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Ricochet and the TPP
Ricochet began as a podcast and a subscription-based website, but quickly became a community that extends well beyond. Perhaps it would be more accurate to say it began with the unlikely friendships of its founders — @peterrobinson and @roblong — so the ensuing meet ups and social media interactions of members should not be surprising. Via Facebook, Twitter, or face-to-face, the debates and conversations don’t end here.*
Nor do they always begin here. And sometimes, that’s regrettable because I learned a thing or two that others could certainly appreciate. Case in point, @jamielockett proposed elsewhere that President Donald Trump’s decision to withdraw from the Trans-Pacific Partnership was a mistake. That led to the following exchange including myself, Jamie, and @jamesofengland, reprinted here (somewhat abridged) with their permission.
Me: Nothing prevents [Trump] from renegotiating one-on-one with each country. What were the advantages of the TPP?
No agreement should be thousands of pages. That’s opportunity for mischief.
Jamie: The advantage was the normalization of tariff and IP regulations across multiple jurisdictions making the flow of goods much easier and cheaper. Furthermore, it ensconced America as the central authority figure of the Pacific Rim economies with our standards for regulations and rights central to any participation in a growing pacific free trade zone. Now we have opened the door to China who have already begun the process of establishing their own economic dominance with their evil regime at the center.
Me: And do you believe it was well negotiated by the Obama administration? It’s difficult for me to believe that the errant ideology and priorities that infected his every other policy had no bad influence on the TPP. Again, I would guess that it would make sense for Trump to renegotiate… even if it is the TPP he is negotiating.
Jamie: The TPP has been in the works since the Bush administration. From what I’ve read the tariff reductions were pretty straight forward and well negotiated. I’m a bit less sanguine about the IP protections but that has more to do with my libertarian ideology than it does with real politik.
Me: Well, you have read it and I haven’t, so I’ll trust your judgment.
Jamie: The best person to ask on this is @jamesofengland.
[Cue the bat signal!]
James: The length of the agreement is not an indicator of quality, but if it’s what you’re concerned about, it’s hard to believe that having a dozen similar length agreements instead is helpful in any respect whatsoever.
Me: The length of any agreement is a concern because politicians regularly bury controversial lines to avoid publicity and debate. Perhaps trade agreements are less prone to this corrupt practice than domestic legislation. But we should be wary in any case. Don’t personal lawyers advise that succinct contracts are best? Can the same not be said of corporate and national contracts?
Furthermore, fewer claims within an agreement mean stronger negotiation on the particulars. If I can’t get A, B, C, D, and E unless I accept X, that is a lot of pressure to compromise. But if only A and B are premised on acceptance of X, I have more leeway to negotiate.
Large agreements are more susceptible to deception (more carefully worded clauses not given sufficient consideration) and to pork.
James: You want to know what’s in a contract. There’s two ways that you can achieve this. Firstly, you can make the contract short. Secondly, you can have the contract contain the same language as previous, known, contracts.
If you’re engaging in a personal contract, you probably want it to be short because if you’re drawing something up you’re only going to know what’s in it if you put work into understanding each clause. You probably don’t have a pre-existing lengthy contract. So, there you should make sure that it’s short.
I’ve worked with contracts that were longer than the TPP, though, because in some industries where the relationships are mature and the parties are substantial, they get that way. Oil company contracts are a classic example. It also helps that there are a lot of interested actors (multiple nations don’t increase the number of interest groups all that much, but an individual nation has a lot of different concerns). Because everyone has to pay specialized lawyers considerable sums to understand these contracts, everyone would like it if the contracts could be short and simple, but they want the agreement to be clear and to avoid problematic ambiguity even more than they want brevity.
When Reagan negotiated the CUSFTA with Canada that became the bulk of the NAFTA text, he didn’t make it long because he wanted to hide pork. There was no pork. When Bush added the rest of the NAFTA text, he didn’t add pork. What was there was mostly safeguards against Mexican governmental abuse. As with oil contracts, they’re long because there’s a real chance that you won’t have the parties being friendly and working in good faith thirty years down the line when the clause comes into effect, so you want everything to be spelled out to the greatest extent possible.
Most of the TPP text is taken from the NAFTA and CUSFTA. Rewriting Reagan’s work to make it simpler wouldn’t help provide predictability as well as retaining the language that has already been litigated.
