March 08, 2018
That’s the question NYT readers are asking after reading the lead sentence of an article on the signing of an agreement by the other eleven countries that had been part of the Trans-Pacific Partnership (TPP). The sentence tells readers:
“A trade pact originally conceived by the United States to counter China’s growing economic might in Asia now has a new target: President Trump’s embrace of protectionism.”
If the point of the trade pact was to counter China’s influence then it may not have been wise to turn over the structuring of the deal to corporate interests who dominated the working groups that crafted the individual chapters of the TPP. As a result of turning the crafting of the deal to industry groups, provisions such as longer and stronger patent and copyright protections will raise the prices of drugs and other items for the countries in the TPP.
It is not clear how making it more difficult for countries to pay for health care would be expected to counter China’s growing economic might. The provisions on e-commerce could make it more difficult for countries to regulate Facebook and other social media companies so that they would have a harder time preventing the sort of fake postings that have been an important factor in U.S. politics. It is also not clear how such rules would help counter China’s growing economic might.
The piece also includes projections from the Peterson Institute, a strong proponent of the TPP, that might mislead readers. It tells readers:
“Once it goes into effect, the agreement should generate an additional $147 billion in global income, according to an analysis by the Peterson Institute for International Economics. Its backers say it also will bolster protections for intellectual property and include language that could prod members to improve labor conditions.”
This projection for growth, which is more than twice the projection issued by the United States International Trade Commission, will be equal to roughly 0.08 percent of GDP in 2032, the point where these gains are expected to be realized. This is roughly equal to one week of growth.
The projection from the Peterson Institute also does not take account of any losses from the longer and stronger patent and copyright-related protections in the pact. These protections, which can raise the price of drugs and other protected items by more than a hundred-fold, are equivalent to tariffs of many thousand percent. It is entirely possible that the distortions from these protections more than offset any gains from reducing already low trade barriers.
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