A Question For Free Traders on the Trans-Pacific Partnership

 

Up or down on the TPP?  How would you decide?

When Obamacare was being debated I had liberal friends whose argument in favor consisted of “We need to do something,” and “Health care is a right.” One of my responses was that slogans are not legislation and it is only the details of bill that are relevant. In the case of Obamacare, it was a 2,000-page piece of legislation that no one understood, and today even some of my liberal friend rue its passage as they understand what it actually contained.

When Dodd-Frank was being debated, some liberal friends said things like “We need to do something,” and “We need to end too big to fail.” I said again that slogans are not legislation.  And although the 1,000-page-plus Dodd-Frank bill stated in its preamble that it was ending “too big to fail,” we now know that the details of the legislation actually strengthened the hand of the largest banks.

Now the full text of the TPP has finally been released. It’s 5,500 pages, and let’s face it, no one who is going to vote on it will understand it. I like free trade as a principle. But the TPP does not simply say, “We like free trade — go for it!” It contains voluminous and complex provisions governing trade that only those who have spent the past few years negotiating understand (and my guess is most of them only understand the specific sections they worked on).

So what say you?

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  1. Ball Diamond Ball Inactive
    Ball Diamond Ball
    @BallDiamondBall

    Frank Soto:

    The Reticulator:Considering what the Affordable Health Care Act did to affordable health care, I wonder what the TPP will do to free trade.

    You can predict this, by looking at our existing agreements.

    Trade agreements are as contentious in other countries as they are here. Just as in America, getting them passed is a nightmare. That is why if you look 20 or so agreements the US has with other countries, they all mirror each other.

    The fear seems to be that Obama and a global cabal of leftists are using the agreement to push a progressive agenda, but such terms would never be accepted by all of the countries covered by the TPP. It’s terms are extremely predictable, as if they veer too far from what has worked in the past, the deal is dead.

    So you would sign it based on this argument?

    • #31
  2. Mister D Member
    Mister D
    @MisterD

    Z in MT:I don’t like the idea of opposing a trade deal just because it is Obama’s trade deal. I have yet to see any analysis or summary of what is in it, so I can’t form an opinion. However, 5500 pages makes me hesitant.

    This. Odds are if the agreement was 5 pages long it would still be over my head. Best thing is to release it to the public, let the people who know vet it.

    • #32
  3. genferei Member
    genferei
    @genferei

    AIG: God help us if we have to leave “trade” up to democratic vote!…

    Do you honestly think the American people, or even a majority of Republicans, would vote for more competition from Asia?

    Then the answer is to educate the electorate or not involve the government in trade at all in the first place. Or, you know, do what the people want.

    And what exactly would Joe Schmo know about, for example, IP law and how long patents or copyrights should apply for

    What does anyone know? Copyright and patent are an invention of government. Those in charge of the government – the people – should have a say. The intuition of Joe Schmo that copying a movie is not morally opprobrious should inform public policy about the nationalization of “IP” enforcement. At the least.

    or what rules should or should not be about setting up FDI in a foreign country?

    And this gets to the important point. As you ask above “what does free trade imply”? If it’s a matter of benefitting the consumers of the US qua consumers, then the government could drop all trade restrictions unilaterally without need of a treaty. The treaty is a deal saying “we will only benefit our consumers (by dropping inward trade restrictions) to the extent you agree to benefit our manufacturers/film industry/whoever (by agreeing to X)”. There is no objective measure by which such a deal can be evaluated, because it will effect each person differently. Hence, Democracy.

    • #33
  4. Ball Diamond Ball Inactive
    Ball Diamond Ball
    @BallDiamondBall

    Still trying to wrap my head around radical libertarians defending this.

    • #34
  5. Quinn the Eskimo Member
    Quinn the Eskimo
    @

    Ball Diamond Ball:Still trying to wrap my head around radical libertarians defending this.

    Who knows.  Maybe the balance of the document is better than no agreement.

