The Trans-Pacific Partnership is the biggest trade deal you’ve never heard of. The subject of nearly a decade of negotiations, the deal has the potential to create one of the largest reductions of tariffs and regulatory barriers to trade in history. It involves 12 countries, representing 40 percent of the world’s Gross Domestic Product.
If you’ve ever taken Economics 101, you know the Ricardian logic that proves free trade makes everyone better off. If you haven’t, the argument is pretty straightforward. If two countries have different capacities to make different products, they are better off specializing in whatever they are best at making, and then trading. This creates more total material welfare, and when there is free trade, everyone is better off.
This basic economic logic applies to the TPP, on a huge scale. The Peterson Institute for international economics has estimated that enacting the TPP could result in $78 billion worth of gains annually for the U.S. economy. Even for the world’s largest economy, that is a figure worth pursuing.
On a less abstract level, gains from the TPP would be passed along to people like the average UNC student through lower costs for consumers — you will pay less for almost everything that you buy. Moreover, the reduction in regulations will create a better business environment for cross-Pacific ventures, meaning there may be more jobs or business opportunities available for UNC’s hordes of global entrepreneurs.
The TPP represents what national security advisor Tom Donilon called the “centerpiece of our economic rebalancing” to Asia. The deal represents a chance to improve America’s stature in the Asia-Pacific, a crucial objective given the current administration’s consistent bungling of their supposed new emphasis on the region and the growing sense of abandonment in many of our Asian allies.
So, the TPP is economically a good deal for countries on both sides, as well as a boon to consumers and a chance to enhance America’s strategic position. It is fairly unsurprising, then, that some Democrats in Congress have a problem with it.
Leading Democrats, including Harry Reid and Nancy Pelosi have opposed giving President Barack Obama “fast-track” authority to negotiate the deal, meaning that he would need only a simple majority rather than a two-thirds majority to approve the eventual product.
At first blush, Democratic demands that the full text of the deal be made public before they give fast track authority seem reasonable, but the fact is that most trade agreements are made privately so that governments have more room to negotiate. Voting against fast-track authority would send a message to potential TPP partners that the U.S. is not committed to negotiations, potentially dragging out negotiations that have already taken years.
While Democrats drag their feet over the TPP, the U.S. is losing an opportunity to increase its stature on the world stage, create economic gains across the Pacific and lower prices for consumers like us.
