Political headwinds blow back on global trade deals

The downturn in trade saw many shipping firms around the world struggling to book profits.
Andy Clark | Reuters
The downturn in trade saw many shipping firms around the world struggling to book profits.

As the pace of global trade slows, so does support for a pair of deals designed to revive it.

With a fresh round of European trade talks getting underway this week, President Barack Obama spent the weekend in Germany trying to counter strong political headwinds at home to his administration's effort to lower trade barriers with Europe.

Obama told a news conference with German Chancellor Angela Merkel that moving ahead with the so-called Trans-Atlantic Trade and Investment Partnership would boost the U.S. and European economies. The United States is Germany's biggest trading partner.

Supporters of the sweeping deal being negotiated with 28 European Union countries say it could add $100 billion a year to U.S. exports.

"The Trans-Atlantic Trade and Investment Partnership is one of the best ways to promote growth and create jobs," Obama told the German newspaper Bild.

But with millions of American voters convinced that global trade has cost the U.S. good-paying job losses, political support for the deal has been fading along with the volume of global trade.

The anti-free-trade sentiment has propelled Donald Trump to the front of the GOP pack of presidential candidates, including a pledge to reverse the 1994 North American Free Trade Agreement with Canada and Mexico, the two top U.S. trade partners.

"We will either renegotiate it or we will break it," Trump said last fall, calling it "a disaster. Every agreement has an end. Every agreement has to be fair."

Trump has also vowed to raised tariffs on Mexico and China.

Trump opponent Texas Sen. Ted Cruz has said he opposes any vote on trade deals before the November election. Ohio Gov. John Kasich, also in the race for the GOP nomination, has said he supports "fair" trade.

The Obama administration's trade deals have also gotten a chilly reception from the two Democratic candidates.

Former Secretary of State Hillary Clinton, who initially supported the idea of expanding Asian-Pacific trade, has come out against the proposed Trans-Pacific Partnership, saying she doesn't like the terms. (Clinton hasn't taken a position on the ongoing talks to reach a deal with Europe.)

Vermont Sen. Bernie Sanders, who has opposed various trade deals in Congress, has been as blunt as Trump on the White House's efforts.

Sanders has called the Trans-Pacific Partnership "part of a global race to the bottom to boost the profits of large corporations and Wall Street by outsourcing jobs; undercutting worker rights; dismantling labor, environmental, health, food safety and financial laws; and allowing corporations to challenge our laws in international tribunals rather than our own court system.

Opposition to the European trade deal spans both sides of the Atlantic.

On Saturday, tens of thousands of protesters marched in Hannover, Germany, where Obama attended a trade show, to voice opposition to the deal. Police said 35,000 people took part in the demonstration, while organizers said more than double that number had attended.

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The White House has acknowledged it faces an uphill battle selling trade deals to a skeptical public.

"I think that we have to do a better job… to counteract voices that are distorting the reality of trade agreements," U.S. Commerce Secretary Penny Pritzker told CNBC at the Hannover trade fair.

But with little support from the presidential candidates, the deal's future is not looking bright.

Obama conceded as much on Monday.

"If we don't complete negotiations this year, then upcoming political transitions in the United States and Europe could mean this agreement won't be finished for quite some time," Obama told a news conference.