Congress will now have 90 days to review the agreement. Under fast-track rules ("Trade promotion authority") signed into law this past summer, Congress will have an up or down vote within 90 days after President Obama announces his "intent to sign." Congress can not submit amendments.
Here is the preamble to the statement of "benefits" prepared by the U.S. Trade Representative:
The Trans-Pacific Partnership (TPP) ... levels the playing field for American workers and American businesses, supporting (sic) more Made-in-America exports and higher-paying American jobs. By eliminating over 18,000 taxes—in the form of tariffs— that various countries put on Made-in-America products, TPP makes sure our farmers, ranchers, manufacturers, and small businesses can compete—and win—in some of the fastest-growing markets in the world. With more than 95 percent of the world’s consumers living outside our borders, TPP will significantly expand the export of Made-in-America goods and services and support American jobs.Back in July, Peter Gosselin (Bloomberg News) wrote that "Some of the chief beneficiaries may be big drug companies like Novartis AG, Roche Holding AG, and Pfizer Inc." This is by design, because the administration's trade negotiators were bound by Congressional instructions "to try to get as much current U.S. law as possible into trade accords -- including stringent protections for patented drugs that it’s repeatedly tried to ease at home to encourage more cost-saving generics."
The fight over drug rules reflects the complexities involved in a new generation of trade deals. Traditionally, such accords focused on removing tariffs and other barriers to the flow of goods across borders. Increasingly however, pacts aim at the bigger target of syncing up countries’ laws and rules. Advocates argue that such “regulatory harmonization” can improve the global economy by relieving companies of the cost of complying with inconsistent regulations in different countries. Yet as the bargaining over the drug provisions for the Pacific Rim deal illustrates, the effort is fraught with potential for clashes between a country’s domestic and trade goals, and the needs of developed and developing countries.Here is Brad DeLong in conversation with Scott Gosnel at the Washington Center for Equitable Growth. Gosnel asked DeLong what he thought of the TPP back in June.
The actual deal seems to have a set of important tariff reductions and export-import restraint reductions. That is worth $4 trillion to the people of the Pacific basin over its expected lifetime. But it is also worth -$1 trillion to people–like the people of Bangladesh–who are left out, who are excluded from things like the textile market access provisions.
Normally I would say: adding up a +$4 trillion for some people and a -$1 trillion loss for other people–that looks like a winner. Except that the people outside–the people in Bangladesh–are poorer on average than the people inside. Bangladesh is a lot poorer than even Vietnam right now. And so the utilitarian calculus tells us that even the trade part is not nailed down. The longer it goes without pro-TPP people doing the work to nail down the utilitarian calculus of the trade benefits, the more antsy I get.
My first instinct would be to say: $4 trillion – $1 trillion = +$3 trillion. There is a $3 trillion bill lying on the sidewalk in this thing. We should pick it up and utilize it. We can figure out how to redistribute it later. But the important thing is to pick it up. So my first instinct is to say that I am for the “trade” part–100% in favor. But the fact that the distributional argument has not been made drops me down to 75%.
Then there is the dispute resolution aspect. The dispute resolution aspect worries me a lot. I don’t understand it. The case for it–arguing that this is a good thing–has also not been made. And, as best I can tell, once this dispute resolution framework is set up it is then next to impossible to modify. We may be doing the equivalent of what the European Union did in setting up the European Central Bank: creating institutions without having any reasonable means of changing its modes of operation should they be wrong.
I think Europe has suffered significantly over the past eight years because the European Central Bank is not subject to enough political control. I fear this is what we are getting into with the dispute resolution mechanism. That drops me from +75% down the +25%.
Then there are the intellectual property provisions. I tend to think we should be, on balance, loosening intellectual property protection in the world rather than tightening them. That drops me from +25% to -25%.
So at the moment I am slightly opposed to the Trans-Pacific Partnership. I am in favor of passing fast-track, so Obama can actually finished negotiating it. Then we can look at it. But if what he negotiates turns out to be what I expect he will negotiate, I will wind up being opposed then on the final vote. Unless, that is, someone can convince me that the intellectual property protections are not as bad as I fear, or that setting the dispute resolution mechanisms in stone is not as dumb-ass a move as I fear.We will be hearing a lot more analysis (not to mention loud partisan rhetoric) on this over the next three months. The TPP will likely become featured in the Presidential primaries to be held in the first half of next year.
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