    That being said, the nature of free trade is that we benefit when goods come into our country, that is, something like the converse of a blockade.  And to do that, we only have to lower our trade barriers, not get other people to lower theirs.  If other countries want to blockade themselves and have less stuff, goes the theory, then they are suckers.

    I’m still on the fence, but I do think supporters of this arrangement have to explain the merits of such a lengthy document to do what should be relatively easy and can be done unilaterally.

    • #35
  6. James Of England Moderator
    James Of England
    @JamesOfEngland

    BrentB67:JoE will be along shortly to correct this,

    Sorry I missed this.

    but I am very suspicious of anything deemed legislation that requires 5,000+ pages and forms something approaching a union without clearing the Constitutional hurdle for treaties.

    The NAFTA is a little over half the length and subsequent trade agreements have used significant amounts of cutting and pasting from it. If all the TPP were was a harmonization of the various US FTAs with these parties, it would probably not be more than 4k pages long. Since it also has to deal with Japan-Vietnam issues, and Brunei-New Zealand issues, it’s going to be longer. We don’t have to sweat those details much because, seriously, who cares, but it matters to some New Zealanders.

    Fortunately for budding trade lawyers, they seem to have gone to some efforts to achieve rationalization, so the text is shorter than one would have imagined it to be just on that basis.

    The actual text of the legislation, incidentally, isn’t all that long at all for the principles, and is not so hard to read.

    I think the U.S. has the most leverage with respect to negotiating trade agreements and can do them one country at a time if need be.

    In the case of TPP, I am a No.

    The US already has FTAs with most of the parties to this. Canada got an FTA under Reagan which was updated and added Mexico in the NAFTA under Bush (signed) and Clinton (ratified). Chile, Australia, Peru, and Singapore were added under Bush.

    The US has already used its leverage with most of its treaty partners, and the TPP doesn’t change those terms all that much. It’s true that the TPP adds Japan and some minor treaty partners, but I don’t think that the US would have achieved anything extra by negotiating with them on a bilateral basis.

    Transforming the dozens of different treaties between the various parties into one single treaty has a variety of benefits. It means that there’s less regulatory overhead, and it clarifies the nature of the diplomatic block formed thereby (it’ll be even clearer when Colombia and South Korea join, which they hopefully will eventually).

    So far as I am aware, there are no costs. If anyone wants to propose a cost, I’m all ears.

    • #36
  7. James Of England Moderator
    James Of England
    @JamesOfEngland

    Quinn the Eskimo: That being said, the nature of free trade is that we benefit when goods come into our country, that is, something like the converse of a blockade.  And to do that, we only have to lower our trade barriers, not get other people to lower theirs.  If other countries want to blockade themselves and have less stuff, goes the theory, then they are suckers.

    Not quite. When we open our borders to trade, we benefit and the other party benefits. When they open  their borders to trade, we benefit and they benefit.

    It’s true that if they don’t open their borders, they suffer, but that doesn’t mean that we shouldn’t care about our own losses, too.

    To put it another way, currently, our goods are taxed when we export them to Japan. This cuts those taxes. If you can’t see why a libertarian would like tax cuts, or can’t see how tax cuts on American businesses would be good for American businesses, I can try to explain in greater detail.

    • #37
  8. James Of England Moderator
    James Of England
    @JamesOfEngland

    billy:

    BrentB67:Frank, you’ve read the agreement and know that it makes trade morefree?

    Why bother?

    Can’t we just trust the fact that it is called a free trade agreement and it was negotiated by the Obama administration, which is firmly committed to free markets and rejects crony capitalism in all its nefarious forms?

    Well, in part. It was negotiated by 12 parties, most of them keenly committed to opening trade. The US seat at the table was sharply confined in its negotiations by the terms of the Trade Promotion Authority which was given to it.

    Even if all 12 parties were not keen, most of them already have FTAs in place with other parties, most of which are written up along similar lines, meaning that it would be very difficult and expensive to make the TPP terribly different.