The place where most pork gets hidden is in agency discretion. The most pork filled bill in American history was FDR’s National Industrial Recovery Act, which was pretty short. Obama’s stimulus was only long because people packaged a whole raft of mostly unrelated laws along with it; the stimulus part was small.
James: In terms of the negotiation over particulars, the US promises nothing that I’m aware of in TPP that it has not already promised in existing trade agreements with TPP members. It would expand the scope of those commitments, so Japan etc. would now have tariff free access as well as countries that already have it, but there’s nothing that the US was pressured to give other than giving up pork. Specifically, there’s some industries that negotiate slower implementation of agreements and such; the last NAFTA provision wasn’t fully implemented until 2008. In general, it’s good for America when the US decides not to pick and choose exceptions, so if large agreements had the impact that you suggest that would generally be positive (it would also increase our access to foreign markets). The way that these agreements are negotiated, though, with different teams working on different sectors, means that there isn’t as much cross-issue negotiation as one might have thought and relatively few issues are resolved along the sort of sine qua non lines you suggest.
The governments generally have roughly the same interests; they both want clarity, they both want free trade with proper phytosanitary and other systems in place, they both want to have systems in place to prevent breaches effectively, and so on. The people who are likely to have the A, B, if X issues are the domestic legislators in various countries. In general, it’s undesirable for them to have a lot of negotiation space because we want a clean agreement. There are areas bracketed out for a period of time, but those exceptions should be the few exceptions most important to a country, not every exception that’s important to a representative somewhere.
Me: Why are old agreements folded into new ones? Why not leave or reaffirm the established contract and make the new terms a separate contract? Does folding in the old to make a compilation discourage renegotiation of those old terms?
James: They reuse the language in new, separate, agreements. You want to reuse language as much as you can in part because, yes, renegotiation is a pain, but also because you want to maximize familiarity so that legal precedent is clear and so that you don’t have to retrain all the lawyers.
This is true in trade agreements, but also in personal contracts; you want them to be brief, but you also want to copy and incorporate language that will be familiar to anyone who has to deal with it either as a party to the contract or as an enforcer of it. You’ll find a lot of the Canada-US language in Korea-US not because the KUSFTA incorporated CUSFTA but because everyone in the sector now knows the CUSFTA language and no one wants the legal precedents from previous FTAs to be rendered less clear through novelty.
Just to clarify, most of the language wouldn’t be subject to renegotiation anyway. The great bulk of the language of the TPP, as with all modern trade agreements, is responsible governments limiting the power of irresponsible future governments to engage in bad behavior. When everyone in the room wants the same thing, there just isn’t that big a drive for negotiation.
Caroline: James probably included this in one of replies. More contracts means more people managing the compliance. So more bureaucracy and not just the government’s.
James: Obama’s first USTR was awful, but his second USTR was pretty good. Also, trade agreements are pretty consistently similar to each other; the differences are in the details, which don’t matter all that much in substance. Also, the people Obama was negotiating with were free market capitalists; if you’re a conservative, you shouldn’t want Obama to be negotiating hard, because it’s what the Australians and Japanese and Harper govt. Canadians wanted that you’d want to be law.
Jamie: Don’t forget the Singaporeans.
James: There were several smaller good actors, but it’s the big countries that made the bigger difference. I’d say the next most helpful were Mexico and Chile, but in general TPP was negotiated at a uniquely helpful time for having just about all of the countries being headed by free trading governments.
In defense of Trump, because there was no change to TPP that he could plausibly make that would improve it (Ross suggested changing the rules of origin a little, but while that would be easy to do it wouldn’t persuade anyone that this was a radically different different deal), he probably had to leave to comply with his promises. It’s true that negotiating and signing individual FTAs with the remaining countries is in every respect inferior to being part of a multilateral accord with the same terms. It is also true that his NAFTA resolution might be nuts and he could seriously harm the WTO. If neither of those things happen, though, and we get Japan, Malaysia, Vietnam, New Zealand, and the UK added to the bilateral FTA network we’ll have a global trading system that is substantially more free and more rules based (i.e., with less scope for arbitrary government action) when he leaves than it was when he came in. Less good than if he’d been an ordinary President, but “only somewhat improved” is a target devoutly to be desired.
