In his State of the Union speech, President Obama said he would submit a bill to Congress that would grant him the fast track authority to finalize the Trans-Pacific Partnership (TPP)—a trade pact with Pacific Rim countries such as Japan, Malaysia, Peru, and Chile. While free trade has brought benefits in the past, tariffs in the world economy are at an all time low and new deals like the TPP offer few new gains in terms of growth and jobs for the American people.
Moreover, deals like the TPP now come with very high risks. Given that tariffs on goods are so low, these sorts of agreements have rebranded bona fide economic regulations as “barriers to trade,” blurring the distinction between protectionism and measures to protect the well-being of the middle class.
According to the most optimistic economic models, the TPP would only boost U.S. GDP between one and three tenths of one percent by 2025. This essentially amounts to a rounding error of just over one hundredth of a percent per year over the next ten years. Even these tiny gains are likely overestimates, given that they assume full employment for the U.S. and all trading partners.
Alongside these small gains, the TPP comes with high costs. The negotiations are conducted in a highly secretive manner, but leaked text on foreign investment and financial services reveals that the TPP rebrands regulations to protect workers and the general public from financial crisis as unfair barriers to trade. When signing on to “market access” provisions—a cornerstone of the TPP–nations must “liberalize” regulations that are seen as lessening the profits of Wall Street.