" We must redefine the goals of trade"
July 8, 2016 5:20 AM   Subscribe

"We can and should have a moratorium on trade agreements. The process by which they’re negotiated is undemocratic, they uplift investor rights over sovereign rights, they reverse the order in which certain challenges should be tackled, and they fail to deal with currency issues. But globalization cannot nor should not be stopped. Done right, it delivers great benefits to advanced countries through the increased supply of goods, and it helps improve the living standards of workers in developing countries through profits made from trade with wealthier nations. [...] So how can we best realize that potential?"
posted by OnceUponATime (64 comments total) 17 users marked this as a favorite
 
This level of secrecy must end. We’re not talking about nuclear codes but about the formulation of policies

But the very act of suggesting a partnership can affect markets and cause disruption that can cause huge losses in the stock market or even the failure of some participants. Very few significant negotiations are carried out with all parties providing full information, there is always a hidden trump card.
posted by sammyo at 5:40 AM on July 8, 2016 [1 favorite]


If the trade deal you're suggesting would tank the economy if anyone fond out about it, then the trade deal you're suggesting is unlikely to be in the best interests of your citizens. I really don't think it's too much to ask that we limit negotiations to deals that aren't so terrible that no one can know about them before it's too late.
posted by Proofs and Refutations at 5:44 AM on July 8, 2016 [38 favorites]


they uplift investor rights over sovereign rights

I am, in a small way, an investor, but I sure as hell ain't a sovereign.
posted by save alive nothing that breatheth at 5:46 AM on July 8, 2016 [5 favorites]


There's a big difference between people getting scared of possibilities during negotiations and the final deal actually being bad for those people.
posted by timdiggerm at 5:54 AM on July 8, 2016 [5 favorites]


"The process by which they’re negotiated is undemocratic, they uplift investor rights over sovereign rights, they reverse the order in which certain challenges should be tackled, and they fail to deal with currency issues."

And much of the empirical and theoretical work on the subject shows that they are a robust and strong cause of peace between states!
posted by MisantropicPainforest at 5:54 AM on July 8, 2016 [13 favorites]


The idea that they boost investors rights over sovereign right seems to be unfounded. 75% of cases have been adjudicated in favor of the sovereign. The US has never lost in ISDS. When sovereigns have lost it is because they have trampled on the rights of the investor.
posted by humanfont at 6:16 AM on July 8, 2016 [3 favorites]


There is something a little strange about the argument that "the current investor-state dispute settlement (ISDS) process is set up in such a way that investors in countries that are signatories to trade deals can, through non-elected tribunals, override the sovereign laws of countries." Governments pass laws, and they agree to trade deals, including signing onto the settlement process. So the issue is that the the sovereign has two sets of laws that might be in conflict, and the process they've signed on to contains a mechanism that says "when these laws are in conflict, this is what happens."

It seems a little bit like signing a contract with a binding arbitration clause, and when the arbitrator doesn't agree with you, saying that the arbitration process violates your property rights ex post. Of course, one could argue that the ISDS system, like some binding arbitration clauses in labor contracts, is not transparent or coerced. But that's a different argument.

This is not to say that the current set up is good or even fine. But there's a tension there. Bernstein's alternative might be fine, although I wonder whether a private insurance market for the kinds of losses at risk in the ISDS could exist (I really don't know much about these sorts of disputes).
posted by dismas at 6:18 AM on July 8, 2016 [2 favorites]


The process by which they’re negotiated is undemocratic, they uplift investor rights over sovereign rights
But the very act of suggesting a partnership can affect markets and cause disruption that can cause huge losses in the stock market or even the failure of some participants.

So the rights of capital should be held above sovereign rights?
posted by indubitable at 6:18 AM on July 8, 2016 [8 favorites]


In the article, those are two separate arguments against the current process, and the "sovereign rights" are about dispute resolution, not negotiation of the agreements themselves.
posted by dismas at 6:26 AM on July 8, 2016 [2 favorites]


Couple that with the fact that many developing countries are the ones who are initiating and wanted to join international treaty organizations, and the case that this is an erosion of sovereignty weakens.
posted by MisantropicPainforest at 6:29 AM on July 8, 2016 [2 favorites]