And if we get bilateral FTAs and the rest of the TPP signs with each other (not certain, since some of the governments are now less conservative than the ones who negotiated it), it should be pretty easy for Trump’s successor to sign us up.
The End. Or it would be if we left the conversation there. But I knew if I brought it here, y’all would have plenty more to add.
Ricochet isn’t just a site, nor even just a community. It’s also an education.
[* Editors’ Note: Want to become a part of the community Aaron describes here? Membership starts at just $5 a month and we’d love you to join the conversation.]
Published in Economics
No, that isn’t true absolutely. You’re speaking like it’s a religious belief. If the displacement comes at a greater cost than the benefit, then the free trade is not beneficial. It’s not clear to me that the shutting down of the steal industry was a net plus. We had billions if not trillions of dollars of infrastructure invested into the industry. When tariffs are high, then freer trade is a net plus. But when tariffs are moderate to low, then there is a cross over in cost/benefit where it may not make sense. Everybody that talks free trade imagines the tariffs to be sky high but in reality they are not necessarily so. Not all trade agreements make sense, and so far you seem like one that who hasn’t met a trade agreement he doesn’t like.
So why are you concealing it?
Sure, but what evidence do you have that the displacement comes at a greater cost to the nation than the benfit? NAFTA increased our exports and manufacuring. It increased employment. It made goods cheaper. These are just facts.
I’m not – I just don’t see how it has any value.
I favored Brexit – mostly because as Daniel Hannan and Nigel Farage pointed out at the time, the UK was forbidden from establishing free trade agreements with various parts of the world with which it had a natural constituency – India, Australia etc.
Now that you know it still has no bearing on the TPP because they are in no way the same.
Ha! This is religious dogma to you. Any corporation worth their salt making such a a large contractual arrangement would have a cost/benefit analysis performed. Where is the cost/benefit analysis on these trade deals? Why isn’t that put before the American people for some sort of educated assessment? How am I to know how much we’re supposed to benefit and how much turmoil it will cause our infrastructure and citizens? Why are these deals so nebulous that the facts are not put forth for everyone? These thousands of pages deals stink like most government laws that are thousands of pages.
You keep saying its religious dogma but the facts are there: https://piie.com/commentary/speeches-papers/nafta-revisited
You can also read and listen to James from earlier in this thread.
Well I was going to say “knock it off.”
yours was more elegant @jamesofengland
I did some research re: my own question in #75 above.
Andy McCarthy has quite a lot to say about it in NRO this afternoon.
Here are a couple of relevant passages:
Andy thinks the deal is actually pretty protectionist and that’s why it’s so long.
(Continued below)
(Continued from above)
He also points out that the U.S. indeed gives away some sovereignty.
(Continued from above)
I apologize for the lengthy quotes but considering the arguments we are seeing up to now both for and against I thought it important to put some substance to why it might not have been such a great deal.
I don’t know. All the substance in the thread is good. Seems to support killing it if you ask me.
All good information that deepens people’s understanding of the TPP, no need to apologize. What is missing from McCarthy’s analysis is that these things are based on US Law which benefits us in the end. I don’t love it, but the massive trade liberalization provisions outweigh this – in my opinion.
Addressing the labor rights generally, these commitments are already part of our law. They’re part of every trade agreement Clinton, Bush, and Obama have signed. If the US ever decides to abolish rather than to lower its minimum wage, it could run into trouble. That trouble would not be significantly greater as a result of TPP.
Those who have referenced the previous conversations along the same lines will note that this is similar to the reason that I’m not particularly excited about the IP provisions reproducing the same provisions from existing US international commitments. Yes, if the US were to back out of twenty years of international commitments, this would be another layer added to the many layers of commitments added over that time. It wouldn’t be a particularly substantial layer, though. In a world where the US, the chief beneficiary of ironclad IP standards (we own more IP than anyone else, by a considerable margin) decided that it wanted to roll those standards back, it’s pretty unlikely that many of the TPP partners would constitute the chief problem raisers. Since we’re a long way from that, it seems fine.
