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Sunday, November 8, 2015

TPP isn't so bad, after all

The Trans-Pacific Partnership (TPP) trade deal hasn't attracted much attention by the media since June, when Congress approved the fast track for TPP. At that time some citizens were uncomfortable that the details of TPP hadn't been made public; they distrusted government and big business. But now the entire agreement has been made public, and the complaints about TPP since its texts were published are mainly technical. I support TPP. I'll tell you why, and I'll try to dispel misconceptions about it.

From an American perspective the TPP is mainly about two things: intellectual property and trade with Japan. If you are an artist, a writer, an inventor, or a film maker, you probably want global protection for your intellectual property rights. Of course, large corporations like Apple, Disney, and GlaxoSmithKline want those same protections for the same reasons. America doesn't manufacture and sell widgets to the world like we once did, but we create and license a tremendous amount of intellectual property to the world in the form of innovations (e.g. the Internet), entertainment, and software. In those areas America is still the world-leader. Getting better protection for IP is important to Americans because "soft" exports need protection. Our economy depends on this.

As for Japan, the U.S. and Japan have never had free trade. It's time. Japan shares many aspects of the American ethos. For many years after World War II, Japan followed a highly protectionist trade policy while striving to rebuild an economy. For various reasons the Japanese have been slow to drop their trade barriers after it became clear in the late 1980s that they needed no further protection of their economy. TPP will give American companies more access to markets in Japan, which is the world's third-largest economy.

Only 12 nations are parties to the TPP. China is not one of them. If you are not at ease with China or you have misgivings about free trade with China, relax. It will be a long time before anyone, including the Chinese themselves, propose bringing China into the TPP. Of the 11 other nations, the U.S. already has free trade with Canada, Mexico, Australia, and Chile. TPP would tweak the rules of free trade with those nations, but it's not the difference between night and day.

Besides, it tickles me when I see people complain about international trade while typing their complaints on a smartphone or laptop made in China. The same product would cost two or three times more if made in America, and a major portion of the profit from smartphones and laptops still accrues to Apple, Intel, and Microsoft despite assembly of products in Shenzhen. This is smart.

Does free trade occasionally cause dislocations in the American economy? Yes. Of course, dislocations would occur even if there were no free trade. No one mentions that, it seems. Coal miners and railroad workers are losing their jobs because natural gas is replacing coal as a source of energy at many American plants that generate electricity. You might think this is a good thing or a bad thing, depending on your positions on environmental issues and whether your own income and wealth is coal-driven or railroad-driven. But free trade plays virtually no role in the dislocations that are underway in coal mining and railroading. Truth is, the economy changes and it's natural for some jobs to go away over time. Free trade is often blamed because it's convenient to blame somebody on the other side of the world for our problems.

Three more things:

  • The fast track process for free trade agreements, technically called Trade Promotion Authority (TPA), was first adopted by Congress in 1974. It doesn't commit the U.S. to anything except an expedited decision, yes or no, to ratify a proposed agreement. There is no less American sovereignty under fast track, nor is the objective to hide details of the agreement. In many cases the details are still being worked out, as was the case with TPP even though the basic concepts of the agreement were already understood by all involved. These free trade agreements are notoriously difficult to write onto paper because the negotiators represent many different cultures, languages, and legal systems.
  • The Transatlantic Trade and Investment Partnership, or TTIP, is in the pipeline too. TTIP is free trade between the U.S. and the European Union. Bring it on.
  • In an election year, it's inevitable that some U.S. politicians will attack TPP as a campaign tactic. I understand that. For every politician who has sincere misgivings about TPP, three or four will merely use it to inflame the electorate and to get press coverage.
In the interest of disclosure, I've worked in international telecommunications for over 30 years. Naturally, then, I support free trade. Consider the source, in other words. But I believe my position is logical and defensible.