The suggestions seem laudable. Also probably impossible. Investors, property rights and the financial sector have a de facto veto over these sort of deals. Any attempt to cut them out of the process and reduce their take could probably be made politically impossible rather easily. Essentially, if the government wants to have an economic blocking move against China in the Pacific Rim you have to pay the pipers. So get out your coin purse...
posted by jim in austin at 6:34 AM on July 8, 2016


and, with the huge caveat that I don't know much of anything about particular ISDS cases, I'm not sure "sovereign rights over the rights of capital" is something that's always makes sense. I'm thinking about eminent domain in the US, for example.
posted by dismas at 6:41 AM on July 8, 2016


So the rights of capital should be held above sovereign rights

Are you saying the sovereign should have the right to confiscate property or break any agreement without any consequences or relief available to those who were affected?
posted by humanfont at 6:52 AM on July 8, 2016 [2 favorites]


Couple that with the fact that many developing countries are the ones who are initiating and wanted to join international treaty organizations

The interests benefiting from the developing countries joining the trade agreements are not necessarily the people of those countries so much as the wealthy few at the top and the multinationals that have positioned themselves to profit from the cheap labor that they wish to tap and markets they can flood with products undercutting the local markets. NAFTA was devastating to small Mexican farmers, for example, which not only had strong negative effects on their employment and land ownership, but resulted in food shortages around 2008 when that supply of cheap foreign corn dried up.

I'm one of the proponents of capitalism on Metafilter, but let's not pretend that trade agreements often are designed to work to the advantage of big money (which is kind of the point of the article) rather than citizens of any of the countries involved.
posted by Candleman at 7:02 AM on July 8, 2016 [10 favorites]


Are you saying the sovereign should have the right to confiscate property or break any agreement without any consequences or relief available to those who were affected?

Under certain clearly defined circumstances, hells to the yes.
posted by Faint of Butt at 7:02 AM on July 8, 2016 [3 favorites]


Now, now, gentlemen, we can't have Capitalism on display in all its naked glory. The common people just wouldn't understand....
posted by GenjiandProust at 7:32 AM on July 8, 2016 [7 favorites]


As is often the case with these Kleinist think pieces, sentences like "globalization cannot nor should not be stopped" distract me from what little substance there is here.

And these positions, as poorly fleshed out as they are, aren't even internally coherent. On the one hand we're worried about how the ISDS violates the sovereign laws of countries, on the other the US should "take action" against those "who suppress the value of their currencies relative to the dollar." The IMF apparently has tools to help "distinguish between legitimate central bank demand management and currency manipulation." Cool.

I guess this is touched on a little above, but the "sovereign laws of countries" are in no way an unequivocal good. In a lot of cases they're what keeps the uneven development going. Globalization and Free Trade rely on the nation state system to perpetuate borders, tariffs, privileged country statuses and "Special Economic Zones."

#SLVOX, dammit.
posted by aspersioncast at 7:53 AM on July 8, 2016 [1 favorite]


Under certain clearly defined circumstances, hells to the yes

The problem is, those "clearly defined circumstances" usually boil down to "wealthy white people take the stuff of people of color".
posted by happyroach at 8:10 AM on July 8, 2016 [2 favorites]


aspersioncast, do you have any other links that might shed some light on how to structure international trade agreements without panicking people who feel (rightly?) that they will lose out in a more competitive market?

It's something I'm trying to understand. I found the link via this link-dump post at the Weekly Sift, where the framing is:
Most progressives regret NAFTA, feel an instant antipathy to any action of the WTO, and oppose ratification of the TPP. At the same time, it’s one of those obvious Econ-101 truths that trade is good. Just as no individual can hope to be self-sufficient at a level much above subsistence, no country can truly prosper by cutting itself off from the rest of the world.

So a blanket opposition to any and all trade agreements can’t be the right progressive position. If only someone would lay out some general principles of a positive progressive trade policy. Well, Jared Bernstein is taking a whack at it.
Is there a better way to resolve that tension between "trade is good" and "working class people fear free trade, and progressives are supposed to be on the side of the working class?"

Either some way to show that they are wrong to fear its effects on their own lives, or some better set of "general principles of a positive progressive trade policy" to work from?

If even Hillary Clinton, who was in a position to appreciate the economic development effects of trade for developing countries, and its tendency to reduce the number of wars, says that she can't support the TPP now because "I don't believe it's going to meet the high bar I have set for creating jobs and advancing national security. I am also worried about currency manipulation not being part of the agreement, and that pharmaceutical companies may have gotten more benefits from the deal than their patients," then it seems like there may be some consensus building behind the general principles outlined in this #SLVOX.

