Trans-Pacific Partnership

Trans-Pacific Partnership Trade Pact: Yes, No, and Maybe

The maddening third-best quality of secret international trade pacts for free trade lovers

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Sen. Elizabeth Warren (D-Mass.) made news today hitting President Obama over aspects of the pending Trans-Pacific Partnership trade deal. She's complaining about the president's desire to see Congress pre-approve "fast-track" methods for passing the pact, which does not allow legislators to amend, before they've seen its precise content. This seems, regardless of whether you would think the deal is a good idea if you did know everything that was in it, a reasonable request.

Very roughly, the politics of this deal see Obama acting more pro-trade deal than the traditional Democratic constituencies of labor and environmental activists, in whose name Warren speaks.

I've been both supportive of trade deals as a least-bad response to international protectionism, though I find when I have dug deeper into the actual content, as I did for NAFTA in these pages back in 1993, that there's always some bad or unnecessary stuff there. First-best for American citizens is dropping our trade barriers, no matter what our partners/rivals/other nations making, buying, and selling stuff and services do.

Wikileaks released some drafts of the not-quite-public pact back in 2013.

Some recent commentary and reporting from both hither and yon that give a decent picture of where the TPP debate stands:

•Rand Paul, running for president, is for TPP. Ron Paul, not running for president, is against it, and fast-track trade authority and trade pacts in general.

• National Review laments the secrecy, but guardedly advises Congress to pass fast-track authority, but then:

give the thing a careful read before voting on it, especially considering how little they know about the details of the negotiations up to this point. The Obama administration, self-proclaimed epitome of openness and transparency, has conducted TPP negotiations largely in secret, with members of Congress permitted to review documents only in person in the office of the U.S. trade representative, without staff. Most of what the public knows about the negotiations has come through a series of releases from WikiLeaks. The level of secrecy here might be appropriate to missile-defense negotiations; it is excessive for a trade deal, especially one involving mostly free and open societies.

• Mother Jones has a decent "explainer" on what's at issue, including:

As of the most recent round of negotiations, concluded in March, 12 countries are involved: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The deal could eventually encompass half of the world's economies.

The TPP would expand market access between its signatories. Analysts are saying the pact's rules will be even more stringent than those currently used by the World Trade Organization (putting more emphasis on free trade). Some economies may be reformed to meet the criteria. And while a lot of that change would happen in less-developed economies, America could see some restructuring, too. According to areport by the Congressional Research Service, manufacturing stands to take a $44 billion hit, while the services sector (already 80 percent of our economy) can expect gains of more than $79 billion.

• Even some economists who think that globalization has hurt American manufacturing workers-qua-workers are pro-TPP, as they wrote in the Washington Post:

First, the TPP — which seeks to govern exchange of not only traditional goods and services, but also intellectual property and foreign investment — would promote trade in knowledge-intensive services in which U.S. companies exert a strong comparative advantage. Second, killing the TPP would do little to bring factory work back to America. Third, and perhaps most important, although China is not part of the TPP, enacting the agreement would raise regulatory rules and standards for several of China's key trading partners. That would pressure China to meet some of those standards and cease its attempts to game global trade to impede foreign multinational companies….

The World Trade Organization counts 160 members, including every major economy and most importantly China, which joined in 2001. According to the World Bank, WTO members can export manufacturing goods to the U.S. market at an average tariff of just 2 percent. Within the proposed TPP, the United States already has bilateral trade deals that have eliminated all manufacturing tariffs with five of the 11 members: Australia, Canada, Chile, Mexico, and Singapore. Cutting already rock-bottom U.S. manufacturing tariffs to zero for the remaining TPP countries would thus have negligible effects on U.S. producers.

• Scott Lincicome, a trade attorney and Cato Institute adjunct scholar, explains at length at the Federalist why the deal is "third best" from a free trade perspective, but still likely the best politically possible thing to be done now.

• The Electronic Frontier Foundation's objections to the IP protection aspects of IPP.

• Tyler Cowen dings Paul Krugman for opposition to TPP, on the grounds that if we don't shape such a pacific trade deal, China will.

On the Reason front, the magazine editorialized in favor of fast-track authority and passing the TPP in our February issue. Jesse Walker dissented, writing that "Provisions in the leaked drafts would extend copyright terms, impose DMCA-style restrictions on circumventing copy protection, and otherwise take a maximalist approach to intellectual property." 

