Promoting trade — with caveats
By Rep. Jerry McNerney
Trade has become an important political issue in the current election. Although President Barack Obama is pressing Congress to bring the Trans-Pacific Partnership, or TPP, up for a vote before he leaves office, nominees of both major political parties publicly oppose the agreement, signaling a shift away from support of free trade. President Bill Clinton fought hard for and won the North American Free Trade Agreement. The Republican Party has been a champion of free trade, while the Democrats have been lukewarm at best, with opposition led by organized labor and environmental groups.
Many economists assure us that trade is essential to a strong economy, and that the advantages of free trade outweigh the disadvantages. Trade has been a key part of our economic growth, and if trade were to be restricted through tariffs or other means, our economy as a whole would suffer.
So why has the political environment shifted so strongly that the Republican presidential nominee has counted on his opposition to the TPP and free trade in general as one of his most popular issues? The answer is clear: the gains of free trade are greatly stratified. Although trade causes growth of our national economy, only a small percentage of Americans reap the rewards while a large portion of American society is harmed, leading the average American to believe that free trade does not benefit them.
The harm that free trade causes is substantial enough to call into question what sort of political support trade policies will have in the future. To address this problem, I would like to offer a conceptual solution: require that a share of trade-related profits be invested in infrastructure here in America. This can be accomplished through taxes, formula expenditures, public-private partnerships, or any combination thereof. This policy would more equitably share the benefits of trade by creating jobs and business opportunities across our nation.
America is far behind in meeting its infrastructure needs. The American Society for Civil Engineers estimates that the United States requires $3.6 trillion in infrastructure investment by 2020. Transportation infrastructure will produce tens of thousands or more direct jobs as highways, rail, air traffic control, bridges, and public transportation are improved, and countless opportunities made possible with the resulting increased mobility. Our nation’s water infrastructure is in dire need of improvements, as illustrated by the tragedy of Flint, Mich. Investing in water recycling, desalinization, storage, and other water infrastructure can generate jobs and help us meet our future water challenges. Our nation’s grid is straining to keep up with demand, and while the technology exists to modernize the grid, it will take billions in investment in the years ahead. Improving broadband infrastructure, including providing broadband for rural America, will yield a wealth of opportunity as well as directly employing an untold number of American workers.
Using a portion of profits from trade to build infrastructure will also help reduce the vast and growing income disparity in the United States. If the American people know that some of the money that results from free trade will improve the infrastructure in their communities and they see jobs being created in the process, the advantages of free trade will be clear. If we want to promote trade and get the American people to support it, then we must show them that they will be better off because of it.
U.S. Rep. Jerry McNerney represents the 9th District of California and serves on the House Energy and Commerce Committee.