Do you think there are practial problems with being against the current ISDS process but in favor of IMF currency rules, or just that it's sort of philosophically inconsistent? Because if it's just the latter, I can see an argument that it's one thing for other states to object to your sovereign decisions to manipulate your currency before agreeing to trade policies with you, and another thing for private corporations to object to your sovereign decisions as to how to run your economy.
posted by OnceUponATime at 8:10 AM on July 8, 2016 [2 favorites]


The problem is, those "clearly defined circumstances" usually boil down to "wealthy white people take the stuff of people of color".

Let's not kid ourselves here: TPP and its ilk are written by wealthy white people for wealthy, predominantly white people. To the extent that they're getting official support outside of the First World, we have to consider the possibility that, just as our government is biased towards established moneyed elites, so too might smaller countries' as well.
posted by fifthrider at 8:19 AM on July 8, 2016 [5 favorites]


Is there a better way to resolve that tension between "trade is good" and "working class people fear free trade, and progressives are supposed to be on the side of the working class?"

It should be noted that whether an individual stands to benefit from a free trade agreement has almost no effect on their support for free trade.
posted by MisantropicPainforest at 8:29 AM on July 8, 2016 [2 favorites]


How do you work out whether any given individual does stand to benefit?
posted by OnceUponATime at 8:35 AM on July 8, 2016 [2 favorites]


Usually by their job or industry of employment, etc.
posted by MisantropicPainforest at 8:38 AM on July 8, 2016


You look at what profession they have and what industry they work in, and then look at the projected effects of free-er trade on that profession and industry.
posted by ROU_Xenophobe at 8:38 AM on July 8, 2016


So when economists do these projections, do they find that that blue-collar manufacturing workers generally benefit?
posted by OnceUponATime at 8:40 AM on July 8, 2016 [1 favorite]


Depends what sector. Are you a stevedore? Then yeah, its a safe bet you will benefit from trade.
posted by MisantropicPainforest at 8:42 AM on July 8, 2016


Or when historians analyze past trade deals, do they find that that blue-collar manufacturing workers (people who make things, I mean, rather than stevedores) generally benefit?

I honestly don't have a position on this issue because I feel quite ignorant about it. So these are not rhetorical questions leading up to some point I'm trying to make. I am really hoping for knowledgeable MeFites to explain things to me.

I don't even know if I agree with the article in the FPP. I just like what they're trying to do, and am wondering if there's a consensus among smart people and/or progressives about whether this is a reasonable approach.
posted by OnceUponATime at 8:44 AM on July 8, 2016 [1 favorite]


it’s one of those obvious Econ-101 truths that trade is good.

As a rule, appeals to textbooks rather than data are both condescending and obfuscating.

Econ-101 is (typically) a bunch of abstract methods that make sense in a vacuum. The question isn't whether trade is good in a vacuum. The question is whether trade, as practiced today given our current environment and the challenges we (and others face), is a positive good not just for our economy but for our society.
posted by steady-state strawberry at 8:49 AM on July 8, 2016 [13 favorites]


I think the general answer is: it depends. A lot depends on sector. A lot depends on what job you have. A lot depends on where you live (is your factory the only game in town). A lot depends on short-term vs long-term gains.
posted by MisantropicPainforest at 9:03 AM on July 8, 2016


trade is good

No simplification of something so complex is ever true. Here's a good refutation.

Econ-101

Yeah, no one really believes these guys any more. PAE or complexity economics have totally eviscerated the emperical underpinnings of most of the macro theory.


"...the biggest winners were the rising middle class in emerging market economies (a.k.a. the Third World) and the 1%, who engineered the globalization and labor arbitrage revolution, while those still living in subsistence economies continue to lag.

The "unexpected consequence" was that the middle class in the developed markets has paid the price for the creation of the rising prosperity in emerging economies"



So I guess, 'yay' for India, eh comrades?
posted by Reasonably Everything Happens at 9:18 AM on July 8, 2016 [5 favorites]


The "unexpected consequence" was that the middle class in the developed markets has paid the price for the creation of the rising prosperity in emerging economies"

This is why Sanders, Trump, Brexit, etc.
posted by resurrexit at 9:41 AM on July 8, 2016 [2 favorites]


Or when historians analyze past trade deals, do they find that that blue-collar manufacturing workers (people who make things, I mean, rather than stevedores) generally benefit?

If you make stuff that other countries are protecting with tariff barriers, or make other stuff in the places where they make that stuff, it probably helps you. If you make stuff that's being protected by tariff barriers, or make other stuff in places that make that stuff, it probably hurts you.
posted by ROU_Xenophobe at 9:46 AM on July 8, 2016


do you have any other links that might shed some light on how to structure international trade agreements without panicking people who feel (rightly?) that they will lose out in a more competitive market?

