and participate in the OECD’s Base Erosion and Profit Shifting project to combat tax evasion and avoidance.

• Not appear on the Department of Treasury monitoring list of countries that merit attention for their currency practices.

One reason Warren is comfortable setting out a list of conditions that the US cannot meet is that she intends to make changes to the relevant policies at home. But this list also underscores the reality that for her, getting trade deals done per se is not a particularly high priority. To the extent that other countries want to make deals with the United States, that’s going to be leverage to try to push them in directions she favors. But she fundamentally thinks it’s putting the cart before the horse to put as much emphasis as pre-Trump administrations did on trade deals. Instead, she wants to make trade policy subordinate to broader economic policy goals — where she differs sharply from Trump in terms of objectives.

Trade policy for progressive ends

A key example of the difference is that one of the concessions Trump “won” in his NAFTA renegotiation process is that Canada and Mexico agreed to lengthen the term of pharmaceutical patents.

Since the United States is a substantial net exporter of pharmaceuticals, getting Canada and Mexico to pay higher prices for prescription drugs should increase our exports to those countries (Obama’s Trans-Pacific Partnership had similar provisions). This is a win for American exporters in the balance of trade, so Trump likes it. But Warren doesn’t share the view that the problem with trade policy has been “bad deals” in which foreigners take advantage of the United States by running trade surpluses. Her view, rather, is that the deals are good at achieving their objective — making money for multinational companies — and that Trump’s reworking of NAFTA commits the same basic sin.

Warren, by contrast, says she “will support efforts to impose price controls on pharmaceuticals” at home and promises that she will run this same bargain in the opposite direction when renegotiating existing deals — trading away lower prices for US pharmaceutical companies in exchange for other priorities she sees as more directly benefiting Americans.

Similarly, she wants to stop pushing the adoption of the consumer welfare standard for antitrust enforcement as part of trade deals. More generally, as a pretty enthusiastic proponent of business regulation in a variety of spheres, she is not enthusiastic about the overall trend toward including Investor-State Dispute Settlement provisions and other kinds of curbs on regulation (country of origin labeling, intensive food inspection requirements, etc.) in trade deals. While this kind of regulatory harmonization can grease the wheels of trade, it can also in practice amount to a kind of race to the bottom where business interests push what’s essentially a deregulatory agenda cloaked in the complexities of a trade agreement.

One key area where Warren wants to go in the opposite direction is environmental regulation. Right now, when the US imposes tough rules on polluters, it creates an incentive for manufacturers to comply by shifting production to less regulated countries. That’s a loss for American workers, albeit a gain for local levels of pollution. But in critical realms like greenhouse gas emissions, nothing is accomplished by outsourcing the polling. So she wants to impose a border carbon adjustment — in effect, a carbon tax on imports — to compensate for foreign countries’ laxer environmental standards.

Trade is one of the most important issues in the primary

Democrats have thus far spent most of their time releasing plans on issues like health care and higher education, where the nuanced differences between the candidates are unlikely to amount to very much in practice.

Trade is different for two reasons.

One is simply that Democrats’ disagreements with each other are bigger. Joe Biden supported NAFTA during the Clinton administration and was a loyal member of the Obama administration during the push for TPP. Warren — like Bernie Sanders and most of the more liberal members of Congress — has long been critical of this approach, not just in detail but in terms of the overall direction of change. As Tara Golshan and Dylan Scott have reported for Vox, Beto O’Rourke and a number of the lesser candidates (Julián Castro, Jay Inslee, John Hickenlooper, Steve Bullock, John Delaney) tend to line up with Biden, while Cory Booker, Amy Klobuchar, and Kirsten Gillibrand have been skeptical of trade deals.

The rest of the field is fairly ambiguous. The point, however, is that while any Democratic administration would be more favorable than Trump to taxing the rich, subsidizing college tuition, expanding public health care programs, and providing generous treatment of immigrants, his opponents really disagree on trade. Several of them might reverse Trump’s gestures toward protectionism and attempt to rebuild the pro-Trump trade consensus. The candidates who’ve been critical of trade deals likely would not. And Warren is trying to explain exactly how her approach would differ both looking forward from both Trump and in the back-to-the-future approach.

But the other reason trade matters is that, as Trump has shown us several times, the president has a lot of discretionary authority in this area. Past presidents have not made much use of this discretion. But it turns out that if you’re not afraid to rock the boat on trade, you have pretty free rein, legally speaking.

“The President has a lot of authority to remake trade policy herself,” Warren wrote in her plan. And “[w]hen I’m elected, I intend to use it.”

Trade policy is an area that’s unusually wide open for change and a rare topic that isn’t particularly polarized in partisan terms these days. Exactly the sort of place, in other words, where the specific contours of the president’s ideas are likely to make a big difference.