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The Washington Post's TPP Challenge

Those folks at the Washington Post are so much fun. Now that it looks like the Trans-Pacific Partnership (TPP) might fail, the Post challenges TPP critics, "if not the Trans-Pacific Partnership, then what?"

Let's see, the Obama administration had how many staffers working how many years to craft the TPP? And the critics working in their spare time should come up with the alternative?

Okay, but we'll accept that the critics are much smarter and more competent than the TPP team. I'll at least outline some items I want in my pact.

First, we can accept the actual "free trade" items in the pact. Let's eliminate the tariffs and quota restrictions as provided for in the TPP. That won't have much impact, since in almost all cases they are already very low, but no good reason not to go to zero. 

There is one item worth noting here. If this is really an anti-China deal, which is the main line these days of TPP proponents, then we would probably want to up the country of origin requirements. As it stands, the TPP provides that if 30 percent of the value added of a product is made within the country, then it can get the preferential treatment awarded to TPP members.

This means that if a Chinese company sends a product to Vietnam, where 70 percent of the value comes from China, it can be shipped to the U.S. under TPP rules. And, having more confidence in the private sector than government bureaucrats, my guess is this Chinese firm can probably find a way to get through with 25 percent Vietnamese content and possibly even less. If the point is to in some way lock out China, having a 30 percent country of origin requirement was probably not the way to go.

CEPR / August 21, 2016