Last week’s GOP debate began with a series of questions about trade policy and the Trans-Pacific Partnership. Donald Trump’s answer was thankfully short. Ted Cruz, however, had a lot to say in an apparent attempt to convince people that he, too, favors economically wrongheaded protectionism. Here’s his response to a question about the Trans-Pacific Partnership:
And when it comes to trade, look, free trade, when we open up foreign markets, helps Americans. But we’re getting killed in international trade right now. And we’re getting killed because we have an administration that’s doesn’t look out for American workers and jobs are going overseas. We’re driving jobs overseas.
And the people who are losing out are in manufacturing jobs, or the steel industry or the auto industry. But I’ll tell you who else is going to be losing out, which is the service industry. This Obama administration is negotiating the Trade in Services Agreement which is another treaty to allow services to come in and take jobs from Americans as well.
And you’ve got to understand. Trade and immigration are interwoven, and they are hurting the working men and women of this country. So the question is, what’s the solution? It’s easy to talk about the problems. But do you have a solution to fix it? And I think the solution is several things.
Number one, we need to negotiate trade deals protecting American workers first, not the corporate board room. Number two, we need to lift the regulations on American businesses here so we see jobs coming back. And number three, we need a tax plan like the tax plan I’ve introduced that will not tax exports and that will tax imports, and that will bring millions of high-paying jobs back to America.
This is full-blown mercantilism. Cruz claims “we’re getting killed in international trade” as if a great number of mutually beneficial exchanges that enrich Americans can somehow become bad for the country’s economy in the aggregate. Casting trade as a competition leads inevitably to government intervention to “protect” the economy from the ravages of economic growth, higher productivity, lower prices, and greater consumer choice.
When Bernie Sanders criticizes the TPP he says things like, “We need trade policies that benefit American workers and consumers, not just CEOs of large multi-national corporations.” Channeling the Vermont socialist, Cruz states that Obama “doesn’t look out for American workers” because free trade has sent jobs overseas. Free trade agreements, he says, hurt workers while benefiting “corporate boardrooms.” He then claims that his plan to raise taxes on imports “will bring millions of high-paying jobs back to America.”
Moreover, Cruz’s attempt to link trade and immigration aptly highlights the protectionist nature of his support for immigration restrictions. Cruz has joined the ranks of Republicans willing to oppose immigration per se, rather than merely illegal immigration. He thinks the government can determine the optimal number of immigrants in the U.S. labor force and justifies that position by demagoguing about foreign workers who “come in and take jobs” that belong to natives.
Perhaps the most frustrating part of Cruz’s response is his unprompted opposition to free trade in services. Cruz tried to link the Trade in Services Agreement to increased immigration last summer to explain his dramatic change of heart over trade promotion authority. What I wrote about it then still holds true today:
Senator Cruz is just wrong about TiSA, and he would know that if he asked any trade policy expert. There is approximately zero chance the TiSA will do anything to liberalize America’s byzantine and protectionist immigration laws. That’s because even though temporary immigration is a common component of global services negotiations for other countries, the United States never makes any commitments on immigration—for the obvious reason that it is politically toxic to do so.
On the other hand, there is approximately a 100% chance that TiSA will reduce barriers to trade in services in the United States and around the world. So, even if you only support free trade as long as no one is allowed to move across national boundaries, you should support TiSA.
In his positions and rhetoric on trade policy, Ted Cruz is bridging the gap between Donald Trump’s nativist populism and Bernie Sanders’s anti-market populism. The inevitable result is harmful economic policy.