Trans Pacific Partnership

Trans Pacific Partnership is Not Especially Important

Paul Krugman argues that the Trans Pacific Partnership is no big deal:

I’ve been getting a fair bit of correspondence wondering why I haven’t written about the negotiations for a Trans Pacific Partnership

The answer is that I’ve been having a hard time figuring out why this deal is especially important. …

The big talk about TPP isn’t that silly. But my starting point for things like this is that most conventional barriers to trade — tariffs, import quotas, and so on — are already quite low, so that it’s hard to get big effects out of lowering them still further. …

An aside: one little-known aspect of the literature on trade liberalization is that to get any kind of large effect it’s necessary to drop the assumption that markets are highly competitive and efficient, and assume instead that there are large inefficiencies that will be reduced as a result of international competition. …

As I read it, to make TPP something really important you have to (a) bring China inside, which isn’t on the table right now and (b) have major effects on foreign direct investment. …

OK, I don’t want to be too dismissive. But so far, I haven’t seen anything to justify the hype, positive or negative.

Via Mark Thoma, ralmond said…

The three most worrying things I’ve heard about this treaty:

1. It would allow corporations to sue countries for damages (in a corporation friendly court of arbitration) if they changed laws which caused economic damage to the country. This would effectively stop any new environmental or labor protection laws.

2. It extends the life of patents and copyrights and removes a lot of the fair use carve outs (e.g., translating formats for blind or deaf). It may be worse than that copyright law they were trying to ram down our throats two years ago before the internet protests stopped it.

3. It removes capitol controls, so that countries would not be able to put up emergency capital control to avoid spillovers from financial crises.

Of course, the negotiations aren’t finished, so all of this is up in the air. But why all the secrecy? These provisions have potentially big impact so they need to be fully negotiated, not fast tracked. Especially if the trade barrier stuff is not such a big deal.

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