I'll dig around. I'm sure there's someone in here more knowledgeable than myself who can weigh in. I feel like later world systems theory people tried to grapple with this. Any economic geographers in here?

Is there a better way to resolve that tension between "trade is good" and "working class people fear free trade, and progressives are supposed to be on the side of the working class?"

MisanthropicPainforest has a point. Hmm. I think a good place to start would be getting past this binary, because I think it's just way more complex than that. There are working class progressives, "progressive" is hardly a discrete category, especially when it comes to economics, and "trade is good" needs qualification for anyone who's actually bothered to think about it. I work with a lot of people who think in terms of Current Account and Balance of Trade/Payment, who are politically far to my right, but who would never make a blanket assertion that "trade is good." Trade is inevitable certainly.

Do you think there are practial problems with being against the current ISDS process but in favor of IMF currency rules, or just that it's sort of philosophically inconsistent?

Both? I can totally see your argument, and those are indeed different things in agreements between certain states. But it really depends on the states in question.
posted by aspersioncast at 9:48 AM on July 8, 2016


The idea that they boost investors rights over sovereign right seems to be unfounded. 75% of cases have been adjudicated in favor of the sovereign. The US has never lost in ISDS. When sovereigns have lost it is because they have trampled on the rights of the investor.

The question really is which sovereign vis-a-vis which investor. It's not surprising that the U.S. doesn't lose. I don't want to make a blanket argument that ISDS is bad, but the case against is a little more nuanced than you seem to think.
posted by praemunire at 9:56 AM on July 8, 2016


Is there a better way to resolve that tension between "trade is good" and "working class people fear free trade, and progressives are supposed to be on the side of the working class?"

Amartya Sen has written a couple of nice defenses and definitions of trade. Or there's the Rawlsian difference test of "making the worst off better off".

Very possibly neither of those would keep the developed world middle classes as absolutely rich as we have been (let alone as rich relative to poorer parts of the world).
posted by clew at 10:32 AM on July 8, 2016 [3 favorites]


Part of what the TPP will do is reform the ISDS process for the member countries. Proceedings will be conducted in a more transparent fashion. For example under TPP 3rd parties can file amicus briefs, and proceedings and rulings are to be made public.

The TPP has a number of other provisions that make it preferable to our current agreements with the member countries.
posted by humanfont at 11:46 AM on July 8, 2016


I love the new definition of trade: I move a factory from Ohio to Mexico and then sell the products back in Ohio.

"globalization" has never been about trade in any classical sense, but about capital flows eg. literally moving a factory (physical capital) from Ohio to Mexico and income distribution ie. workers in Ohio get less, workers in Mexico get more and the owners of capital skim most of the difference.

and then all the economists scratch their heads at Branko's elephant and wonder why productivity growth has been so slow.
posted by ennui.bz at 11:56 AM on July 8, 2016 [15 favorites]


also, this is what the context for this navel gaze from Vox:
If Clinton embraces platform language condemning the TPP, it would please unions while causing difficulties for Obama, one of her most enthusiastic supporters.

Labor unions told the Clinton campaign of their frustrations in a closed-door meeting on June 30. One of a series of occasional sessions to update unions supporting her on campaign staffing, logistics and other issues, it concluded with a brief question-and-answer session where AFL-CIO President Richard Trumka asked about the pact.

"The (platform's) language now is unacceptable,” Hasan Solomon, the legislative director of the International Association of Machinists and Aerospace Workers, told Reuters. The machinists were the first industrial union to endorse Clinton and remain strong backers of her candidacy.

Clinton thinks it's still 1992 and she can be calculatedly ambiguous and the unions will roll over for her. the funny thing is that she had already come out against TPP but absolutely no one believes her...
posted by ennui.bz at 12:17 PM on July 8, 2016 [1 favorite]


So I guess, 'yay' for India, eh comrades?

An aside: Jawaharlal Nehru is a member of my personal pantheon of "human beings I respect a lot." On occasion I wonder what he would think about the development of Indian nationalism as it has progressed from the days of the Independence movement, through it's strong membership in the Non-Aligned Movement in the context of a bipolar world order, and subsequently into the current (post-Soviet breakdown) unipolar world dominated by the United States. What would he think of BRICS, for example? I suspect he would be all for the development of an alternate coalition of nations (even though all the BRICS nations are member of the the G-20) as a potential counterpoint to a unipolar world.

