The TPP And Free Trade: Time To Retake The English Languauage

The proponents of the Trans-Pacific Partnership (TPP) are planning to do a full court press in the lame duck session of Congress following the election. We will be bombarded with speeches and columns from President Obama and other illustrious figures telling us how it is important to approve the TPP for a variety of reasons.

We can be certain that one of the reasons will be the inherent virtues of free trade.

They will not be telling the truth.

Alternate delegates hold up signs during the first sesssion at the Democratic National Convention in Philadelphia

The TPP is not about free trade. It does little to reduce tariffs and quotas for the simple reason that these barriers are already very low. In fact, the United States already has trade deals with six of the other eleven countries in the TPP. This is why the non-partisan United States International Trade Commission (ITC) estimated that when the full gains from the TPP are realized in 2032, they will come to just 0.23 percent of GDP. This is a bit more than a normal month’s growth.

In fact, the TPP goes far in the opposite direction, increasing protectionism in the form of stronger and longer patent and copyright protection. These forms of protection for prescription drugs, software, and other products, often raise the price by a factor of a hundred or more above the free market price. This makes them equivalent to tariffs of several thousand percent.

These forms of protection do serve a purpose in promoting innovation and creative work, but we have other more efficient mechanisms to accomplish this goal. Furthermore, the fact that they serve a purpose doesn’t mean they are not protectionist. After all, protectionism always serves some purpose. A quota to protect the U.S. sugar industry doesn’t stop being protectionism because it ensures the survival of a domestic sugar industry.

It is likely the case that the strengthening of patent and copyright related protections in the TPP does more to impede free trade than the modest reductions in tariffs do to promote free trade. Unfortunately, neither the ITC nor anyone else has attempted to quantify the cost of the protectionist measures in the TPP so we don’t have a good basis for comparison at this point.

The other point to be made about free trade and protectionism is that our push for free trade has always been very selective. NAFTA and other trade deals were explicitly designed to make it as easy as possible for U.S. corporations to manufacture goods in the developing world and ship them back to the United States.

This pattern of trade had the predicted and actual effect of reducing jobs and lowering pay for manufacturing workers. This pattern of trade has been an important factor in the wage stagnation seen by workers without college degrees over the last four decades.


Read the full story on the Huffington Post

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