Bill Watson griped at Reason about how even Obama himself is more prone to argue the special-interest benefits of the pact than to emphasize the wealth-creating-for-all prospects of lowering rules and tariffs that block the free flow of goods and services, concluding that "If Congress refuses to ratify the TPP, it won't be because Americans oppose free trade. It will be because the TPP's supporters never told them about it."

Zenon Evans wrote back in 2013 (this has been a long process) against the pact, fearing early signs that it promises " bigger government, stricter laws, and less accountability." Evans detected signs of a special-interest crony-capitalism extravaganza:

The USTR acknowledges the existence of 29 chapters under negotiation. Only five of these chapters deal directly with trade. The other 24 aim to influence many issues, such as food and environmental standards, intellectual property, and pharmaceutical formularies.

Various special interests groups openly voiced their support for the TPP in a letter to the president. The CEOs of the Recording Industry Association of America (RIAA), Pharmaceutical Research and Manufacturers of America (PhRMA), International Trademark Association (INTA), and many others found common ground in anticipation of more rigorous "protection and enforcement of intellectual property." This, of course, benefits a few businesses, but directly contradicts the notion of liberalization and limited government influence in trade.

Back in July 2013, I had this to say about trade pacts and the process v. content issue of "fast track" that has Warren upset this week:

Process vs. outcome arguments can be complicated from a libertarian perspective; in general autocratic executive power is to be looked down on, though it's possible giving Obama that authority will lead to a better (in terms of trade liberalization and lack of attaching other bad regs to trade deals) outcome than allowing Congress to amend….[But] it ain't business, in general, for whom real free trade is good: it's consumers. (See some recent data on this from Daniel Griswold at Cato.) So the more business interests have ins on shaping these deals vs. consumers, likely the worse.

It is worth remembering that we have in our power as nation the ability to do what's good for American consumers, that is, all of us: cut tariffs and allow us to buy things from foreigners at the price they are willing to sell it, without the government taking a cut.

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  1. …with members of Congress permitted to review documents only in person in the office of the U.S. trade representative, without staff.

    Where is Sandy Berger’s cargo pants when you need them?

  2. You have to vote for this before you know what’s in it.

    1. Is that like you have to taste it to tell if you like it?

  3. So I guess they’re going to have the Senate vote on this pact, with a 2/3 vote needed for passage, and that the House’s only role will be to vote on whatever implementation budget is needed?

    Ha ha ha, I’m such a kidder.

  4. In the long march of freedom, the signal of rejecting such bloated rent-seeking free trade agreements is still worse than the signal of passing them.

    It’s tragic, but the opponents of free trade agreements aren’t against them because they are not free enough.

    1. Sad but true.

        1. Free trade agreements are your hate when you want true free trade love.

    2. It doesn’t matter about the motives. It whether this is right or wrong.

      The very fact they want to do a “fast track” and pass a classified treaty is a march further toward
      tyranny lead by a Imperial President.

      Don’t think that freedom is winning as some long march of history. America for generations has been becoming less free.

  5. I have a question. What’s the need for “fast-tracking” trade pacts? I mean, sure, I suppose it could shorten and simplify negotiations, but that’s all it does. It also takes out the inconvenience of the Senate fully debating the contents of the pact and playing the role it is supposed to play under the Constitution.

    I say that as someone who favors free trade.

    1. Fast tracking just limits the opportunity for rent seeking and preening demagogues.

      1. I understand that, but the result I want–free trade–needs to happen without skipping the limits we intentionally place on the executive. I don’t want the Senate circumvented.

        1. They’re not circumvented. They get to be preening demagogues on their up-or-down vote. They just miss out on the rent seeking.

      2. Fast tracking just limits the opportunity for rent seeking and preening demagogues.

        Is this true though? Wouldn’t the rent seekers just turn their attention to the people being granted the authority to make these deals?

        Perhaps I don’t understand fast tracking, but it seems to me that if the senate allows this, nothing stops some industry lobby from going to the opaque delegates in the executive branch and getting them to include provisions for their rent checks. And now, we don’t even get the opportunity to have it debated in the senate. Instead, it just sails through to signing, pre-approved.

        Am I wrong on that?

