Monday, October 12, 2015

ECONOMY - The Very, Very Bid Deal

"In size and stakes, the Trans-Pacific Partnership is a big deal" PBS NewsHour 10/5/2015


SUMMARY:  The U.S. and 11 other Pacific Rim nations have struck the largest trade deal in a generation.  The wide-ranging Trans-Pacific Partnership sets new rules for labor and environmental standards and reduces and phases out thousands of tariffs on American producers, among other provisions.  But there's substantial opposition to the accord.  Jeffrey Brown learns more from Greg Ip of The Wall Street Journal.

JEFFREY BROWN (NewsHour):  It’s a wide-ranging accord that seeks to lower trade barriers and expand agricultural markets.

Among other things, it sets new rules for labor and environmental standards, reduces and phases out thousands of tariffs on American producers, provides between five and eight years of intellectual property rights for biologic drugs made here, and makes it easier for the U.S. to sell dairy products in countries like Canada and Japan.

But many provisions are the subject of deep skepticism and outright opposition from voices across the spectrum.  And getting it approved by Congress during an election year is no small matter.

Greg Ip is chief economics commentator for The Wall Street Journal and the author of the forthcoming book “Foolproof,” and joins us now.

Welcome back, Greg.

GREG IP, The Wall Street Journal:  Thanks, Jeff.

JEFFREY BROWN:  First, an overview, huge dollar amounts, right, wide range of areas covered, and enormous economic stakes.  It’s a big deal.

GREG IP:  It’s a very big deal.  It’s the biggest trade deal that has been negotiated since the Uruguay agreement of the World Trade organization, which was some 20 years ago.

It’s also the first trade agreement to be negotiated by the United States under the Obama presidency.  The scope is very large, roughly 40 percent of world GDP.  It covers areas that have heretofore not been covered in agreements of this size, like services, like intellectual property.

It’s important in geostrategic terms because it’s as important for the countries that are in it as the countries that are not, more importantly China.

JEFFREY BROWN:  All right, we will get to that afterwards.

But in strictly economic terms first, the Obama administration and supporters point to what they see as benefits.  Give us a couple of examples that they’re pointing to that’s in this deal.

GREG IP:  Well, there are specific areas where the United States is very competitive that it has had trouble getting to other countries’ markets, agriculture, for example.

Under the agreement, countries like Japan and Canada, which have highly protected dairy sectors, will have to open up more to the United States.  Then there are newer industries where the U.S. is very advanced like drugs, intellectual property, high-end services like accounting and engineering.  When those services are exported to other countries, signatories to this agreement can no longer discriminate against American companies.

And there will be mechanisms that American companies that feel they have been discriminated against can challenge countries in their own courts.

COMMENT:  The skeptism is due to the history of previous trade agreements.  Especially those that cost American jobs when companies moved their production overseas, and a tax code that gave breaks to companies who did that.  Note that the job problem is our (U.S.) fault for not having big tax penalties for companies doing that.  Of course, since Congress is owned by Big-Money, and worshiped by Republicans......

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