Similarly, if anyone thinks that we’re going to abolish the minimum wage, I can see how this stuff might seem exciting. I get that more senior politicians talk about this than talk about rolling back IP protections, but we haven’t had a bill even get drafted to do this since 1996, and that one didn’t get so far as getting a committee hearing (it had the support of 24 Representatives, which isn’t nothing, but is also not a governing majority).
That said, even if the US were to abolish its minimum wage law and a TPP partner were to successfully launch a suit against the US for doing so, the remedy would be to reduce some US rights against the treaty partner; essentially, that treaty partner would be permitted to raise tariffs to protect its industry against the US undercutting its labor costs. No rights would be granted to that partner that would not have existed absent the TPP. We would be no worse off signing the TPP and violating the labor clause to the point of implementing slavery than we would be absent TPP.
The point of these chapters is not to regulate the US. We’ve had them for a long time and there has never been a problem for the US arising from them. They’re there to say that countries where there are issues with corrupt non-enforcement of labor laws and such is a problem should do better at maintaining the rule of law. Again, almost all of the TPP partners already have these commitments, and I believe (although I’m going from memory here) Vietnam is not having to make significant changes to raise its standards to the required level.
For the people who are make claim that you can’t have free trade working with unfree labor, there were two responses formulated in the 1990s. Firstly, it would be a good idea to study Ricardo and learn why this isn’t true (this answer predates the ’90s). Secondly, even if you don’t understand the issue, we’ll include these safeguards so that you don’t have to worry so.
To respond to the environmental thing as separate from the labor agreement: the law isn’t reinforcing the myth that trade harms the environment. It’s saying that countries shouldn’t make exceptions to environmental and labor laws for wealthy investors, which has historically been a problem; there are well run export zones, but there have also been export zones that were wholly corrupt. They aren’t an issue today in any of the TPP partners, but they have historically been legitimate concerns and could conceivably be so in the future.
The environmental chapter explicitly condemns protectionist endeavors disguised as environmentalism. That stuff about “collective action” is pro-trade.
Also, again, this stuff just isn’t meaningful from a US perspective. If we fail to meet Vietnamese environmental standards, they might become a concern, but that’s just not where we’re at. If there’s a nuclear war, we may want to renegotiate the agreement, but it’s not wise to pass law today on the basis of what life would be like after the apocalypse; the survivors will be much better placed to shape law appropriate to their circumstances.
I’m not sure that the steel industry has been “shut down”. In 1990 we made 90 million tons of steel. In 2014 we made 88 million. In the 1960s we were at 115. Other countries that have increased openness to trade substantially have increased production or decreased production depending on case. Other countries that have not substantially increased oppenness to the steel trade have increased or decreased it.
Do you have a specific economic theory in mind when you say that low tariffs are beneficial? Do you believe that low steel tariffs would have led to greater employment in the US?
You think that the overwhelming majority of Americans have suffered from trade agreements? Do you have a specific mechanism in mind? Are you aware of the benefits of trade being one of the very few things on which economists reach broad agreement and you consciously reject the academy?
I really believe that if you read the text you’d come to understand the reason that there’s more in these documents.
With corporate contracts that run to thousands of pages, do you think that they set things up that way because the lawyers are conning them, or because legal agreements sometimes benefit from detail.
Trade agreements work in the same way as every other law. Do you think that the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 was short, or that it worked by saying that all prior laws were obsolete? Do you think that that was because Newt was giving someone the short end of the stick? When you can through it it looks as if it’s only hundreds of pages, rather than thousands, long, but that’s because it has a body of domestic law that it can clearly and easily refer to. Trade agreements by their nature are reforms to different legal systems so have to duplicate more text from previous agreements, but there is nonetheless a high level of continuity with previous law.
I don’t think we should enter into agreements with nations who cheat.
I believe that plenty of non-racists have questions about trade agreements and that some oppose them. Was my explanation in #60 helpful?
Do you have any particular nations in mind?
I’m going to recap the point I talked with @jamesofengland about.
In science publication, particularly biomedical [see Marcia Angell’s work for a cogent insider critique] there are some interesting general disputes. One centers around openness and full disclosure of data. This is related to the problem of selective publication of favorable studies and suppression of unfavorable studies.
Publication of the suppressed studies is generally fought under intellectual property grounds by the drug companies which conducted or funded them.
This is not just an industry problem. The evidence of an immunization related increased incidence of autism in African American boys was suppressed, and the relevant data collected during the studies studies destroyed, by the FDA.
