Business, Economics and Jobs

Hillary Clinton’s stand on NAFTA and the TPP: It’s complicated, and evolving

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Democratic U.S. presidential candidate Hillary Clinton speaks at the North America's Building Trades Unions 2016 Legislative Conference in Washington, U.S., April 19, 201616.

Credit:

Yuri Gripas/Reuters

When it comes to trade talk, it’s a potential minefield for presidential candidate Hillary Clinton.

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Let’s start with NAFTA — the North American Free Trade Agreement — which set up a free trade zone between Canada, Mexico and the US. That was negotiated by President George H.W. Bush and signed into law in 1994 by President Bill Clinton.

The vast majority of economists say NAFTA has benefited the US economy. But try telling that to autoworkers in places like Ypsilanti, Michigan, who have seen factories and jobs moved to Mexico. Debates still rage 22 years later about the economic pros and cons of NAFTA. But what’s very clear: Popular opinion in the US is strongly against the trade agreement.

As first lady, Hillary Clinton championed NAFTA, after all it was one of the crowning achievements of her husband’s presidential administration. Then as a US senator from New York, and as a presidential candidate, she backed away and criticized the deal, saying NAFTA “had not lived up to its promises.”

Presidential candidate Barack Obama used Clinton's evolving positions against her over and over in the 2008 presidential debates, scoring political points and backing Clinton into a corner. Clinton fought back, but came off to many as a flip flopper.  

To finish that thread, presidential candidate Obama vowed to renegotiate NAFTA. Once in the Oval Office, however, he didn’t. In 2009, President Obama said the world economy was imploding and it wasn’t the right time to deal with NAFTA. Many of his supporters were disappointed and said the president failed to live up to his promises.

Fast forward to the present day and presidential candidate Clinton is again backed in a corner with another trade deal, the TPP, or the Trans-Pacific Partnership. That encompasses 12 Asian-Pacific nations, including the US, Canada and Mexico. This deal is basically a much bigger version of NAFTA, with some additional protections.

President Obama says the TPP corrects many of the problems with NAFTA. Clinton praised the TPP when she was secretary of state, once calling it the “gold standard in trade agreements.”

Bernie Sanders’ backers hate the TPP. They’ve waved signs at the Democratic Convention all week in Philadelphia with TPP crossed out. During President Obama’s speech on Wednesday, a heckler screamed, “No TPP,” briefly interrupting the president.

Donald Trump opposes the TPP as well. Trump also says he’ll amend or rip up NAFTA.

So, Clinton is getting criticized from the left and the right this time around. And she's evolving her position. Very early on in her campaign, last October, she came out and said she supported the TPP as secretary of state, in principle, but the final negotiation didn't live up to her high standards.

Is this a flip flop? Is she playing politics?  Or have her positions truly evolved? It depends whom you ask. You can be certain that Donald Trump will use Clinton's shifting positions on trade deals to attack her trustworthiness.  

So, bottom line: If Clinton is elected president, will she sign the TPP?

First, it’s possible that Congress will pass it and President Obama will sign it before she would come to power, so all this might be a moot point.

But if Hillary Clinton is elected president? Well, Virginia governor Terry McAuliffe, a long-time Clinton family friend, told the web site Politico this week that a President Clinton would pass the TPP and make some fixes. A Clinton aide pounced on that comment and said, “Hillary opposes TPP BEFORE and AFTER the election. Period. Full Stop.” No ambiguity there.

But, some economists do think she’ll find a way to pass it. And save face politically.

“As far as I’ve read in the press, Secretary Clinton has launched one critique against TPP, that it does not do a good job of disciplining the misbehavior of countries that manipulate the value of their currencies for trade gain,” said economist Lee Branstetter, of Carnegie Mellon University in Pittsburgh and the Peterson Institute for International Economics in Washington. “What’s true is that TPP does not include a currency chapter. It does not deal with this issue.

“But what this means is that if the TPP could be coupled with a separate piece of legislation that offers at least some tools for policymakers to deal with currency manipulation as a trade barrier, then the big problem Secretary Clinton has identified would be solved, at least in principle. At that point, I think she could support the TPP and an anti-currency manipulator bill as a package without appearing to contradict herself.”

But will voters or future political enemies be so kind or accept these nuances? If the past is any indicator, that's unlikely.