The Trans Pacific Partnership Agreement

What It Means For Global Trade

"Imports create competition and keep domestic industry more responsive to consumers."
-- Senator Chuck Grassley, IA (R)
The one thing almost any economist will agree to is that free trade is nearly always a net benefit, and almost never creates net losses. When nations remove tariff and non-tariff barriers (NTBs), such as quotas, it allows resources to be used more efficiently across those countries and increases competition. Firms gain because now they can sell their products to much larger markets. Consumers gain because they have a greater variety of goods and services to choose from. As companies merge or out compete inefficient rivals, economies of scale allow them to more efficiently (ie more cheaply) use resources which lowers prices for consumers. As some industries contract from competition, their capital and workers are absorbed into the expanding industries. Importantly, while their are losers and winners, the gains by the winners will outweigh the losses to the losers, and on net the countries involve in opening up trade will benefit.
Because there are losers in large scale free trade agreements, there tends to be vocal opposition to such deals, usually fueled by the interest groups that stand to loose. One common argument that has been raised around the Trans Pacific Partnership, or TPP, is that it is a "corporate power grab". In essence, runs the argument, large companies are forging new laws behind closed doors that will boost their profits at the expense of domestic jobs and the common man.
This argument has two flaws. Firstly, corporate bodies are not involved in the negotiations, and in fact have no more information or access than the general public. Secondly, corporations are among the loudest opponents to the TPP. Big pharmaceutical companies in America fear it will reduce the duration of their patents, allowing generics to enter the marketplace and drastically lower the prices of medications sooner. Dairy farmers in Canada fear that foreign firms will be able to outcompete them, luring away customers with cheaper milk and cheese. Free trade means greater competition for many industries, leading to lower prices. That is bad news for corporate profit margins, but an exciting prospect for the average consumer, both in America and abroad.
Another major complaint is that the negotiations took place in secret, and only the final deal is being released to the public and legislature for approval; thus, it must certainly be undemocratic. This overlooks the fact that if the negotiations were public, the citizens, companies, and interest groups of every one of the participating countries will holler and scream at every single development, and nothing would progress. With the current situation, each nation had representatives negotiating on their behalf, and the final version will be publicly released. The US people will still be able to become informed, lobby their congressional representatives, and put the TPP through the democratic process before we decide whether or not to adopt it. This way, none but a select few, and that excludes any mega-corporations, have access to details before everyone else; and the negotiations can progress in relative peace and quiet.
The TPP has the potential to become one of the largest trade agreements ever created, and its exact effects will not be known for some time. On October 7th, it was announced that the exact, full text of the final agreement will be released within 30 days to the general public. Each nation will have to ratify the treaty independently, and the US Congress will have until early 2016 to do so. Over the weeks following the release of the full text, this department will publish articles of the TPP's potential effects on the 12 member countries, looking and the potential impacts of specific policies.

By: Jonathan Wood