I think Bernstein's argument for more transparency in the negotiation of trade agreements is a good one on a theoretical level. Yet, as a practical matter, these kinds of complex negotiations ought to have some level of secrecy during the process so as to prevent distractions and a certain amount of grandstanding/pandering to the public. We often forget that one of the keys to the successful hammering out of the U.S. Constitution in 1787 was that it was done in secret. And that the ensuing ratification debates in the individual states was transparent and in some cases, pretty protracted. So, if this example has any merit, perhaps what we need to take a look at is the fast-track process/mechanism. Should it be an up or down vote only? Does it have to be so fast? Should a post-negotiation/pre-ratification evaluation and democratic debate of a given treaty be a vital part of the process?

And while there is some truth to the matter that good trade agreements can serve to prevent war, we often overlook the fact that a bad trade agreement is tantamount to exercising economic war. This ought to be of special concern to us today given the supranational pretensions of many corporate actors, as well as the overweening reliance on monetarism as the fundamental set of premises upon which the globalization edifice is being constructed.

There are alternatives. And in this period of pro-Hamilton musicals, it wouldn't hurt to take a closer look at economic nationalism, of which Hamilton was a prime mover, to see if there is some way to allow for some level of protectionism from the perspective of the nation-state to coexist with good and beneficial international trade relations. The two dynamics aren't mutually exclusive, though some radical proponents of "free trade" would have us think so.

Let me quote Daniel Raymond (from The Elements of Political Economy, vol 1, p. 35, as quoted in Communism and Nationalism: Karl Marx versus Friedrich List, by Roman Szporluk, p. 109):
A nation, it is true, is an artificial being, or a legal entity, composed of millions of natural beings; still it possesses all the properties and attributes of a being, which are as distinct and strongly marked, as the properties of any natural being, and this must be constantly borne in mind, if we would reason correctly on the interests or rights of this being... .

The interests of a nation, and the interests of individuals, who are constituent parts of that nation, may be, it is true, and often are, in unison. They may be identical, but they are not necessarily so--so far is this from being the case, that they are often directly opposed. So national and individual wealth may be coincident, but they are not necessarily so.
My point is this: If the nation-state is to have any meaning as a legal edifice (as has been the case more or less since the Treaty of Westphalia) then it must be the "front" for interactions on the global scene. As such, any attempts to undercut the nation-state as a legal entity must be looking at with a cautious and skeptical eye. This doesn't make the nation-state a benevolent institution--in-and-of-itself--we all know that nationalism can go off the rails and be a cause of war itself. But, if there are processes within a nation-state that can freely debate the merits of an outward-facing set of policies (in this case with respect to how trade is to be conducted) then there is a basis for arguing that reasonable people can come to a consensus on policies which benefit both the nation and it's constituents while suppressing or marginalizing the more dangerous impulses of nationalism. And if more than one nation is doing this, then there is some hope that trade agreements can be beneficial to all parties, simultaneously, even if each nation has its own idea of national self-interest (which may or may not include some ideas about protecting parts of its economy in the face of international competition.)

Yes, I know it doesn't always work out that way. Asking for reasonable debate can be a chimera. But still, even though this approach is asking people to thread the needle of a difficult eye, it is, imo, preferable to the boot on our necks by neo-feudal tendencies as represented by undemocratic corporate internationalists and financial rentier interests, who pretty clearly could not give a damn about large swaths of the population.
posted by CincyBlues at 12:33 PM on July 8, 2016 [13 favorites]


also, the politics of the Bernstein piece wrt all of this are crystal clear.

one of the ways NAFTA, the Colombia pact and other trade deals, pushed through by the Democratic Party, were sold to union leadership was various provisions aimed to impose US style labor and environmental regulations on our new "free trade" partners. What elite liberals, like Bernstein would like to do is create a whole new level of "concessions" that the politicians can sell to the union leadership: "see, you can tell the locals that this is a good deal because it cracks down on currency manipulation...' etc.

i don't think the same trick is going to work this time but you never know.. but you can see how utterly irrelevant any honest economics of "trade"* are to this whole discussion.

*if such a thing exists. trade has always existed side by side with coercion, military or otherwise. putting it outside the purview of any "pure" economic discussion.
posted by ennui.bz at 12:51 PM on July 8, 2016 [1 favorite]


You do know that many developing countries are the ones initiating their involvement with trade agreements? They aren't coerced.
posted by MisantropicPainforest at 12:56 PM on July 8, 2016 [2 favorites]


They aren't coerced.

