Foreign policy and trade agreements have taken center stage in the Trump administration, but it remains unclear how the President’s rhetoric will translate to action.
In one of his first executive orders after the inauguration, Donald Trump withdrew the United States from negotiations over the TPP - also known as the Trans-Pacific Partnership. The proposed trade agreement was used by both Democrats and Republicans during the campaign, as a proxy for the pitfalls of globalization.
But Edward Alden, a senior fellow at the Council on Foreign Relations who specializes in U.S. economic competitiveness and trade policy, says that trade agreements are just one part of a very complex puzzle.
"A lot of this was going to happen anyway. I mean, globalization isn't just something the governments went out there and snapped their fingers and created. It's a product of the fact you now have big container ships, so it's a lot cheaper to ship stuff across the Pacific Ocean to come to the United States," says Alden. "It's a result of the internet. Companies can now produce components all over the world and coordinate this for final assembly in the United States, or China, or wherever."He points to his own iPhone as an example of this, since the mobile device contains parts manufactured in 30 different countries.
"You don't get a vote on globalization, you don't get a vote on container shipping, you don't get a vote on the internet. You do get a vote on trade agreements, whether your politicians are going to support it or not."
Alden believes that much of the focus on trade agreements has to do with the greater issue of what the average American has the ability to control. "You don't get a vote on globalization, you don't get a vote on container shipping, you don't get a vote on the internet," he explains. "You do get a vote on trade agreements, whether your politicians are going to support it or not, so I think a lot of the focus of anger over the disruption caused by globalization ends up directed at these trade agreements and at the politicians who've supported them."
In his recent book, Failure to Adjust: How Americans Got Left Behind in the Global Economy, Alden looks at the different things that impacted Americans ability to compete in the global economy, which it is largely responsible for maintaining.
"The United States accounts for a quarter of the world economy, and it has been the leader in terms of setting these trade rules and trying to enforce them around the world. So yeah, the United States, more than any other single country, created the modern global trading system in which we live," he says.
"American companies have been big winners from globalization, and that's been good for a lot of Americans. But I think in the process, they've forgotten about their commitments and obligation to the United States."
Although the United States has been hurt in some ways by globalization, many American companies have prospered under the current rules and regulations. "American companies have been big winners from globalization, and that's been good for a lot of Americans. But I think in the process, they've forgotten about their commitments and obligation to the United States," he says.
He continues, "Being American companies gives them a lot of benefits in terms of workers who are educated here by American schools and American universities, an American government that will fight for them around the world if they run into business problems in China or Mexico or anywhere else. I think those companies owe something to the United States in return, and I think they've forgotten about that."
While the U.S. workforce in manufacturing has severely declined since the early 1970s (from around 25% to less than 9%), Alden says trade agreements are not the biggest factor. "Most of that is a technology story," He says. "We use robots in the factory. We're far more productive than we've ever been before. The United States actually makes more stuff than it ever has before, with a fraction of the workforce."
"What concerns me about Trump is I don't really think he has a strategic vision. He is really a genuine, old-fashioned protectionist."
President Trump has talked a lot about bringing back manufacturing jobs largely through renegotiating trade agreements and changing U.S. trade policy. Alden questions these tactics.
"What concerns me about Trump is I don't really think he has a strategic vision. He is really a genuine, old-fashioned protectionist. You have to go back to Herbert Hoover to find the last time that the Oval Office was occupied by a president who believed that cutting the United States off from global trade would be a good thing for the country. And I think history's taught us that that's not likely to be the case," he explains.
The proposed Trans-Pacific Partnership (TPP), got a lot of heat during the campaign season. Donald Trump spoke vehemently against it and ultimately removed the U.S. from the negotiation process. Alden believes that was likely a bad call.
"By walking away from that agreement, he's just giving away what was potentially the biggest source of leverage that the United States had to put pressure on China."
"The biggest problem in global trade right now is China, and there are lots of ways that China does not abide by the rules," says Alden. "It plays fast and loose with the agreements it's entered into in the World Trade Organization, and any successful trade policy that's going to do something to help American manufacturing has to focus on a tough strategic policy to get China to play by the rules.
"So what's President Trump's first action? He walks away from a trade agreement that would've linked the United States to Japan, to Australia, to Singapore, to a dozen Pacific Rim countries, under a set of rules that was favorable to the United States and not so favorable to China," he continues. "By walking away from that agreement, he's just giving away what was potentially the biggest source of leverage that the United States had to put pressure on China."
"I didn't and don't have a problem with Trump reminding companies that they should be looking where ever they can for investment opportunities in the United States. But he's got to back that up with something more."
Although Alden is unsure about Trump's methods, he agrees with his motives. "I didn't and don't have a problem with Trump reminding companies that they should be looking where ever they can for investment opportunities in the United States. But he's got to back that up with something more. You've got to change the economics in some ways."
He continues, "You've got to make the United States a better place to invest through tax reform, through regulatory reform, through investment in infrastructure, through expansion of community colleges and other things, to make sure that the skilled workers are there that the manufacturing operations need. You know, bluster and bullying alone is only going to get you so far."
