Paul Krugman weighed in yesterday on the Trans Pacific Partnership (TPP). I agree with one of his points; I disagree with another.
First, the disagreement: Krugman claims protectionism is mostly gone, and thus the TPP is not all that important:
The first thing you need to know about trade deals in general is that they aren’t what they used to be. The glory days of trade negotiations—the days of deals like the Kennedy Round of the 1960s, which sharply reduced tariffs around the world—are long behind us.
Why? Basically, old-fashioned trade deals are a victim of their own success: there just isn’t much more protectionism to eliminate. Average U.S. tariff rates have fallen by two-thirds since 1960. The most recent report on American import restraints by the International Trade Commission puts their total cost at less than 0.01 percent of G.D.P.
Tariffs on certain goods are still quite high. A publication called World Tariff Profiles illustrates this nicely. If you look at p. 170 for U.S. statistics, you will see tariff duties for four general product categories of over 10%. You’ll also see maximum tariffs (i.e., the high tariff on particular products) of over 100%!
And if you look at the duty rates for other countries, they are generally much higher.
And none of that includes special “trade remedy” tariffs (anti-dumping, countervailing duties, safeguards), subsidies, discriminatory government procurement, or domestic laws and regulations that discriminate (such as local content requirements).
So, protectionism is alive and well.
Turning to the part where I agree with him, he says:
But the fact remains that, these days, “trade agreements” are mainly about other things. What they’re really about, in particular, is property rights—things like the ability to enforce patents on drugs and copyrights on movies. And so it is with T.P.P.
… Is this a good thing from a global point of view? Doubtful. The kind of property rights we’re talking about here can alternatively be described as legal monopolies. True, temporary monopolies are, in fact, how we reward new ideas; but arguing that we need even more monopolization is very dubious—and has nothing at all to do with classical arguments for free trade.
Now, the corporations benefiting from enhanced control over intellectual property would often be American. But this doesn’t mean that the T.P.P. is in our national interest. What’s good for Big Pharma is by no means always good for America.
I don’t have much to add to his points, which I think are pretty good ones. In my view, there’s a need for a real debate on how much intellectual property protection is appropriate (and, in fact, we will be discussing this here at Cato next week). Unfortunately, that’s not what we are getting either domestically or in the international trade context, where it seems that more is always better.