Washington Post Opens the Door for Name-Calling to Push the TPP

April 27, 2016


Yep, all is fair in love and war and pushing trade agreements, and the Washington Post really really wants the Trans-Pacific Partnership (TPP). So, when they asked Ivo Daalder and Richard Kagan to make the case for the TPP as part of a story about preserving American leadership in the world, the Post apparently gave the greenlight to name-calling.

[Dean Baker| April 24, 2016 |Center for Economic and Policy Research]

This meant that the opponents of the TPP appear in the piece as "demagogues." Sounds good, now we don't have to deal with arguments from people like Nobel prize winning economist Joe Stiglitz or Jeffrey Sachs. Hey, if you oppose the TPP you're just a demagogue, not someone who might have a serious argument.

This is not the only cheap trick in the Daalder and Kagan's deck. They also tell us that:

"According to the Peterson Institute for International Economics, the agreement will increase annual real incomes in the United States by $131 billion."

Wow, $131 billion, that sounds like really big money. Of course if Daalder and Kagan were actually interested in conveying information rather than pushing their agenda, they might have told us that this projection is equal to 0.5 percent of projected GDP for 2030, when the full benefits are realized. In other words, the Peterson Institute is projecting that with the TPP the United States will be as rich on January 1, 2030 as it would otherwise be on April 1, 2030. Sound like a must-pass deal?

It's also worth noting that computable general equilibrium models of the sort used by the Peterson Institute to make this projection have a really bad track record in projecting the outcomes of trade deals. Therefore, we may not want to rely on this projection too much in making policy.

There is much else that is not quite right in Daalder and Kagan's argument. For example, they tell readers:

"The widely touted “rise of the rest” — the idea that the United States was being overtaken by the economies of Brazil, Russia, India and China — has proved to be a myth."

If the "rise of the rest" is a myth, then the I.M.F. is now a purveyor of this myth. According to its data, China's economy is now more than 10 percent larger than the U.S. economy.


They also assert that the "dollar remains the world’s reserve currency." Of course there is not a single reserve currency. In addition to dollars, countries hold euros, yen, British pounds, and even Swiss francs as reserves. More importantly, we don't want countries holding large amounts of dollars as reserves. This is how they prop up the dollar against their own currency ("currency manipulation" as some call it), giving their goods and services a competitive advantage internationally and leaving the United States with a large trade deficit. In other words, having the dollar as the predominant reserve currency is not obviously a good thing.

But the real punchline is their argument that the TPP is somehow essential for preserving U.S. leadership in the world, one of the conclusions of the group they worked with under the auspices of the World Economic Forum (a collection of rich people). Contrary to the line that is being generally pushed about the TPP, it has little to do with trade. The United States already has trade deals with 6 of the other 11 countries in the pact. We will not see trade barriers with Canada and Mexico further lowered by the TPP.

Rather, the TPP is about putting in place a pro-business structure of regulation that cannot be easily reversed by democratically elected governments. The TPP could override national or sub-national decisions on appropriate labor, environmental, or health and safety regulations. It puts in place an extra-judicial structure (investor-state dispute settlement (ISDS) tribunals) which operates outside the existing legal system. The rulings from ISDS tribunals are not subject to appeal or bound by precedent.

The TPP also increases protectionism in the form of stronger and longer copyright and patent protection. It will make drugs more expensive. In the case of copyrights, in addition to lengthening copyrights everywhere (at least 70 years after the death of an author or publication of a work), it will also put in place far stronger protections, including a requirement that governments impose criminal penalties for copyright violations.

Daalder and Kagan might be convinced that the United States best establishes leadership in the world by making poor countries pay more money for drugs and by requiring governments and individuals to be copyright cops for Disney and Time-Warner, but that is not obviously the case. Some might think that the U.S. standing in the world is enhanced when we don't try to impose the demands of our corporations on the rest of the world.

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