The TPP Gang That Can’t Shoot Straight

The TPP Gang That Can’t Shoot Straight

The push for the Trans-Pacific Partnership (TPP) is reaching its final stages as the House of Representatives will soon take the key vote on fast-track trade authority which will almost certainly determine the pact’s outcome. The proponents of TPP are clearly feeling the pressure, as they make every conceivable argument for the deal, and unfortunately many that are not quite conceivable.

In the last few weeks, TPP proponents have repeatedly tripped up, as they got their facts wrong and their logic twisted. This hit parade of failed arguments should be sufficient to convince any fence sitters that this is a deal not worth doing. After all, if you have a good product, you don’t have to make up nonsense to sell it.

Leading the list of failed arguments was a condescending editorial from USA Today directed at unions who oppose the TPP because they worry it will cost manufacturing jobs. The editorial summarily dismissed this idea. It cited Commerce Department data showing that manufacturing output had nearly doubled since 1997, and argued that the job loss was due to productivity growth, not imports.

It turned out that the table used in the editorial did not actually measure manufacturing output. The correct table showed a gain of only 40 percent over 17 years. By comparison, in the prior ten years, when our trade deficit was not expanding, manufacturing output had increased by roughly 50 percent.

USA Today eventually acknowledged the error, but left the text and the criticisms in the editorial unchanged. Remarkably the headline of the editorial referred to the opposition to the TPP as a, “fact-free uproar.”

Another big swing and a miss came from Bill Daley, a former executive at J.P. Morgan who briefly served as chief of staff in the Obama administration, as well as Commerce Secretary under President Clinton. Daley had a New York Times column pushing the TPP by arguing for the virtues of trade. The piece was chock full of errors and misleading comments, but the best line was the claim that the United States ranks near the bottom in the ratio of exports to GDP because of the barriers put up to our exports.

As fans of trade economics everywhere know, the main reason the United States has a low ratio of exports to GDP is that the United States is a big country. This means that Illinois and Ohio provide a large market for items produced in Indiana. On the other hand, if the Netherlands or Luxembourg wants to have a large market for their products, they must export. (Paul Krugman added the chart to illustrate this point.)

Then there was the issue over whether the TPP is secret. President Obama and other TPP supporters ridiculed this notion, pointing out that members of Congress can see the draft text any time they like. The point made by critics is that it is not possible to have a public debate on the TPP. The members are not allowed to bring staff with them (it is technical language) nor can they discuss the text with others.

As Senator Sherrod Brown pointed out in this context, President George W. Bush made the draft text for the Free Trade Area of the Americas (FTAA) public before asking Congress to vote of fast-track authority. Apparently President Obama is not willing to have the same degree of openness as President Bush and is attacking TPP critics for suggesting that he should.

Washington Post columnist Ruth Marcus tried to save the day for Obama by arguing that our partners in the FTAA had given permission to make the deal public. We’re really supposed to believe that President Obama could not get similar consent from the TPP partners, if he wanted it?

Then there was the issue of whether TPP and other trade agreements that could be passed under fast-track authority (the fast track authority will extend well into the term of the next president) could jeopardize the ability of the United States to regulate the financial sector. When Senator Elizabeth Warren raised this issue, President Obama dismissed her views as the hypothetical musings of a former law professor.

The next week, Canada’s finance minister gave a speech in which he argued the Volcker Rule, which limits the extent to which government insured banks can hold risky assets, violates NAFTA. It turned out that the Canadian finance industry had raised these concerns with the Treasury Department as far back as 2011. In other words, Warren’s concerns were far from hypothetical; they reflected issues that had already come up with prior trade deals.

With the economic arguments for the TPP falling flat many have turned to the geopolitical argument. Fareed Zakaria went this route in a column last week. After implying that opponents of TPP favored a return to autarky, Zakaria then argued that we should be less concerned about what TPP will do for the United States and think more about what it will do for our trading partners. He held up NAFTA and what it did for Mexico as a model.

This should leave readers more than a bit baffled. On the economic side Mexico has lagged badly in the years since NAFTA went into effect. According to the I.M.F.’s data, it went from having a per capita GDP that was 34.9 percent of the U.S. level in 1993 to having a per capita GDP that was just 32.7 percent of U.S. level last year. Developing countries are supposed to catching up to rich countries economically, not falling further behind. If the argument is that NAFTA has bestowed democracy on Mexico, try telling that to the families of the 43 protesting students who were turned over by local police to a drug gang to be tortured and killed.

The reality is that the TPP has little to do with trade. It was a deal crafted by business for business. The goal is to put in place a business-friendly structure of regulation in the United States and elsewhere. No amount of lipstick is going to make this pig pretty and the folks who keep trying are making themselves look very foolish in the process.

About the Author

baker deanDean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. He is frequently cited in economics reporting in major media outlets, including the New York Times, Washington Post, CNN, CNBC, and National Public Radio. He writes a weekly column for the Guardian Unlimited (UK), the Huffington Post, TruthOut, and his blog, Beat the Press, features commentary on economic reporting. His analyses have appeared in many major publications, including the Atlantic Monthly, the Washington Post, the London Financial Times, and the New York Daily News. He received his Ph.D in economics from the University of Michigan.


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