In recent weeks, a number of prominent economists have expressed views on the Trans Pacific Partnership (TPP). David Autor, David Dorn, and Gordon Hanson are for it; Tyler Cowen is for it, mainly for foreign policy reasons; Noah Smith is for it; Larry Summers is a maybe; Paul Krugman thinks it's not a big deal and questions whether Obama should spend "political capital" pushing it; Brad DeLong is more positive than Krugman; Dean Baker is skeptical; and Matt Yglesias is skeptical, noting that “[t]he political economy and public choice issues around what's become of the mutlilateral trade process stink.”
Before jumping to any conclusons, though, I think DeLong makes an important point here:
“It is foolish to debate whether a trade agreement that has not yet been negotiated is a good idea and should be ratified. Such a debate should properly begin only once there is something to analyze.”
That's very true: We don’t have a negotiated agreement yet, so it’s difficult to judge its content. If this were an old-school trade agreement whose main function was to get rid of tariffs, it would be easier to make an assessment in advance. If we knew all or most tariffs would be brought to zero, and that's all that would happen in the agreement, we would know just about everything we needed to know. However, today’s trade agreements have lots of substantive policymaking in them, and the details are important.
To take a few examples:
- How long should the term of protection for biologic drugs be?
- What should rules on foreign investor lawsuits look like?
- Should there be provisions related to minimum wage laws?
In addition, with trade in services, liberalization does not happen automatically for all services as part of trade negotiations. It only happens where specific commitments have been made, and we don't know yet which service sectors will be liberalized in the TPP. A big question I have is, what commitments have been made to liberalize cross-border trade in medical sevices?
So let's wait for a final deal before offering a definitive judgement on the TPP. When the full text of a completed agreement is released, I hope all of these economists will weigh in on the details of the actual TPP. It's not just free trade in the abstract that is at issue with agreements such as the TPP; it's trade rules in actual practice that we need to debate and discuss.