The proposed Trans-Pacific Partnership (TPP) trade bill has attracted much attention, with the Senate voting against President Obama’s request to fast track the bill, then changing its mind. Senator Elizabeth Warren has been critical of the president on this bill. Cato Institute trade policy analyst Bill Watson discusses the bill and its probable effects in this report.
The proposal would include the U.S., Canada, Mexico, Peru, Chile, Singapore, Malaysia, Japan, Vietnam, Brunei, and Australia. Watson explains that the proposal will reduce tariffs, making it easier for the countries involved to trade with each other. Most of the controversy about the bill involves ancillary matters like intellectual property rules, possible labor and environmental requirements, and “investor state dispute settlement.” These latter issues are the ones of concern to Senator Warren and other Democrats in the Senate, says Watson. The president is talking about how the pact would increase exports, “so they’re talking past each other.”
Another concern expressed by Senator Warren has to do with the secrecy surrounding the TPP. Watson says that, “as someone who wants to know what’s in the agreement, I sympathize with people who are complaining about the secrecy.” But, Watson adds, we don’t know what will be in the TPP because it’s not finished. At some point, the negotiations will be completed. Then, there will be a lot of time for Congress and the public to look at the proposal before it is voted on. And the longer the negotiations last, the more people will want to know what’s in the proposal.
In the end, says Watson, the winners under this proposal will be consumers, both Americans who are getting imported goods at lower cost and foreign consumers who will be able to get American goods for the first time. The lowering of trade barriers will help companies in all the countries who import and export goods. As to losers, the disruption of the status quo will mean that some industries will decline and some people will lose their jobs. On the other hand, some people will gain jobs because of economic growth resulting from the TPP.
K. William (Bill) Watson is a trade policy analyst with Cato’s Herbert A Stiefel Center for Trade Policy Studies. His research focuses on U.S. trade remedy policies, disguised protectionism, and the institutional aspects of global trade liberalization. He manages Free Trade, Free Markets: Rating The Congress, Cato’s online database that tracks votes by Congress and its individual members on bills and amendments affecting the freedom of Americans to trade and invest in the global economy. The Legal Broadcast Network is a featured network of the Sequence Media Group.