Trade Talks Are Heating Up

There’s suddenly a lot going on in the trade negotiating world. Unfortunately, there is not as much free trade involved as one might hope or expect.


Over the weekend, the members of the WTO reached an agreement on several issues, the main one being “trade facilitation”. This was touted as a big deal because it is the first time the WTO agreed on just about anything in its almost 20 years of existence. In addition, supporters talked up its potential “$1 trillion” increase in global trade. 


It’s important to understand, however, that this agreement is not an agreement under which all countries will lower tariffs or barriers to trade in services, which is the traditional kind of trade agreement. My colleague Dan Ikenson wrote about trade facilitation here. Reading through a draft of the agreement, it seems to cover two things. First, it tries to achieve “good governance” in customs procedures, such as through requiring an appeals process for customs decisions. And second, it requires governments to speed up the import process where possible, for example by letting frequent traders use expedited procedures. These are all good things, but it is not the same as using trade agreements to rein in protectionism. Also of note is how it accomplishes these things. Basically, it will be rich country governments paying, through money and training, for improvements to customs procedures in developing countries. Is that the best way to accomplish all this? I’m not really sure, to be honest, but that’s what they are doing.


Next up is the Trans Pacific Partnership (TPP), an agreement being negotiated by 12 countries in the Pacific region. Those talks have started up again, with a goal of finishing by the end of the year. (Probably won’t happen, but it’s good to have goals, I guess). What’s fascinating about these talks is how many non‐​free trade issues are involved. Someone just leaked a summary of where the parties stand on all the issues. What jumps out at me in this document is that about half the issues deal with environmental law or intellectual property! Not that there is no free trade at all in there, of course. There is the traditional tariff lowering as well. But there are so many other things to be ambivalent about.


And finally, next week the Europeans will be in town for another round of negotiations on the Transatlantic Trade and Investment Partnership (TTIP). These talks are in a much earlier stage than the others. The big issue being talked about here is what to do about “regulatory trade barriers.” Some on the left fear that this will mean lowering everybody’s regulation to a least common denominator. Some conservatives and libertarians worry that it will mean more regulation, as regulations are harmonized around higher standards. In practice, I think it is unlikely to mean either of these things. I don’t see much of a role for international law, through trade agreements, to make substantive regulatory policy, and I would be surprised if the TTIP does much of this. But where I think international agreements could help is pushing countries to remove the impact of divergent regulations. For example, if the U.S. and EU both regulate for auto safety, but do it differently, why can’t both sides sell their cars in the other market as is, based on the assumption that the regulations are functionally equivalent?


So that’s a basic round‐​up. There are some modest successes, and some issues causing distractions from actual free trade, but things are moving forward, for better or worse. (How’s that for a not‐​so‐​ringing endorsement?)