    For what it’s worth, I have read some chunks of it, and those have confirmed my suspicion that it wouldn’t be terribly different to its predecessors; I should clarify that I don’t know as much about the IP aspects as I do about other areas of the law with this stuff, but I get the impression that the concerns there are overblown, too.

    • #38
  9. James Of England Moderator
    James Of England
    @JamesOfEngland

    Fred Cole:

    Ball Diamond Ball:This ridiculous treaty should be rejected just based on its length. Why? Because precisely nobody will be able to process this information.

    I agree with you on principle, however,

    I wouldn’t dare to presume to speak for James, but he often made the point to me that longer bills are better. Why? Because when they spell out everything specifically in great detail, its better than leaving it up to the whim of bureaucrats to interpret.

    This is particularly the case when you really can’t trust the executive. In the US, the executive generally does more or less what the majority of Americans want, because there’s a lot of democratic pressure even on Democratic leaders. The weight of US public opinion and the prosperity of US companies is less meaningful to, say, Malaysian politicians.

    We haven’t had particular difficulty in implementing the NAFTA and other trade agreements (well, there’ve been difficulties with some passages, such as those offering access to the US for Mexican trucks, but they’re not complicated passages, just passages with meanings uncomfortable for US politicians.) We’ve run this experiment, and it turns out that the results were sound and conservative, bringing prosperity and the rule of law (including sometimes to the US).

    • #39
  10. The Reticulator Member
    The Reticulator
    @TheReticulator

    James Of England: The actual text of the legislation, incidentally, isn’t all that long at all for the principles, and is not so hard to read.

    For your reading convenience, here is the actual text of the legislation.  I got that link by following the one provided by James of England, but if you go to this one you can skip all the advertising that tries to insult your intelligence.

    • #40
  11. James Of England Moderator
    James Of England
    @JamesOfEngland

    BrentB67: All of the republicans supporting this are the same crew howling about how Obama is lawless, operates outside the Constitution, rogue, etc. When it comes to trusting him and his staff to negotiate an international agreement >2x Obamacare that is subject to a less than Constitutional hurdle suddenly all is well and we should trust both them and Obama. I think that is a hard pill to swallow.

    I’ve known some of the people who worked on it. The USTR is a pretty professional agency. Obama’s first USTR was a terrible incompetent, perhaps the most shameful cabinet appointment, but the current guy’s basically fine.

    We don’t need to trust him. If there was a sneaky thing in there, there were a ton of conservatives involved in the negotiations from the other side. It would have been leaked so that it could be defeated and removed.

    Freeven:Can I ask a stupid question? Why do we need agreements regarding free trade? If it’s truly free trade, no agreement should be necessary. If an agreement is necessary, then we’re no longer talking about free trade.

    So we have those sorts of trade agreements. Essentially, they guarantee Most Favored Nation treatment and leave it at that. Today, they’re basically all subsumed into the WTO, making them meaningless other than in interactions with non-WTO members.

    They don’t, for example, protect American companies in Mexico from abuse at the hands of the Mexican government. They don’t spell out precisely what measures governments can take to exclude lumber that they suspect may carry economically deadly beetles. They don’t give tariff rates more favorable than the Most Favored Nation rates.

    If you glance over the text, you will see that it is basically filled with useful protections for exporters that take some work to spell out, in part because it’s helpful to guess why countries might want to do something that looks like discrimination against foreign goods and then work out if they should be able to do that thing. So, for instance, some phytosanitary measures are worth having; we don’t want to simply ban countries from going to efforts to exclude beetles, carp, and such from their borders. On the other hand, we don’t want to say that simply calling something a phytosanitary measure means that you get to do what you want.

    • #41
  12. James Of England Moderator
    James Of England
    @JamesOfEngland

    The Reticulator:

    Frank Soto: The fear seems to be that Obama and a global cabal of leftists are using the agreement to push a progressive agenda, but such terms would never be accepted by all of the countries covered by the TPP.

