December 26, 2013 8:37AM

Is the TPP about Free Trade or Economic Nationalism?

One of the big Obama administration trade initiatives going on right now is negotiations with eleven countries in the Pacific region, called the Trans Pacific Partnership (TPP). What exactly is being talked about in these trade talks? Is it really about free trade? Based on standard media coverage of the issue, it’s not easy to discern. Here’s an example from the Washington Post.

In the print version of the piece, the title notes that the U.S. is seeking “to shape global trading rules”; and the sub‐​title says that the goal of the talks is “a freer flow of world commerce.” That sounds free trade‐​ish. But is it free trade? And if not, what is it?

When you look at the substance that is described in the article, the talks seems much broader, and do not have a very free trade feel. Take a look at these examples:

When Vietnamese officials issued new Internet rules this year, the U.S. tech industry gave a shudder.

The regulations clamp down on political speech, require companies such as Facebook and Google to invest in local computer infrastructure to store information on Vietnamese users, and could force chipmakers to strip standard encryption features from their processors.

Only one of these is about free trade (the local computer storage requirements). The rest are all domestic laws that affect trade. But perhaps more accurately, the U.S. trade goal here is changing other countries’ domestic laws so as to increase US exports, which isn’t free trade at all.

Some of these changes may be good (e.g., taking on speech restrictions); I’m less certain about others, such as the stronger intellectual property rules mentioned later in the article. But the article gives away the real policy goal, when it says:

the more significant fights … are over issues such as the regulation of the Internet and e‐​commerce, the rules for the patent and sale of biopharmaceuticals, and the oversight of logistics, consulting, energy management and other service industries where the U.S. holds an edge.

Putting it this way, the talks seem to be about economic nationalism pursued through trade agreements! Make everyone use our rules, which will give our companies an advantage. Along the same lines, the online title of the article is as follows: “Through trade treaty, U.S. hopes rules that favor its companies will become the norm.”

There is real free trade in these talks, of course. There will be lower tariffs and liberalized services trade, and government procurement will be opened up to foreign competition. But the shift to other subjects as the focus, and the emphasis on giving advantages to U.S. companies, has fundamentally altered the nature of these agreements and the debate, and in the process left the media confused about how to talk about free trade and trade agreements. They keep trying to make these agreements sound like they are about free trade, but with the hurdle that much of what’s in them is not.