As near as I am able to tell, the IP provisions of TPP would massively compound this problem. These provisions are generally are handled administratively within the TPP (sound familiar?) and independent oversight is difficult.
The above is my impression, based on my decades long following of the medical literature, my interest in medical history both from mainstream and alternative vantage points, and personal experience with illegal activity carried on by the medical establishment (I was not involved in the lawsuit but was directly affected by the conspiracy that was the reason for the lawsuit.)
This is the lens through which I view TPP. I don’t have the expertise to address the trade provisions though I see the desirability of using language tested in hearings before courts, commissions, etc. whenever possible.
I found your comment over the top. Racism is the go to way to shut down arguments used by globalists. Top is an exercise by globalists.
This one line undermines pages and pages of your text. I am not worried about trade based on the color of someone’s skin. I get called racist enough by the left. Clearly, you are more comfortable with the globalist left than flyover right.
Whenever someone uses the term globalist regarding free trade I know they aren’t serious about the issue.
I don’t like being called racist. The injection of skin color into this discussion was not by me.
I didn’t see anyone call you a racist.
http://ricochet.com/podcast/a-trade-debate/
@jamesofengland, thank you very much for all of the information in your replies in this post! You and @jamielockett must be the reasons why @aaronmiller is able to stay so quiet in his own post. You probably have discussed much of this in previous posts, and all I can say is that I am unable to follow everything going on in Ricochet with the level of attention that I would like to.
I have learned something regarding the implementation of certain rules (such as intellectual, labor and environmental protection) in the agreements. I had an initial negative stance regarding many things worked or proposed by the Obama administration, including TPP, but I lean towards opener trade, so I’ve kept an open mind.
Living in Japan also means that I get a closer view of things from the other side. It wouldn’t surprise you to be told that there are many Japanese who are just as concerned by the risk of loss of jobs in manufacturing and agriculture. And they have the same concerns regarding IP issues, thanks to regular reports in the news regarding Chinese companies using things such as Japanese corporate symbols or manga without authorization. Although I’m too young to remember it personally, I remember that the Japanese used to do the same thing in the 50s, 60s and 70s with US products. The shoe is now on the other foot, and in a generation or so, the Chinese may be doing the same thing.
All credit to @jamesofengland on this one. I’m an enthusiastic amateur and no where near as smart.
@roberto, it’s not speculation, I’ve experienced this myself. Although I was working on military issues as opposed to trade issues, I saw the same thing in bilateral and multilateral military alliances. Let me use the name TPP to provide an example of what I think James meant when he used the word “forum,” to demonstrate that he wasn’t speculating.
The persistent international agreements I’ve dealt with expect there to be periodic meetings of designated officials, usually Secretary-level members of each government, and give the meeting forum a name, for example “TPP Principals Committee.” If the agreement is comprehensive, it’ll normally have subordinate specialized fora, with titles such as “TPP Legal Subcommittee,” “TPP Environmental Subcommittee,” etc. Whenever disagreements come up about some specific issue, it’s addressed in one of these fora to work on a solution.
Without an existing agreement and fora to address issues, the respective countries have no formal way to work what may be low-level issues, except by meetings of Secretary-level officials of each government. Junior officials in many countries are afraid to stick their necks out, so they defer to their boss. And because senior officials are extremely busy and can be impacted by political changes, problems generally don’t get solved.
I don’t have anything intelligent to add. I’m just glad we were able to open up the discussion. The TPP is too complex for me to have a strong opinion without having read it and a lot more.
Generally, the US should not consent to be restricted by international bodies. If arbitration standards do not impose upon our sovereignty, they might be useful.
Furthermore, we should not be pushing wrong-headed environmental and economic standards on developing partners. As the foremost economy in the world, US demands are influential, so we should undo as much damage as possible when communist sympathizers like Obama encourage weak countries to follow suit.
Again, I haven’t read the bill, so these are only general concerns based on the McCarthy’s remarks. But I’m willing to trust James on this.
I didn’t call you a racist. I apologize for my inept language making me less clear than I ought to have been, but I then clarified that that was not what I was doing.
Race transforms the way that the media cover the issue which means that people who are not interested in race get a distorted understanding of the way that trade works.