    The fear is that they would push an anti-free-trade agenda favoring crony capitalists (which would include socialist capitalists) and such terms could easily be accepted by all countries.

    Why on earth would Stephen Harper and Tony Abbot have accepted that?

    Are you under the impression that this has happened with previous FTAs? Did it happen when Obama passed the Panama or South Korean FTAs? Did it happen when Clinton got the NAFTA ratified?

    This has the deck stacked much more heavily in favor of trade than those agreements did, but those agreements also worked like other FTAs have.

    • #42
  13. The Reticulator Member
    The Reticulator
    @TheReticulator

    I skimmed the Telecommunications section.  I’m guessing that the main thing this does that is different from the status quo is to require transparency of regulation and to require non-discriminatory policies, e.g. in access to rights of way. It’s otherwise full of deference to countries’ existing regulations.  The word “reasonable” is used a lot.  There is a mechanism for resolution of the inevitable disputes that will come up, and it provides for a reasonable amount of heel-dragging by national telecoms in dealing with these disputes.

    So will this agreement actually do anybody any good in providing access to another country’s telecom services and infrastructure?  It might, but I don’t know.

    • #43
  14. Ball Diamond Ball Inactive
    Ball Diamond Ball
    @BallDiamondBall

    James Of England:

    Quinn the Eskimo: That being said, the nature of free trade is that we benefit when goods come into our country, that is, something like the converse of a blockade. And to do that, we only have to lower our trade barriers, not get other people to lower theirs. If other countries want to blockade themselves and have less stuff, goes the theory, then they are suckers.

    Not quite. When we open our borders to trade, we benefit and the other party benefits. When they open their borders to trade, we benefit and they benefit.

    It’s true that if they don’t open their borders, they suffer, but that doesn’t mean that we shouldn’t care about our own losses, too.

    To put it another way, currently, our goods are taxed when we export them to Japan. This cuts those taxes. If you can’t see why a libertarian would like tax cuts, or can’t see how tax cuts on American businesses would be good for American businesses, I can try to explain in greater detail.

    Some people do not assume that this administration is doing things in good faith.  Your faith is endearing, but not contagious.

    • #44
  15. The Reticulator Member
    The Reticulator
    @TheReticulator

    tpp

    So what is this graphic doing all over the blah-blah-blah sections of the agreement?  Does this mean that the agreement is made in America and we’re shoving it down the throats of other countries?  Does it mean that it covers only American-made goods and services?  Is it a cynical ploy by Obama to get the bitter clingers to go along with it?

    If it’s true that it’s the latter (which is my suspicion) such dishonesty in presenting it means we should reject the treaty.

    • #45
  16. James Of England Moderator
    James Of England
    @JamesOfEngland

    The Reticulator:tpp

    So what is this graphic doing all over the blah-blah-blah sections of the agreement? Does this mean that the agreement is made in America and we’re shoving it down the throats of other countries? Does it mean that it covers only American-made goods and services? Is it a cynical ploy by Obama to get the bitter clingers to go along with it?

    If it’s true that it’s the latter (which is my suspicion) such dishonesty in presenting it means we should reject the treaty.

    Conservatives in America had a large role in the creation of the treaty through the terms of the TPA, which helps to make it a good treaty. Conservatives in the past (including some Democrats conservative on this issue) have done the same, by shaping past agreements. Conservatives in other countries have made this a better agreement.

    The choice of logo on the webpage, though, is all Obama. I will make no defense for what I agree to be a horrible choice. I will stake the claim, though, that choosing a policy for the economic direction for America and the Pacific Rim based on the logo would seem to be eccentric. If Obamacare had had a really great logo, it would still have been terrible. If welfare reform had had, well, this logo, it would still have been awesome.

    If it is any help, I am not under the impression that many Americans will have seen this logo, so it is unlikely to have had much of an impact in passing.

