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Trans-Pacific Partnership “No Big Deal,” says NYTimes columnist Paul Krugman

A few weeks ago I appeared before trade committee and suggested the Conservatives’ proposed Canada-EU trade deal is not all that impressive, which irritated London West Conservative MP Ed Holder (pictured left). He asked me (in what I guessed to be a purposefully condescending way) if I knew how big the European Union economy was, so I responded it is the biggest already open and accessible market in the world.

There are very few real barriers to Canadian trade with Europe, I said. By the government’s own numbers, the tariff savings to Canadian companies in CETA will be about $225 million per year. A drop in the bucket from one perspective. A rip-off when you balance that against the expected domestic industry losses and public policy changes Canada has promised to make in exchange for extremely modest new market access in Europe.

New York Times economist Paul Krugman (pictured right) makes a similar argument today about the exaggerated importance of the Trans-Pacific Partnership to the U.S. economy in light of reported roadblocks in the negotiations related to agricultural trade. 

“That’s O.K.,” he writes. “It’s far from clear that the T.P.P. is a good idea. It’s even less clear that it’s something on which President Obama should be spending political capital. I am in general a free trader, but I’ll be undismayed and even a bit relieved if the T.P.P. just fades away.”

Krugman explains that today’s trade deals “aren’t what they used to be” because “there just isn’t much more protectionism to eliminate” after the 1960s Kennedy Round of GATT negotiations that significantly lowered tariffs around the world. 

“What the T.P.P. would do, however, is increase the ability of certain corporations to assert control over intellectual property. Again, think drug patents and movie rights,” writes Krugman. Patent and copyright terms and protections are controversial in both the TPP and CETA, with health and open Internet groups calling for them to be removed completely from the deals.

“The kind of property rights we’re talking about here can alternatively be described as legal monopolies,” continues the NYTimes columnist. “True, temporary monopolies are, in fact, how we reward new ideas; but arguing that we need even more monopolization is very dubious — and has nothing at all to do with classical arguments for free trade.”

Krugman concludes: “So don’t cry for T.P.P. If the big trade deal comes to nothing, as seems likely, it will be, well, no big deal.”

A Financial Times blog quickly responded that Krugman may be right on the economic benefits being small, but that he misses the bigger geopolitical picture:

Both the TPP, which groups 12 Pacific Rim countries including Japan, and the Trans-Atlantic Trade and Investment Partnership, the EU-US negotiations launched in July, are really big strategic, rather than economic, projects. They are about responding to the changing shape of the global economy and the rise of China and other emerging economies and trying to reinforce the US (and to a lesser extent, the EU’s) position at the centre of it. They are, particularly in the case of the TPP, about security policy as much as economic policy

I’m not prepared to support the deals on that justification, either, and we probably don’t have the luxury of sitting back and waiting for Krugman’s hoped for collapse in the transpacific talks. The Obama administration has banked a lot on concluding the TPP this year. Vice President Biden made a case for the deal, and for granting the U.S. administration “fast-track” authority to rush the TPP through congress, in a Financial Times op-ed this week. 

In the U.S., there is incredible momentum on a campaign to block fast-track legislation, which will seriously jeopardize the TPP and TTIP negotiations. Here in Canada, we’re directing our attention to Canada’s trade minister and parliamentary trade committee members, who should be asking to publish the TPP text now and hold public hearings before it can be signed. 

Click here to help Expose the TPP by sending a letter to trade MPs in Ottawa.