A good piece that, in critiquing simplistic takes on trade policy and trade agreements, offers a primer on their basic workings. As I tweeted and Facebooked the other day, trade deals are neither good or bad in theory, but specific deals can be.
You have to look at the details, as Dean Baker says. Who wins and who loses? Who is at the table? How will disputes be addressed? Every one of those questions requires a value judgment — which is why all trade deals are as much about protectionism as they are about opening markets.
Consider Baker’s explanation:
The United States pursues a variety of agendas in its trade negotiations. Naturally it does not get everything it wants, it prioritizes some items over others. In some areas it clearly has been very “tough” as measured by outcomes. For example, Pfizer and Microsoft and other drug, software, and entertainment companies are collecting tens of billions of dollars a year from foreign countries because U.S. trade negotiators have been very tough in demanding that these countries adopt U.S.-type rules on patents and copyrights.
The United States has also demanded that other countries allow U.S. corporations to take their complaints to special tribunals outside of their domestic legal system. This is a central feature of the newly negotiated Trans-Pacific Partnership. Undoubtedly our negotiators had to be very tough to get these countries to surrender this aspect of their national sovereignty. (We even had to make a reciprocal sacrifice of sovereignty, allowing foreign investors a route around the U.S. legal system.)
Negotiators have not been tough in pressing demands on currency values, which would have meant a lower U.S. trade deficit with countries like China. While the trade deficit matters hugely to workers, some of whom directly lose jobs to imports and others who suffer indirectly from a weak labor market (in the era of secular stagnation we have no mechanism for making up the demand lost due to a trade deficit), it actually benefits many major corporations.
Companies like GE benefit from being able to produce at low cost in countries like China. Retailers like Walmart also benefit from having low-cost supply chains in the developing world. And highly-paid professionals like doctors, who are largely protected by regulations from foreign competition, benefit from a weak labor market by being able to hire cheap help.
U.S. negotiators, as he says, are picking winners and losers. That’s totally appropriate. The issues we need to be discussing, however, are whether the winners and losers they have chosen match the priorities of Americans and workers around the world.
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Hank Kalet 