The Trans-Pacific Partnership (TPP)

It’s Friday, time to party with a delicious, naughty topic sure to titillate all my readers and bump up the birth rate:  the TPP. 

I’m generally in favor of free trade and against protectionism.  So generally I support efforts to improve free trade and I oppose efforts at protectionism.  Then again, my own profession, law, is heavily protected.   You need a bar license to practice law, and the barriers to entry are significant.  Waiving in is best – though at the very least you would have to pass at least ONE bar exam.  Some states require an attorney exam, and others – such as New Jersey – have no provision at all for waiving in and require ALL applicants to take – and pass – their bar exam.  Anyhow.  I’m in the position of not having to worry about an influx of Japanese or Vietnamese lawyers competing against me.
 
Who is part of this?  First off, CHINA is not included.  The parties are: US, Japan, Australia, Peru, Malaysia, Vietnam, New Zealand, Chile, Singapore, Canada, Mexico, and Brunei.  Given that I already see tons of things from China all over the markets in the US, my guess – without further research or analysis – is that China is already happy with the current situation and the TPP would mean more US goods sold in China, which they don’t think is a good idea.  Too bad.

All four major candidates - Donald Trump, Hillary Clinton, Gary Johnson, and Jill Stein - oppose the TPP.  I can imagine two reasons.  First, a principled objection to free trade, per se (Type A).  I can see this with Trump and Stein; Hillary I'm not so sure about.  The second objection would be that the TPP claims to promote free trade, but in fact is simply more protectionism (Type B), or that it doesn't go far enough.  Of course, it's possible to voice the Type B objection when in fact you really dislike free trade.  My impression is that Gary Johnson opposes it for Type B reasons, as I can scarcely imagine that he truly opposes free trade.

To get to tho bottom of this, I consulted the CATO Institute, which published a helpful and concise 38 page report on this very issue: http://object.cato.org/sites/cato.org/files/pubs/pdf/cato-trade-tpp-abstract-june-30-2016.pdf

The Cato People are pro-free-trade.  The report grades each area of the TPP on a scale of 1-10, 1 being protectionist and 10 being free trade.  Due to political realities, no area got a score of 10; 8 was the best, the worst were rated 3.  Several sections were neutral, neither pro-free trade nor protectionist. Much of it was discretionary and “recommended” without being binding, or full of loopholes and exceptions which either compromised its good points or reduced its bad points.  Anyhow. 

Results?   Neutral & Not Graded (NG): Initial Provisions and General Definitions (NG); Telecommunications (5), Competition (5), Cooperation and Capacity Building (NG), Competitiveness and Business Facilitation (NG), Development (NG), Small and Medium Enterprises (NG), Transparency and Anti-Corruption (NG), Administrative and Institutional Provisions (NG), Exceptions (NG).

Pro Free Trade (6-8): National Treatment and Market Access For Goods (8), Rules of Origin (6), Customs Administration and Trade Facilitation (8), Sanitary and Phytosanitary Measures (6), Technical Barriers to Trade (6), Investment (6), Cross Border Trade in Services (8), Financial Services (6), Temporary Entry for Business Purposes (6), Electronic Commerce (7), Government Procurement (6), State-Owned Enterprises (6), Regulatory Coherence (6), Dispute Settlement; and Final Provisions (8).

Protectionist (3-4): Textiles and Apparel (3), Trade Remedies (3), Intellectual Property (4), Labor (3), and Environment (4).  Sadly, the US was frequently responsible for most of the worst parts of this.

Plunder.  By the way, a French guy by the name of Frederic Bastiat (1801-1850) – the same guy who gave us the Negative Railroad and the Candlemakers’ Petition - addressed this issue back in the early 1800s.  Generally people start from the premise that free trade is good and the government should take as little as possible from people.  Fine.  But one group asks for special favors, and gets them.  Soon everyone else is clamoring for their own favors, until – before you know it – each group gets its particular form of “plunder”.  He called that “universal plunder”.  Lest this be written off as something peculiar to France 150+ years ago, we see it today with our own segments of society, happy to give lip service to the free market and free trade, but unwilling to relinquish the particular nuggets of socialism that benefit their particular group.  So it is here with the TPP.

Anyhow.  Then CATO took a weighted average to determine whether the TPP was more free trade or more protectionist, and reached the conclusion that, it was “net liberalizing”, i.e. more free trade than protectionist, and gave a stamp of approval.  They acknowledged that it could have been much better, but nevertheless it was better than the prior free trade agreements applicable to the member countries.  For its part, the Brookings Institution, a modestly liberal thinktank, also argued in favor of the TPP.  Obviously, there are many industries which see competition as a threat and oppose any liberalization, which is why I sought out the CATO Institute’s opinion.  I don’t seek the opinion of Donald Trump or Hillary Clinton on anything, much less something as important as the TPP, and as noted earlier they both oppose it anyway. 

Mark me down, then, as in SUPPORT of the TPP.   Too bad none of the major candidates agree with me, but November is still a few months down the road, long enough for Gary Johnson to change his mind… I hope.