Real issue is, who's "they"? The guys working in the Foxconn factories aren't the ones negotiating these deals.
posted by fifthrider at 1:06 PM on July 8, 2016 [10 favorites]


Absent some form of investor protections, there is a strong potential for sub-optimal investments in developing economies, where investment risk is high....The way to accomplish this is by taking ISDS out of future trade agreements and insisting that investors privately insure themselves

Companies don't invest in developing nations because of the political risk that they have to bear, so we should fix it by making companies bear the cost?

I can't imagine any insurer would underwrite that. Political risk is the exact opposite of a insurable risk that is regular and quantifiable, falling into the "act of god" class of things that insurance companies won't touch. Which is why they don't insure it now.
posted by jpe at 3:37 PM on July 8, 2016


If you make stuff that's being protected by tariff barriers, or make other stuff in places that make that stuff, it probably hurts you.

Well, it hurts the people that produce the protected good. Everyone else is harmed by the tariff, since they could be doing more productive things with the rent collected by the protected producer.
posted by jpe at 3:50 PM on July 8, 2016


I hate the phrase "wealthier countries", because it glosses over the fact that the wealth is usually in the hands of a few. America is a wealthy nation, but that doesn't mean that all Americans are wealthy, and those Americans in the lower middle have been utterly crushed by globalization.
posted by Beholder at 7:19 PM on July 8, 2016 [4 favorites]


What if we replace "nation" with "corporation" in the useful Roman Szporluk quote above? That's what I see as the problem with handing this judicial power to ISDS members, because business interests have a lot of leverage with the governments who are negotiating these deals, which are presented as adding a mechanism to bring fairness to disputes between investors and state overreach or incompetence. But it's a powerful lever, and given the ability of large corporations to operate in their own interests to the detriment of the public and investors (the current Exxon fraud investigation springs to mind), how do can we reasonably assess the negative consequences of these deals? I feel like all we get from the parties is "Trust us, it will all work out. You'll see."
posted by sneebler at 7:23 PM on July 8, 2016 [4 favorites]


Trade deals for goods and services sound great and mutually beneficial. Intellectual property protection agreements? Much less clear IMO. Public domain IP builds value and literally saves lives.

>The US has never lost in ISDS.

That tells you as much about the US as ISDS, no?
posted by anthill at 10:31 PM on July 8, 2016 [2 favorites]


NAFTA was devastating to small Mexican farmers, for example, which not only had strong negative effects on their employment and land ownership, but resulted in food shortages around 2008 when that supply of cheap foreign corn dried up.

That's not quite the story.

Pre-NAFTA, Mexico long wanted to modernize their farming industry, dependent on subsidies and mired in antiquated and inefficient farming practices going back decades. NAFTA was an opportunity to make it happen.

Mexico, for whatever reasons, chose to expedite NAFTA's removal of trade barriers, resulting in greater shock to marginal Mexican farms. Marginally productive Mexican farmers had a tough time because they had to keep up with (subsidized) US imports. Then corn prices rose because increased demand as biofuel, itself a really stupid idea, in places like the US, leading to increasing corn prices in Mexico. Corn also found increasing use as feed for livestock in Mexico, yet again increasing demand, and cost. With markets opened up, corn prices in Mexico were set by international markets.

If one were to demand that Mexico allow tariffs on imported corn, like the good old days, it might indeed have saved the small Mexican farmer. At the cost of the every Mexican corn consumer and tax payer.

Needless to say that corn subsidies and corn derived fuel, themselves, are notorious examples of shitty non free market government driven policy that manage to survive in the good ol' USA.

Interestingly, Mexican corn production hasn't actually fallen. Mexican farming has gotten more efficient. Demand simply went up.

In the end, though, all the hand wringing over the effect of NAFTA on Mexico is odd, since Mexico has done tremendously well overall in the 21st century, NAFTA and all.

Real issue is, who's "they"? The guys working in the Foxconn factories aren't the ones negotiating these deals.

Yet the guys (and gals) working in Foxconn are exactly some of the people benefiting directly from free trade.
posted by 2N2222 at 11:04 PM on July 8, 2016 [3 favorites]



And much of the empirical and theoretical work on the subject shows that they are a robust and strong cause of peace between states!


and much of the empirical and theoretical work on the subbject shows that they are a robust and strong cause of warfare within states!
posted by eustatic at 11:25 PM on July 8, 2016 [1 favorite]


I guess the biggest question for me is, are trade agreements really bad for working class people who tend to oppose them, or does it depend on the agreement (and if so, in what way?), or do people just like to blame foreigners for their problems?

