[Ip-health] Larry Summers has a very good essay on the TPP and other trade negotiations
james.love at keionline.org
Tue Jun 16 05:27:28 PDT 2015
From none other than Larry Summers, an insightful and very good essay on
the trade agreements.
* What we call trade agreements are in fact agreements on the protection of
investments and the achievement of regulatory harmonization and
establishment of standards in areas such as intellectual property.
* A reflexive presumption in favor of free trade should not be used to
justify further agreements.
* Concerns that trade agreements may be a means to circumvent traditional
procedures for taking up issues ranging from immigration to financial
regulation must be taken seriously.
* Today, we have such an economy, and it has supported the greatest
economic progress in the history of the world in emerging markets and is
working spectacularly well for capital and a cosmopolitan elite that moves
easily around the world. But being pressed down everywhere are middle
classes who lack the wherewithal to take advantage of new global markets
and do not want to compete with low-cost foreign labor. Our challenge now
is less to increase globalization than to make the globalization we have
work for our citizens.
The Washington Post
Rescuing the free-trade deals
By Lawrence Summers June 14, 2015
Rescuing the free-trade deals
Members of Congress opposing the Trans-Pacific Partnership trade deal hold
a news conference at the U.S. Capitol last week. (Chip Somodevilla/Getty
Lawrence Summers is a professor at and past president of Harvard
University. He was treasury secretary from 1999 to 2001 and an economic
adviser to President Obama from 2009 through 2010.
The Senate’s rejection of President Woodrow Wilson’s commitment of the
United States to the League of Nations was the greatest setback to U.S.
global leadership of the last century. While not remotely as consequential,
the votes in the House last week that, unless revisited, would doom the
Trans-Pacific Partnership send the same kind of negative signal regarding
the willingness of the United States to take responsibility for the global
system at a critical time.
The repudiation of the TPP would neuter the U.S. presidency for the next 19
months. It would reinforce global concerns that the vicissitudes of
domestic politics are increasingly rendering the United States a less
reliable ally. Coming on top of the American failure to either stop or join
the Asian Infrastructure Investment Bank, it would signal a lack of U.S.
commitment to Asia at a time when China is flexing its muscles. It would
leave the grand strategy of rebalancing U.S. foreign policy toward Asia
with no meaningful nonmilitary component. And it would strengthen the hands
of companies overseas at the expense of U.S. firms. Ultimately, having a
world in which U.S. companies systematically lose ground to foreign rivals
would not work out to the advantage of American workers.
Both the House and Senate have now delivered majorities for the trade
promotion authority necessary to complete the TPP. The problem is with the
complementary trade assistance measures that most Republicans do not
support and that Democrats are opposing in order to bring down the TPP. It
is to be fervently hoped that a way through will be found to avoid a
catastrophe for U.S. economic leadership. Perhaps success can be achieved
if the TPP’s advocates can acknowledge that rather than being a model for
future trade agreements, this debate should lead to careful reflection on
the role of trade agreements in America’s international economic strategy.
Four points seem salient.
First, the era of agreements that achieve freer trade in the classic sense
is essentially over. The world’s remaining tariff and quota barriers are
small and, where present, less reflections of the triumph of protectionist
interests and more a result of deep cultural values such as the Japanese
attachment to rice farming. What we call trade agreements are in fact
agreements on the protection of investments and the achievement of
regulatory harmonization and establishment of standards in areas such as
intellectual property. There may well be substantial gains to be had from
such agreements, but this needs to be considered on the merits area by
area. A reflexive presumption in favor of free trade should not be used to
justify further agreements. Concerns that trade agreements may be a means
to circumvent traditional procedures for taking up issues ranging from
immigration to financial regulation must be taken seriously.
Second, there needs to be a balancing of the political costs of legislating
trade agreements against those of other forms of internationalism. If a
small fraction of the U.S. political capital that has been devoted to the
Trans-Pacific Partnership had instead gone to support reform of the
International Monetary Fund and adequate funding for international
financial institutions and the United Nations, these objectives could have
been attained — and with greater benefits than the TPP will deliver. Trade
agreements are often defended on the grounds that commerce builds
harmonious ties among nations. I suspect that a rebalancing of U.S. efforts
toward supporting multilateral institutions that provide financial support
for other countries, and away from intense negotiations that demand that
those countries change their domestic policies, would help enhance U.S.
prestige and influence in the world.
Third, there needs to be careful consideration going forward of the
ramifications of trade agreements that include some countries while
excluding others. Where the grouping is natural, such as with the North
American Free Trade Agreement, or where it reflects a clear political
strategy, as with the U.S.-Colombia or U.S.-Jordan agreements, the argument
for this approach is much stronger than where there are no obvious criteria
for which countries are included. Political necessity has in recent weeks
led advocates to increasingly aggressive formulations about how the TPP
enables us to gain advantage at the expense of China. We may come to regret
this provocation. Certainly, it will be important down the road to consider
China’s possible membership in the TPP on terms no different from those
applied to others.
Fourth, the global economic challenge we face today is profoundly different
than it was a generation ago. Then, just after the Cold War and the Latin
American debt crisis, with Asia’s China-led renaissance in its early
stages, the challenge was to enable new markets to emerge with the
potential for profound benefits to their citizens and the global economy.
Trade agreements that encouraged the adoption of market institutions in
developing economies and enhanced those countries’ access to the industrial
economies were crucial to creating a truly global economy.
Today, we have such an economy, and it has supported the greatest economic
progress in the history of the world in emerging markets and is working
spectacularly well for capital and a cosmopolitan elite that moves easily
around the world. But being pressed down everywhere are middle classes who
lack the wherewithal to take advantage of new global markets and do not
want to compete with low-cost foreign labor. Our challenge now is less to
increase globalization than to make the globalization we have work for our
None of this is to suggest an end to trade diplomacy. Rather, it is to
suggest that such talks must be only one component of a broader approach
that has as primary stakeholders not just global companies but also those
concerned with economic equity, protection of the environment,
opportunities for workers to migrate and financial stability. If the TPP is
to be secured, there must be clear signals that international economic
diplomacy will turn to these concerns.
James Love. Knowledge Ecology International
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
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