Michael Grunwald has an outstanding essay in Politico on how the Obama administration used the TPP negotiations to try to tweak NAFTA more to their liking. These parts stand out:
When I asked Obama’s trade representative, Michael Froman, what his negotiating team had given up to Mexico and Canada in exchange for their TPP concessions to America, he replied: “Nothing!” Mexico and Canada were willing to play ball because TPP would give them better access to sell their products in Asian markets — and when Trump tries to renegotiate NAFTA, he won’t be able to offer that carrot now that he’s ditched TPP. …
TPP is dead, and Obama’s efforts to negotiate a U.S.-European trade alliance are barely breathing. Trump has spoken to members of Congress about his desire to reshape NAFTA in a hurry, but he has been uncharacteristically cryptic about how he intends to do that. By the end of February, his nominee for U.S. trade representative, Robert Lighthizer, was still waiting for a congressional waiver he needed to serve because of work he has done for China and Brazil. Meanwhile, Trump’s transition officials have been making the rounds, telling the civil servants whose efforts the president has so publicly ridiculed that they’re valued and talented professionals, urging them to think about creative ways the new administration could renegotiate NAFTA.
“Everyone here is thinking the same thing: We already did that!” one staffer told me. “It was called TPP, and you got rid of it.”
When Trump pulled the United States out of TPP, he threw away his best chance to update NAFTA to the 21st century. Indeed, as previously noted, Trump’s bellicose rhetoric has made it that much harder to get Mexico and Canada to make any politically feasible concessions. Trump’s disdain for multilateral trade agreements eliminates that gambit as well.
This is hardly the only example of team Trump saying or doing things that make little strategic or economic sense. Peter Navarro, the director of Trump’s National Trade Council, published a Wall Street Journal op-ed that seemed to argue that trade deficits were bad for national security reasons. I say “seemed to” because as someone who’s written on this topic I could not for the life of me understand his reasoning.
Then there’s this ditty:
"It's not that the dollar is too strong, it's that some of the other currencies are weaker than they should be" says Wilbur Ross, on CNBC
— Neil Irwin (@Neil_Irwin) March 7, 2017
So let’s stipulate that many people in Trump’s orbit on trade say a lot of stupid things when it comes to trade policy. The part that is truly flummoxing, however, has been his coterie’s disdain for multilateral trade agreements. As Grunwald’s story makes clear, there’s a decided advantage to the United States negotiating new trade deals at the multilateral or mega-regional level. Why is the Trump administration so hostile to the WTO?
Let me suggest that this administration’s hostility to the multilateral trade regime isn’t just about economic populism, but political populism as well. For populists, a multilateral trade organization is the worst of both worlds: it promotes free markets and the rule of law outside the purview of populists.
In his latest book, Jan-Werner Muller noted that populists do not like having to cope with any form of political opposition or constraint: “when ruling, [populists] refuse to recognize any opposition as legitimate. The populist logic also implies that whoever does not support populist parties might not be a proper part of the people — always defined as righteous and morally pure.”
More than anything else, populists do not like alternative centers of power that are beyond their control. They are therefore likely to resist any kind of multilateral institution that places hard legal constraints on their ability to act. We have certainly seen this with respect to Hungarian and Polish resistance to the supranational governance of the European Union. The Brexit referendum revolved around British hostility to dictates from Brussels. Trump disparaged numerous U.S.-created multilateral regimes as antithetical to the national interest, including NATO, the World Trade Organization and the United Nations.
Sure enough, this week John Bolton penned a Wall Street Journal diatribe against the WTO’s Dispute Settlement Understanding. For an op-ed attacking the WTO, was what interesting was that Bolton evinced minimal economic concerns, but many concerns about infringements on American sovereignty:
This alarming trend extends beyond trade. A rising number of international agreements create “judicial” or “legislative” bodies that interpret and expand obligations well beyond what is laid out in underlying treaties, placing them beyond the effective control of domestic democratic institutions. This trend raises legitimate fears among states that they will lose sovereign authority. This fear is particularly acute in America, where the Constitution unmistakably fixes sovereignty in “We the People.”
I would say that this fear is mostly acute in John Bolton’s mind, but that’s not important right now. What is important is that the Trump administration has more reasons to oppose the existing multilateral trading system than trade policy experts may comprehend. For Trump and his acolytes, this isn’t just about blinkered economics; it’s about populist politics as well.