Stated another way, are the people who believe that they are being harmed are correct? And if so, is there some way we can still get the benefits of trade without harming (or doing less harm to) those people? Maybe shifting some of the costs to people better able to afford them?

Or if they are not correct, how we can convince them that they're not being harmed?

I see so many assertions, but so little evidence cited, and so few solutions proposed (other than "continue the status quo" and "stop signing trade agreements," neither of which seems very workable to me at this point in history...)

This article takes the position that whether an agreement is harmful (to the people who think they are being harmed) does indeed depend on the agreement. That trade agreements can be harmful, but that it is also possible to have non-harmful trade agreements. I rather suspect that's the correct answer, because that seems to be the way the world works, in my experience. Nothing is always good or always bad. The devil is in the details, as a rule.

And there some proposed solutions here, prescriptions for non-harmful trade agreements? Would they work? I wish I knew!

The one I'm most skeptical of is getting rid of the secrecy during negotiations, for the reasons already argued here... But for sure if you could get rid of the secrecy, you'd eliminate a huge part of the backlash once the final agreement is announced. We'd have those fights earlier in the process, in smaller forums, among people who really care, and by the time an agreement is reached, there'd be little news value, and the time for arguing would have passed.

I see no real problems with "Thus, the sequencing must be flipped: Any benefits to partners in terms of market access must be preceded by confirmation that labor and environmental rights are enforced." Why wouldn't we do that, if we take those conditions seriously?

I'm not sure how I feel about the "stop putting making IP protection such a thing" suggestions. Clearly American companies are huge producers of IP, and that's how they make a lot of their money. Drug companies and entertainment companies, but really almost all big American companies. That's what Appple actually does produce in the US -- IP You might say IP is one of America's biggest exports... So it makes sense that the US would demand that, and it probably does protect a lot of American jobs (the well-paying ones, too) as well as corporate profits. And yet I agree that there's a huge cost to society that comes with rigid IP enforcement.

As for the currency manipulation and ISDS ones... I just don't understand those well enough to have an opinion at all. But it does seem like those are on the list of specific objections people have to the TPP, frequently. If we fixed those, would people then agree to the TPP? Or are these issues really just rationalizations? Do people who cite them, in many cases, really just oppose the TPP because they generally oppose welcoming foreigners into our economic markets in and of itself, regardless of the terms on which its done?
posted by OnceUponATime at 3:16 AM on July 9, 2016


working class people fear free trade

Please banish the phrase "free trade" from the conversation. These deals are anything but free. They do not free up trade. They put enormous restrictions on trade that benefit global corporations and wealthy elites.

The benefits of these agreements to the economy are vastly overrated. Even by the best estimates of its proponents, the TPP will increase GDP by less than 0.5% by the year 2030. This is so tiny as to be insignificant. What this means is that as a nation, in the absence of the agreement, the U.S. will be just as well off in March of 2030 as with the agreement in January of 2030. Really, is that the wonderful benefits of this trade agreement they are trying to sell, three months of GDP increase fifteen years from now? (See economist Dean Baker for more on this.)

And all the talk about tariff reduction is laughable. We already have low tariffs with most of these countries. The tariffs they tout as removing are mostly on obscure items like fly fishing rods and ski boots.

No, what the agreement is mainly about is extending intellectual property rights, which is anything but free trade. It is removing a 10% tariff on fly fishing rods to place a 10,000% tariff on drugs and software. That isn't free trade. It is using trade restrictions, not free trade, to make citizens in foreign countries poorer in order to make the shareholders of Microsoft and Pfizer richer.

The intent of these deals is to make it easier for global corporations to put U.S. workers in competition with low wage foreign workers. A truly free trade deal would instead put high income workers like physicians in competition with foreign workers by making it easier for foreign trained and certified physicians to work in the U.S -- for example from the UK, Germany, France, India and China. Physicians in the U.S. earn twice the wage of physicians in the rest of the developed world. Putting physicians in competition with foreign workers, just like the current deals put manufacturing workers in competition with foreign workers, would make the rest of us richer. Keep in mind that healthcare is 18% of GDP. Reducing these costs to be in line with the rest of the world would make all U.S. citizens richer. That would really be an example of free trade.

