by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Free trade is, in 2016, a cause without a champion. The two great populist currents of the moment — really a single current with two faces, Donald Trump’s and Bernie Sanders’s — are resolutely opposed to free trade. Mrs. Clinton, a sometime supporter of the Trans-Pacific Partnership negotiated by the Obama administration during her service as secretary of state, is walking sideways away from it.
Even among libertarian-leaning conservatives and free-market liberals (there are a few left), trade pacts such as NAFTA and the WTO are in bad odor. The ideal free-trade agreement is what I have nicknamed the Goldberg Treaty, in honor of my friend Jonah Goldberg, who wrote that a real free-trade pact would consist of a single sentence reading: “There shall be free trade between . . . ”
But there is a problem with the Goldberg Treaty, which is that most of the relevant barriers to trade are not, contra Trump et al., tariffs. Nor are they quotas or other explicitly trade-inhibiting policies, though these do exist and so require liberalization. In truth, countries such as China do not for the most part apply extraordinary tariffs to U.S. goods, and such tariffs as they do apply have been reduced in recent years, not as the result of any get-tough trade policy pursued by the United States but because of the complaints of Chinese consumers, who may spend their lives immersed in nationalist propaganda but who still do not enjoy paying artificially high prices for household goods. Beijing recently cut the tariff on imported cosmetics, proof again that the two most dangerous places to stand are between a politician and a microphone or between a woman and her favorite lipstick.
More typical are the difficulties that U.S. automakers have had in cracking the Japanese market. Japan has no import duties on automobiles, but U.S. makers complain of other problems, particularly the difficulty of establishing dealer networks to help them connect with potential Japanese buyers. The relevant laws are complex, they are in Japanese, some aspects of them (such as commercial zoning rules) vary from jurisdiction to jurisdiction, etc. Dealing with that is a great deal of work, and it is very expensive, though the Japanese domestic auto lobby does point out that while the number of dealers selling U.S.-made cars has declined by 74 percent in the past couple of decades, the number of dealerships selling European-made cars has increased by almost the same proportion. European marques make cars that are more like domestic Japanese cars (the Japan Automobile Manufacturers Association reports that 93 percent of Japanese passenger cars have engines smaller than two liters, while U.S.-made cars are mostly larger than that), and European manufacturers have found it easier to comply with Japan’s safety and emissions rules.
These are not issues that can be resolved by a one-sentence free-trade pact.