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No one casts shadows over my trade optimism!!

Earlier this week Shadow Government's Phil Levy threw some cold water on my pre-election optimism that foreign economic policy would take the lead in 2013, attributing it to my being  in Paris when I wrote it.  Phil has a lot more hands-on experience in these matters than I do, so it's worth reading his post in full.  To sum up here, however:

If, on a 10-point scale, the first term free trade challenges were a 'degree of difficulty' 2, then this term's challenges are an 8 or a 9.... it may be useful to distinguish between President Obama's political cost/benefit of negotiating a trade agreement and of concluding one....

Trade agreements take time. If the president is to get anything completed, he needs to start right away.

How to respond? Well, first, I have a confession -- I did have a lovely time in Paris. 

That said, now that I'm back in the austere bleakness that is November in New England, I'll stand by my prediction.  This is for a few reasons.  First, to push back on Phil a bit, I wouldn't characterize Obama's free trade challenges in the first term so easily.  As someone who was pretty critical of the president on trade matters, I would nevertheless acknowledge that he was facing gale-force winds on this topic during his first term.  In retrospect, if I had told Phil that the global economy would face the worst economic crisis since the Great Depression and yet the United States would not resort to rank protectionism, I think he'd be moderately pleased.  Now, this wasn't entirely due to Obama, but still, I think he could have made things a lot worse... but didn't. 

To be fair, I think Phil's point was intended to be a bit narrower -- namely, that it was easy for Obama to push ratification of Budh-negotiated FTAs but hard to negotiate his own.  But surely, one of the reasons that Democrats were not particularly keen on those FTAs is because Bush negotiated them, yes?  If a Democratic president claims ownership of an FTA, I'd bet he's gonna get more party support in Congress.  Also, a side note: I'm dubious that traditional Democratic Party objections would block either the TPP or a Europe deal. 

Finally, in his post, Phil actually lays out the logic of why I think these deals will go forward:

The problem is that U.S. trading partners will not be infinitely patient in awaiting the conclusion of the deals under discussion. From a broader foreign policy perspective, the TPP is absolutely central to the administration's pivot to Asia. Europeans are eagerly backing the idea of an FTA as one of the few positive signals they might send to investors amidst the still-looming euro zone crisis. There will be serious foreign policy consequences if the president fools us thrice on support for trade.

Phil is right -- and it's precisely this reason that makes me think that Obama will make more forwrd progress on this in his second term.  For most of the postwar era, the United States could act as a veto player.  If it didn't get what it wanted in the GATT/WTO or some regional agreement, well, progress was halted.  One way the world has changed is that even if the United States calls a time-out, the rest of the world won't.  That kind of logic can compel even reluctant traders into agreeing to deals once they recognize that the status quo is even worse -- a logic that Lloyd Gruber spelled out in his excellent, underrated book Ruling the World

Now I'm not quite Nate Silver-like in my confidence about the next term, but I do hereby offer a challenge to Phil:  I'm willing to bet that at least two out of the following four things will happen during Obama's second term: 

1)  A Trans-Pacific Partnership that is ratified by Congress;

2)  Bilateral investment treaties with India and China;

3) A transatlantic integration agreement;

4)  A new services deal within the auspices of the WTO.

If Obama comes up short, I hereby offer to treat Phil to an expensive dinner at a DC restaurant of his choosing, because clearly Washington remains dysfunctional.  If I'm right, however, Phil has to buy me dinner in New York, that most globalized of American cities. 

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