Trade Agreements Can Be Net Liberalizing

Some libertarians have been expressing concern about particular aspects of trade negotiations, often focusing on provisions relating to intellectual property. Here’s Jesse Walker of Reason:

“Free trade” agreements frequently include details that don’t have anything to do with freeing trade. When intellectual property enters the picture, the rules typically make trade more rather than less restrictive. That certainly seems to be the case with the TPP: 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. There are efforts to add tighter IP regulations to the Transatlantic Trade and Investment Partnership too.

I already tend to be skeptical about trade agreements as a path to freer trade, but I recognize and respect the argument that they do more good than harm. That argument is much harder to maintain, though, when the deals are loaded down with provisions like these. If fast-track authority makes such rules easier to pass, then fast-track authority is something I’m happy to do without.

I get what he is saying about intellectual property, and I have criticized this aspect of trade talks myself. But as my colleague Dan Ikenson says, we should consider whether these deals are “net liberalizing.”  In this regard, I think trade deals have the potential to do a lot of good, in ways that people may not be aware of.  Here’s an example from the negotiations between the U.S. and EU.  The EU has proposed new disciplines on government subsidies, in which it states:

subsidies given to support insolvent or ailing companies without a credible restructuring plan belong to some of the most harmful types of subsidies and have the potential to have an adverse effect on trade and investment relations.

Now, translating such sentiments into concrete rules can be difficult, but I like the idea of pushing for limits on subsidies. I can’t guarantee that anything will come out of the EU proposal, but I’m glad they are pursuing it.  To me, a trade agreement that offers additional disciplines on subsidies is something of great value.

(Some of you might be thinking, wait, how come the EU is proposing constraints on subsidies?  Aren’t they the worst abusers, with their farm subsidies, Airbus subsidies, etc.?  Here’s my sense of what is going on:  In addition to the concerns about bailout-type subsidies mentioned in the quoted text, the EU has some pretty strict internal rules governing when its member states can provide subsidies.  As a result, the Europeans get annoyed at subsidies offered by U.S. states, and are looking for ways to impose constraints on these and other U.S. subsidies).