    If I may swing close to the CoC winds for a moment, it’s worth noting that Obama doesn’t necessarily want the deal to pass. If Republicans were to oppose the deal, that would be a serious boon to Democratic fundraising for the Presidential election. Clinton would be certain to run on “improving” the deal, allowing her to navigate the poles in which her activist base correctly opposes it as a manifestation of free markets while her donor and national base supports it for the same reason.

    • #46
  17. James Of England Moderator
    James Of England
    @JamesOfEngland

    Ball Diamond Ball:

    James Of England:

    Quinn the Eskimo: That being said, the nature of free trade is that we benefit when goods come into our country, that is, something like the converse of a blockade. And to do that, we only have to lower our trade barriers, not get other people to lower theirs. If other countries want to blockade themselves and have less stuff, goes the theory, then they are suckers.

    Not quite. When we open our borders to trade, we benefit and the other party benefits. When they open their borders to trade, we benefit and they benefit.

    It’s true that if they don’t open their borders, they suffer, but that doesn’t mean that we shouldn’t care about our own losses, too.

    To put it another way, currently, our goods are taxed when we export them to Japan. This cuts those taxes. If you can’t see why a libertarian would like tax cuts, or can’t see how tax cuts on American businesses would be good for American businesses, I can try to explain in greater detail.

    Some people do not assume that this administration is doing things in good faith. Your faith is endearing, but not contagious.

    I’m not sure what you’re talking about. I’m not particularly afraid of Obama getting the Japanese to cut taxes on American exports in bad faith if the result is that the Japanese cut taxes on American exports. Perhaps you could expand on what bad faith would mean in this context?

    • #47
  18. James Of England Moderator
    James Of England
    @JamesOfEngland

    The Reticulator:I skimmed the Telecommunications section. I’m guessing that the main thing this does that is different from the status quo is to require transparency of regulation and to require non-discriminatory policies, e.g. in access to rights of way. It’s otherwise full of deference to countries’ existing regulations. The word “reasonable” is used a lot. There is a mechanism for resolution of the inevitable disputes that will come up, and it provides for a reasonable amount of heel-dragging by national telecoms in dealing with these disputes.

    So will this agreement actually do anybody any good in providing access to another country’s telecom services and infrastructure? It might, but I don’t know.

    This is a pretty great description of telecommunications chapters, how they function, and the limits to their value. I’m not aware of there ever having been much of an impact from them, but they were in the early FTAs, so they’re in almost all of the later ones  (they’re not in the EU-CAFTA agreement, which seemed frightfully exciting to lots of people in the field, because it suggested that the EU is keen to exclude it from the TAFTA (US-EU), but it appears that that excitement was overblown; it’s not clear why the EU took its decision).

    Still, if it ever does have a meaningful impact, it seems likely that it’ll be a good one. It adds a little to the bulk of the document, but it’s easy to understand, familiar, and does no harm to anyone.

    • #48
  19. Ball Diamond Ball Inactive
    Ball Diamond Ball
    @BallDiamondBall

    James Of England:

    Ball Diamond Ball:

    James Of England:

    To put it another way, currently, our goods are taxed when we export them to Japan. This cuts those taxes. If you can’t see why a libertarian would like tax cuts, or can’t see how tax cuts on American businesses would be good for American businesses, I can try to explain in greater detail.

    Some people do not assume that this administration is doing things in good faith. Your faith is endearing, but not contagious.

    I’m not sure what you’re talking about. I’m not particularly afraid of Obama getting the Japanese to cut taxes on American exports in bad faith if the result is that the Japanese cut taxes on American exports. Perhaps you could expand on what bad faith would mean in this context?

    Assuming that the tax improvements you cite are carried out in the manner you claim, there’s too much room in a 5,500 page bill for mischief.

