7 October 2015, The Conversation, Oh no, we forgot about China – the flaw at the centre of the TPP. Like many trade policy initiatives, the newly finalised 12-nation Trans-Pacific Partnership (TPP) is motivated by a desire to help domestic exporters get better foreign market access. The key idea is one of mutual concessions – in exchange for foreign market access we give up some of our own subsidies or protection. Despite the headlines, however, the TPP agreement has little to do with the economic argument for free trade. This is because the economic gains from trade trade don’t come from exporting more, or from preferential market access. They have nothing to do with mutual concessions. Rather the gains from trade are derived from being able to import at lower prices. This means that costs of trade barriers are incurred by consumers in the country that imposes the trade barriers. Consequently the benefits of free trade can be mostly gained by removing one’s own trade barriers. This is the approach the Australia took toward trade policy when it unilaterally reduced tariffs throughout the 1980s and 1990s. This generated economic gains to Australians and didn’t require armies of lawyers and bureaucrats to manage the preferential access as rules of origin or tariff schedules. When one thinks about the costs of trade barriers and the benefits of trade liberalisation in these terms, it is easy to see major flaws in the TPP as an economic policy. Firstly because tariff barriers are all already very low between the member countries, any economic gains that might be realised by mutual concessions are likely to be exceedingly small. Reasonable estimates come up with numbers like one tenth of a percent of GDP. This, as the Nobel Laureate and economist Paul Krugman notes, is hardly world-shaking. Second, the TPP is an international club with exclusive benefits for members. Like any selective club, it’s not so much about who you let in, but who you keep out – like China. Read More here
Tag Archives: trade agreements
6 October 2015, The Conversation, Winners and losers in the Trans-Pacific trade deal: experts respond. Australia is among 12 nations signing the historic Pacific rim trade and investment pact, the Trans-Pacific Partnership. The agreement, eight years in the making, is one of the largest free-trade agreements in history, encompassing countries that represent 40% of the global economy. We’ve asked our experts to explain some of the winners and losers. Read More here
5 October 2015, Truthdig, Here’s Why the Trans-Pacific Partnership Agreement Is Just Plain Wrong. Republicans who now run Congress say they want to cooperate with President Obama, and point to the administration’s Trans-Pacific Partnership, or TPP, as the model. The only problem is the TPP would be a disaster. If you haven’t heard much about the TPP, that’s part of the problem right there. It would be the largest trade deal in history — involving countries stretching from Chile to Japan, representing 792 million people and accounting for 40 percent of the world economy – yet it’s been devised in secret. Lobbyists from America’s biggest corporations and Wall Street’s biggest banks have been involved but not the American public. That’s a recipe for fatter profits and bigger paychecks at the top, but not a good deal for most of us, or even for most of the rest of the world. Read More here
5 October 2015, Climate Progress, Environmentalists: The Trans-Pacific Trade Agreement Is A Disaster For Climate Change. After years of meetings, months of Congressional debates, and days of around-the-clock negotiations, the United States and 11 other countries reached an agreement on the Trans-Pacific Trade agreement (TPP) on Monday. If adopted, the TPP will eliminate or reduce tariffs between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. But while it specifically addresses some environmental concerns — such as trade of illegally harvested resources or wildlife trafficking — climate change activists saw Monday’s announcement as the culmination of a long-watched train wreck. “It’s still the same disaster for climate change it was three months ago,” 350.org’s Karthik Ganapathy told ThinkProgress. His organization, as well as many others, say the TPP protects multinational corporations that profit from fossil fuels. Some have argued that under the TPP — as with the North American Free Trade Agreement — companies will be able to sue countries that enact laws to limit fossil fuel extraction or carbon emissions, if it interferes with profits. The deal also will lead to the rubber-stamping of export facilities for natural gas from fracking and will prevent the U.S. Trade Representative from ever including climate change action in trade deals, Ganapathy said. But the White House has touted the deal’s potential for environmental conservation, calling it a “once-in-a-generation chance to protect our oceans, wildlife, and the environment.” Environmentalists aren’t buying it. Read More here