If You Really Think TPP Is About 'Trade' Then Your Analysis Is Already Wrong

from the don't-fall-for-the-marketing. dept

George Mason University professor Bill Schneider recently had an interesting blog post over at Reuters in which he discusses how Hillary Clinton is in a tough spot concerning the TPP and TTIP agreements, in that much of the Democratic party is now vehemently against these "trade" deals, while historically, the Clintons have been for them. The piece argues that whichever side Hillary takes will create a problem for her presidential campaign. The politics in the piece may be right, but almost the entire thing is built on the assumption that the TPP agreement really is about "trade" and that such an agreement will lead to cheaper goods and such. Take this passage for example:

Trade is not an ideological issue. It’s a populist issue — the people versus the establishment. Ordinary Americans are suspicious of trade deals. Economists have a hard time understanding this, but most people see trade not as an economic issue but as a moral issue.

People think it’s wrong for them to benefit as consumers from lower prices for foreign-made goods if it throws Americans out of work. Will they purchase the foreign-made goods? Of course they will — as long as they’re cheaper. That’s rational economic behavior. They just don’t think they should be allowed to.

I don't think that's actually what people are thinking at all, but even if we run with it, it's based on the very faulty premise that these agreements have anything to do with free trade at all. As we've discussed in the past, they do not. They are quite clearly often about the opposite of free trade. In the past, we've strongly recommended Michael Goodwin's epic comic about TPP where he shows how it's really got little to do with free trade, and everything to do with the ability to move investment capital around: Perhaps an even better explanation comes from Tim Lee over at Vox, who goes into the history of these agreements, noting that the "free trade" stuff has mostly already been taken care of, as there aren't that many meaningful tariffs/trade barriers left. Instead, trade agreements have become a sort of secret playground for big corporations to abuse the process and force favorable regulations to be put in place around the globe. He discusses the history and how organized labor, the copyright industries, the pharmaceutical industries and more now basically use trade agreements as a secretive, anti-democratic process to force through regulations they want.

As the opportunities for trade liberalization have dwindled, the nature of trade agreements has shifted. They're no longer just about removing barriers to trade. They've become a mechanism for setting global economic rules more generally.

This trend is alarming to Simon Lester, a free trader at the Cato Institute. "We've added in these new issues that I'm skeptical of," he says. "It's not clear what the benefits are, and they cause a lot of controversy."

And this system for setting global rules has some serious defects. We expect the laws that govern our economic lives will be made in a transparent, representative, and accountable fashion. The TPP negotiation process is none of these — it's secretive, it's dominated by powerful insiders, and it provides little opportunity for public input.

If you make the facile assumption that the TPP is actually about free trade, then you might be confused about all the hubbub about it. If you actually take the time to understand that much of what's in there has nothing to do with free trade and, in fact, may be the opposite of free trade, you realize why there's so much concern.

Filed Under: free trade, hillary clinton, investment, non-tarriff barriers, regulations, secrecy, tpp, trade, trade agreements, ttip