    In any large bill, there are little sweetheart deals and poisonous clauses inserted with a near-trapdoor logic.  Those who know what they put where get to prepare for those conditions.  The rest get to suck it up.  The 380-page 2007 immigration bill contained a quiet “Z-visa” provision that rendered most of the law meaningless, as it granted endless renewals of legal status, and placed the burden of providing citizenship on the government.  ObamaCare is really less than 1,000 pages.

    • #49
  20. James Of England Moderator
    James Of England
    @JamesOfEngland

    Ball Diamond Ball:

    James Of England:

    Ball Diamond Ball:

    James Of England:

    To put it another way, currently, our goods are taxed when we export them to Japan. This cuts those taxes. If you can’t see why a libertarian would like tax cuts, or can’t see how tax cuts on American businesses would be good for American businesses, I can try to explain in greater detail.

    Some people do not assume that this administration is doing things in good faith. Your faith is endearing, but not contagious.

    I’m not sure what you’re talking about. I’m not particularly afraid of Obama getting the Japanese to cut taxes on American exports in bad faith if the result is that the Japanese cut taxes on American exports. Perhaps you could expand on what bad faith would mean in this context?

    Assuming that the tax improvements you cite are carried out in the manner you claim, there’s too much room in a 5,500 page bill for mischief.

    In any large bill, there are little sweetheart deals and poisonous clauses inserted with a near-trapdoor logic. Those who know what they put where get to prepare for those conditions. The rest get to suck it up. The 380-page 2007 immigration bill contained a quiet “Z-visa” provision that rendered most of the law meaningless, as it granted endless renewals of legal status, and placed the burden of providing citizenship on the government. ObamaCare is really less than 1,000 pages.

    There are lots of kinds of laws that allow for this. This isn’t one of them. The text is tightly negotiated by many parties, each with their own motivations for leaking any textual controversies and each with their own aims. The provisions of the text are limited by the Trade Promotion Authority terms. The text gets months of analysis and if there’s anything like that in here, the person who finds it (or his employer) gets to make a career out of it.

    I agree that Obamacare isn’t so long. That’s because it gives lots of discretion to the Sec. DHHS. In part, this was wise because healthcare is unbelievably complex and they couldn’t know the impacts of the law even at a fairly basic level, making flexibility important. This law is much, much, simpler, and treads very well trodden ground, so the precision we got with the NAFTA (the TPP is much more similar to the NAFTA than the Canadian CUSFTA which proceeded it) is still appropriate.

    • #50
  21. Ball Diamond Ball Inactive
    Ball Diamond Ball
    @BallDiamondBall

    James, I have lost faith in processes and bodies such as you illustrate. You’re giving the Schoolhouse Rock version of how a bill becomes a law, which remains as true today as the day it was written, and on back to the Founding. So it can’t really be refuted, but it’s not really true anymore. sure, it was never so squeaky clean, but some differences of degree proceed so far as to become a difference in kind.
    This is no longer that.

    • #51
  22. James Of England Moderator
    James Of England
    @JamesOfEngland

    Ball Diamond Ball:James, I have lost faith in processes and bodies such as you illustrate.You’re giving the Schoolhouse Rock version of how a bill becomes a law, which remains as true today as the day it was written, and on back to the Founding.So it can’t really be refuted, but it’s not really true anymore.sure, it was never so squeaky clean, but some differences of degree proceed so far as to become a difference in kind. This is no longer that.

    The best book on how trade agreements are negotiated is still NAFTA: How The Deal Was Done. The people in the USTR’s office I’ve talked to about the TPP confirm that it’s still pretty accurate, in part because everyone’s read it, so it sets expectations. Now, maybe they were in on a conspiracy, but I really think that this is how things work today.

    I’d highly recommend the book to people who are interested in the process. It’s not too long, it’s a pretty exciting read by policy book standards, and it’ll leave you in a much better place for understanding these issues. I can’t think of a second book on trade agreements that I’d recommend to laymen, but this one really is interesting.

    • #52
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