        1. It prevents different rent seeking beyond what has already happened in the secret negotiations.

          We would not want mere Senators getting involved in rent seeking when the professional rent seeking international negotiators have already gotten what they want

    2. The senate still gets to debate the trade pact and vote on it. It’s just they have to vote on it in an “all or none” fashion. If the US and Freedonia agree that the US will give up X as long as Freedonia give up Y, it stops the Senate from sabotaging the treaty by going “well we’re okay with Freedonia giving up Y, but we’re ammending out the US giving up X clause”.

      1. Ahhh, that makes sense. I retract my objection above.

      2. I’m not comfortable with that idea. The Senate is supposed to be part of the treaty-making process, not just an up or down vote on a whole package of terms. That’s a great way to force things unrelated to trade down the throats of Americans–treaties have the force of law, after all, once ratified.

        1. Are you sure it’s just the Senate?

        2. [The President] shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur…

          The Senate’s roll in treaty making is to advise and consent, not actively get involved in the negotiations. The idea the Senate can pick and choose which bits of a treat they like makes negotiations nearly impossible.

          Would you ever agree to negotiations where the other party goes “once we reach an agreement, we reserve the right to randomly change the deal however we like”?

          1. Where’s the advising part if it’s just an up-and-down vote? And who is the party here? It’s certainly not the president, it’s the United States.

            1. Informally by, you know, talking to the President? Or if you need a more formal method, via Senate Resolutions. But ultimately, when you’re negotiating, you need to pick a single negotiator to represent the country in the negotiations, and the Constitution says that’s the person the President picks.

              1. I think the Senate should have the power it has under the Constitution. We made it easier by limiting ratification to one house. That’s easy enough. There’s no constitutional basis for circumventing the Senate’s full role in the process, which is not simply to stamp yea or nay on a treaty.

          2. Yeah, this is essentially the problem with treaties in general. They are always large, bloated sandwiches that will have a bunch of turds slipped in among the lunchmeat. I don’t think either method is ideal.

            I think Stormy misrepresents what would happen in a trade negotiation, though. The negotiators would say “We agree to these terms, assuming the Senate agrees.” If the Senate shot down a piece of a deal, the negotiators would have to go back to the table and ask whether their counterparts are ok with that piece pulled out, or hammer out a compromise and resubmit it to the Senate.

            In a sense, I don’t have much problem with that method either. I would love to have a Rand Paul telling the president to fuck off on a specific rent-seeker provision. But I would also hate a Harry Reid trying to get some environmental clap-trap pushed into it.

            1. In a sense, I don’t have much problem with that method either. I would love to have a Rand Paul telling the president to fuck off on a specific rent-seeker provision.

              Which Rand Paul can still do under fast track.

        3. I bet this is one of those non-treaty agreements.

  6. Is this going to be a treaty????

    The other trade agreements are not treaties so they just needed half the Senate and half the House.

    That is what NAFTA was.

    1. Not sure if it’s a treaty or trade agreement, but Article 1 Section 8 gives the Congress the power ” to regulate commerce with foreign nations, and among the several States, and with the Indian tribes”

  7. Just say no to any “classified” Treaties. This is insane and entirely the behavior of a tyranny not a republic.

    I don’t care how much you love free trade. We can’t go along with this kind of behavior.

    1. You are right!!!! How many reading these comments know” Nothing is Free” hello we as a people need to wake up and take back control of our government. FREE yea right. Someone will pay and who do think that will be. I’m glad you asked. Those that are barely making ends meet. In other words ” The rich gets richer and the poor gets poorer.

  8. I want to support freer trade all around, but after seeing all the crony, corporate and industry handouts that have leaked out I’m questioning how much I want to place pragmatism over principle. Then there’s this from Cato:

    “The Trans-Pacific Partnership pact, which the White House is negotiating with 11 countries, would require members to set and enforce laws on minimum wages, maximum work hours and occupational safety and health standards ? things no other U.S. trade agreement has done.”

    http://www.cato.org/blog/checking-minimum-wage-tpp

  9. This TPP will strip congress of the veto power. Right now they have the two-third override. If this Pact is passed, then its the majority rules.
    Manufacturing in South Carolina is at an all time low, this Pact will eventually eliminate manufacturing all together. Our government as we know is slowly but surely being run by big corporations with big bucks, this Pact will eventually give all power, on a visible level to the corporations. Right now there are many who don’t see the impact corporations have in our government, soon they will. This Pact is going to raise the poverty level. I urge everyone to dig deep into this Pact. Get the facts and not someone else opinion. This Pact is going to be devastating!!!!!!!!

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