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America's Exit May Have Improved the Trans-Pacific Partnership, but Not for America

The pact is better without American influence—but now we won't enjoy the benefits.

Kyodo/NewscomKyodo/NewscomDonald Trump may have pulled the U.S. out of the Trans-Pacific Partnership, but the trade deal didn't die: Last Saturday in Da Nang, Vietnam, the 11 remaining countries announced that they had agreed on the core elements of the pact.

Known officially as the "Comprehensive and Progressive Agreement for Trans-Pacific Partnership" and colloquially as TPP 11, the deal removes many tariffs and other barriers to exchange across borders. That said, it would be better described as managed trade than free trade. Free trade in the ideal sense wouldn't require a 5,500-page agreement, let alone some of the provisions that worked their way into that document.

Interestingly, America's exit has meant the suspension of some of the more egregious of those provisions. It was the U.S. that pushed the document's original rules for intellectual property, which have been criticized for maximizing copyright terms and eroding privacy rights. Similarly, the U.S.-proposed approach to pharmaceuticals would raise the cost of medicine (and restrict rather than free trade) by extending a patent by 20 years when a new use is found for a drug.

The some of the agreement's Investor-State Dispute Settlement clauses have also been suspended. These would have allowed foreign corporations to sue countries if their investments are affected by the home government's policies, an idea that has come under fire from multiple directions: Liberals see it as an appeasement to corporate power, conservatives claim it will weaken national sovereignty, and libertarians have argued that it creates special legal rights while doing little to liberalize trade.

Without Washington in the mix, the TPP is a simpler and in important ways better agreement. On the other hand, now the average American won't receive any of the benefits. According to a 2016 report from the International Trade Commission, both agriculture and beef stood to gain substantially from TPP, as did the services sector of the American economy. And American farmers will be put at a disadvantage if their products face tariffs that Canadian crops won't.

The revised deal will not have the impact on global trade that the original would have had. With the United States' involvement, the agreement would have encompassed 38.2 percent of global GDP. Without the U.S., the figure is 13.5 percent.

Yet TPP 11 would still represent a change in the geopolitical landscape. "Without the United States in the TPP, and with no real promise of new trade agreements for the next few years, the economic center of gravity will continue shifting across the Pacific," says Dan Ikenson, director of trade policy studies at the Cato Institute. "I think it's better for the world (including the United States) that TPP-11 proceeds because the United States is no longer a reliable champion of liberalizing trade through the adoption of sound rules."

"The world will move on, even if we're stuck in neutral," says Clark Packard, federal affairs manager and policy counsel for the R Street Institute. "Hopefully we'll eventually come to our senses and rejoin." Ideally without dragging any bad ideas back into the mix.

Photo Credit: Kyodo/Newscom

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  • loveconstitution1789||

    Trump was right to pull the USA out of managed trade deals parading as "free trade"

    Free trade fo life!

  • Brandybuck||

    If only pulling out of the TPP meant free trade. it doesn't. it means going back to tariffs.

  • loveconstitution1789||

    it doesn't have to mean that. A country can end tariffs without a trade treaty.

  • ALWAYS RIGHT||

    "Managed trade" gives more power to the ruling class and enriches lawyers. The death of this agreement did not force any other country to raise their tariff on our beef and there should not be any such thing as "intellectual property". This agreement was between rulers who only had the interest of their richest patrons.

    The rest of the world needs us a lot more than we need them. We should restrict importing their stuff and their immigrants.

  • colorblindkid||

    Didn't Trudeau just walk out, though? Opposition to free trade has sprung up on both the left and right, and I don't know why. Blaming free trade for our woes is no different than blaming immigrants.

  • Brandybuck||

    Left is right, freedom is slavery, arbeit macht frei.

  • ||

    Opposition to free trade has sprung up on both the left and right, and I don't know why.

    The left was always against free trade. Then the right nominated an anti-trade economic illiterate who brought the votes of unemployed former union guys. You do the math. I was predicting exactly this two years ago.

  • DJF||

    """"Without the United States in the TPP, and with no real promise of new trade agreements for the next few years, the economic center of gravity will continue shifting across the Pacific,""""

    But the economic center of gravity was already shifting across the Pacific even with the previous trade agreements, why would TPP change this? Why would the other countries sign an agreement which would slow down or halt this shift?

  • KobolCoffeeLord||

    According to a 2016 report from the International Trade Commission, both agriculture and beef stood to gain substantially from TPP, as did the services sector of the American economy.


    Some American sectors would have enjoyed greater protectionism over competition. This is a benefit in the manner that a child who eats dessert for dinner and skips bathing is enjoying benefits. It is not good for them, and won't end well for anyone.

    No one benefits from managed trade. Distorting the market has a cost.

  • BYODB||


    Without Washington in the mix, the TPP is a simpler and in important ways better agreement. On the other hand, now the average American won't receive any of the benefits


    So we pulled out of a trade agreement and the agreement became better than it would have been if we were a part of it?


    Or, in other words, a victory for everyone involved that wanted globalized managed trade?


    On the other hand, now the average American won't receive any of the benefits.


    ...that wouldn't have been there if we had stayed in the agreement? Now I'm confused...


    ...the agreement would have encompassed 38.2 percent of global GDP. Without the U.S., the figure is 13.5 percent.


    Oh, I see. They wanted a piece of that big ol' Global GDP to manage! That makes sense, I suppose.

  • chemjeff||

    Yeah I don't quite follow myself. Freer trade is a win for everyone, Americans included. Seems to me, if this trade deal is better without American participation because American cronyism was kicked to the curb, then that is a win for everyone except the cronies.

  • BYODB||

    Indeed, although frankly the rules that America appears to have pushed for don't appear to be bad one's at a glance. Some of them, such as suing a government if their policies destroy investments, would be things that should be expanded to the individual and it would be even better.

    And as for patent protections, well, lets just go ahead and acknowledge that foreign governments don't generally care about that kind of thing if they can reverse engineer it. Lookin' at you, China.

  • ||

    frankly the rules that America appears to have pushed for don't appear to be bad one's at a glance

    Aren't you supposed to be against rules?

  • Rhywun||

    Sounds like we're not good at making "deals" anymore.

  • Jerryskids||

    I'm sure Trump figured any deal Obama made with the Chinese must be a bad deal and therefore pulling out of the TPP was a no-brainer. I'm sure plenty of his supporters would agree with the first part and I have to admit I'd agree with the second part.

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