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January 29, 2016

Grading the Trans-Pacific Partnership

 
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Derek Scissors of AEI published a paper back in December containing his analysis of the Trans-Pacific Partnership (TPP) agreement, which at some point one assumes will be submitted to Congress by President Obama.

Scissors is a free-trader who recognizes the need for such agreements in the absence of an effective WTO trade liberalization process. Based on several of his written pieces, Scissors 1) thinks the TPP as negotiated is distinctly better than no TPP, 2) is disappointed that the U.S. didn’t work harder to get a better deal, 3) thinks we should still try to fix the TPP within the framework of the existing parties to the agreement and, if that doesn’t succeed 4) we should fix the TPP at the cost of dropping countries that refuse to go along with the proposed fixes.

Earlier in November of 2015 Scissors wrote:

If this cannot work, free traders should not abandon the TPP. The next step would be to shrink the number of participants in the first round. 

Scissors recognizes that the business community is pretty solidly behind the TPP as an improvement the status quo.

Here at IPI, we’ll be writing a lot more on the TPP as the debate begins in earnest. But for now I wanted to highlight the fact that Scissors’ disappointment with the TPP do not stem from the most popularly criticized and controversial sections of the agreement, the intellectual property and agriculture sections. His chief criticisms are with the sections having to do with state-owned enterprises (SOE) and with the excessive number of exceptions that were granted to countries to simply not conform to the agreement in particular areas. It would have been far better to allow those countries longer phase-out times for those domestic considerations rather than simply granting them a carve-out from trade liberalization.

The strength of Scissors’ paper is how handily he rebuts the most commonly voiced arguments against the TPP. In particularly, as you might guess, I’m interested in his comments on the intellectual property section, which he grades at a B+.

Some in the US object to the TPP’s codification of IP protection. These objections are largely misguided. Most TPP countries are nowhere near providing excessive IP protection—indeed, half are on the latest US Trade Representative watch list. The same is true for many potential candidates to join the TPP or other US free trade agreements. Raising these countries’ standards is not a threat to consumers. Meanwhile, countries that already boast solid protection of IP have little to do.

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Few existing agreements address digital trade, an increasingly glaring omission that is addressed by the TPP. . . . It includes valuable requirements for border measures that block trade in goods utilizing stolen IP. . . . The precedents set for future TPP members and future agreements, such as revisions to the WTO rules on trade-related aspects of intellectual property rights, are largely positive.

Scissors’ common-sense reaction to the TPP’s IP-related provisions is a helpful rebuttal to the kind of uninformed, knee-jerk, anti-IP temper tantrums that have characterized discussion of the IP chapter, such as this piece by Logan Albright of Freedomworks. If you’re just an anti-IP activist, you’re not going to like IP protection, wherever it happens to show up.

Finally, be sure to check out the final section of Scissors’ paper on red herrings and globalization myths related to the TPP. He explains why the investor-state dispute settlement mechanism is not a “threat to American sovereignty,” why trade deficits don’t matter, why currency manipulation is a false issue, and why there’s no proof that NAFTA harmed the job market in the United States.




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