Paychecks in WA depend on free trade – spurning it would be a mistake

I should start this column by acknowledging that I wasn’t a fan of Donald Trump’s in the race for the Republican nomination. A successful federal government depends in part on an effective president, however, and is one component of a successful America.

It is, though, but one of many components. Ronald Reagan believed, and the Republican Party largely agreed, that when it comes to the economy, frequently the best thing government can do is get out of the way. Reagan also championed free trade as something that was best for America and for our trading partners. A shift to a more nationalistic, anti-trade stance would be a direct repudiation of that belief.

True no matter who won
For the sake of our state’s economy, we should hope that President Trump does not make serious moves away from free trade, as Candidate Trump proposed. Had Clinton won, I would have written the same sentence with her name swapped in. Trump pilloried trade agreements in the campaign, while Clinton flip-flopped on the TPP. There was no major party champion of free trade on the ballot this year.

But Washington State needs free trade champions. As the most trade-dependent state in the nation, this is not an academic question for us. Closed or restricted foreign markets would hit us hard.

Our state’s political leaders understand that. Even though trade skepticism is growing in both national parties, our Congressional delegation, governor, and Legislature are broadly pro-trade, irrespective of party.

We’re going to need them to step up and argue for the benefits of free trade. Business leaders, too, need to join the fray – from all sectors, and both sides of the mountains – and make the case to their communities and the federal government about why open markets are needed.

Washington at greater risk than most
I have made the point before, but it bears repeating: The consequences of moving away from free trade will not be the same in all states. For ours, the consequences would be dire.

Our list of exports is staggering. We manufacture Boeing airplanes (and 175 companies serve as aerospace suppliers), PACCAR trucks, REC Silicon carbon fiber, aluminum castings, boats, and many other useful products. These are the high-value products that provide high-wage jobs.

We’re home to Microsoft and its globe-spanning software, of Nintendo and Amazon and Starbucks. We export grain, apples, hay, dairy products, wine, cherries, raspberries, hops, and many other crops. Even some of our Christmas trees are sent abroad.

The list could go on. These export opportunities would be put at risk by taking protectionist measures, because they invite equal and opposite reactions by other nations. Slap tariffs on a country’s products and they’ll return the favor. Close our market, and they’ll do the same. Slow down the import process here with disputes over rules, and soon our products will likewise languish in foreign ports too. Maybe some states think they’ll come out ahead in some of these scenarios. Ours certainly would not.

It’s one thing to hope to negotiate more favorable agreements, but actions that threaten to stem trade will hurt us in Washington more than most. Trump has bashed NAFTA, but close economic ties with Canada and Mexico have helped us, not hurt us, and strengthened North America, as Ronald Reagan had hoped. The options to curtail free trade, such as they are, look like a road to nowhere, and some of the criticisms, such as China’s currency manipulations, are out of date.

A different perspective
Mr. Trump is a businessman, but building casinos, golf courses, and residential towers is very different than most businesses. In that world, kowtowing to politicians and governments, whether local zoning boards and mayors or foreign dignitaries, is a given. There is necessarily some bowing and scraping and favor-currying involved. This is the world he knows.

Free trade is the opposite of that approach, and the freer the trade, the more that’s true. When nations agree that businesses can trade freely without tariffs or hassles or palms to grease, the politicians are cut out of the picture. That’s something to celebrate.

Some of Trump’s views on trade have sounded a little too much like Bernie Sanders’, who believes in the economy-sapping power of having too many deodorant choices. The Economist highlighted one such exchange:

“Asked in May how his supporters would respond when tariffs lead to higher prices on Chinese-made goods that fill the shelves of such price-conscious stores as Walmart, Mr Trump replied: ‘I see people buying five dolls for their daughters, maybe buy two dolls for their daughters. But I also say that we’ll start making the product at home.’”

When the example is dolls it all sounds so unimportant, but extend it to more necessary products and higher prices for consumers don’t sound so good. I don’t want to overstate the case, and the doom-and-gloom of some is a little overblown (the doom-and-gloom about manufacturing in this country is overblown too). Charles Krauthammer points to a more realistic path:

“If Reaganite conservatives want to head off wrongheaded solutions — such as massive tariffs, mercantilist economics and trade wars — they must be prepared to accept such measures as federal wage subsidies and targeted restraints on trade. This involves giving up a measure of economic efficiency. But the purpose is to achieve a measure of social peace and restore dignity and security to a stressed and sliding working class.”

Avoiding those “wrongheaded solutions” is important for our nation – and it’s absolutely critical for our state. Foreign trade is where our paychecks come from.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.