No, these deals aren't free trade. They are thousands of pages of new regulations that benefit corporations and wealthy elites.
posted by JackFlash at 10:42 AM on July 9, 2016 [7 favorites]


and much of the empirical and theoretical work on the subbject shows that they are a robust and strong cause of warfare within states!

News to me. Much of the research shows that trade shocks, not openness to trade, cause civil wars. Trade openness and integration into the global economy have a consistently negative effect on the incidence of civil war.
posted by MisantropicPainforest at 11:40 AM on July 9, 2016 [1 favorite]


"This is not the first time the tobacco industry has used ISDS to intimidate governments, and it will not be the last." Uruguay wins. Article worth reading as it poses similar questions to some raised here, but within a specific context.
posted by CincyBlues at 1:40 PM on July 9, 2016 [1 favorite]


Everyone else is harmed by the tariff

... except those in the service economy who work in stores frequented by the people who manufacture those goods, the companies which manufacture goods that are purchased by the people who used to manufacture the now-outsourced product, the doctors and dentists and schoolteachers whose salaries were (indirectly) paid for by the now-unemployed individuals, and everyone whose loved ones are now unemployed.

In each individual case, it makes sense. The net effect does not.
posted by steady-state strawberry at 3:12 PM on July 9, 2016


An agreement that protects our creative works seems like a pretty good idea to me. Why shouldn't I be able to sell a license to work in Vietnam with the same ease I can license it to someone in Montana. And if someone rips me off I ought to be able to seek recourse.
posted by humanfont at 3:49 PM on July 9, 2016


Everyone else is harmed by the tariff, since they could be doing more productive things with the rent collected by the protected producer.

Then why aren't the trade agreements focusing on the biggest tariffs? China's currency manipulation amounts to a 20% tariff on every single item sold by the U.S.

Drug and software patents amount to tariffs of 10,000% or more. These are enormous rents collected by producers at enormous cost to consumers.

A real free trade agreement would attack these large tariffs. Instead we get agreements that are not free at all. They protect corporate profits and high income elites.
posted by JackFlash at 3:50 PM on July 9, 2016 [1 favorite]


I don't follow the patents are tarrifs argument. How are they a tarrif?
posted by humanfont at 5:46 PM on July 9, 2016


A tariff is a tax imposed on the import or export of a product that artificially raises its price to reduce competition from cheaper foreign producers and protect the favored industry.

For example if China can produce steel at $500 per ton and the U.S. can produce steel at $550 per ton, then if the U.S. imposes a 10% tariff on imports of Chinese steel, $50, both Chinese and U.S. steel will cost $550. This extra $50 comes out of the pockets of U.S. consumers as higher prices and goes into the pockets of U.S. steel producers.

Likewise if India can produce Solvaldi for hepatitis C for $1000 and the U.S. patented Solvaldi costs $80,000 then for U.S. consumers, it is the same as an 8000% tariff. Just like a tariff, the patent protection is setting an artificially higher price for drugs by blocking importation of cheaper Solvaldi from foreign producers.

It is laughable that TPP proponents make a big deal out of a 10% tariff, going on and on about the ills of protectionism, yet completely overlook an 8000% tariff on drugs. This costs U.S. consumers something like $300 billion a year which goes into the pockets of the favored pharmaceutical industry.

That isn't free trade. That is restricted trade and protectionism at its worst.
posted by JackFlash at 6:26 PM on July 9, 2016 [4 favorites]


this extra $50 comes out of the pockets of U.S. consumers as higher prices and goes into the pockets of

-- the people who make steel in the US. Instead of the entire $500 going into the pockets of the Chinese corporation that produces steel. I, for one, am fine with that.

Likewise if India can produce Solvaldi for hepatitis C for $1000 and the U.S. patented Solvaldi costs $80,000 then for U.S. consumers

This is an entirely different issue, and would be a derail but for people insisting that it needs to be brought up, but: Solvaldi doesn't cost $80,000 because that's how much it costs to produce in the US. The cost of producing Solvaldi in the US probably isn't that much greater than it is in India. The reason that the drug itself costs money is because the price of the drug covers the cost of drug discovery (*) and the massive number of clinical trials required for drug approval by the FDA. (There was a fantastic post, in the day, that broke down the cost bit by bit, but I can't find it now. Sufficient to say, Gilead acquired Pharmasset -- the company that did the original research -- for $11.2 billion explicitly for the yet-unapproved and hence still risky Solvaldi, and the cost went up from there.)

(Also, how fucked up is it that a pharmaceutical company can discovery a drug that cures a chronic illness and the only thing that progressives do is use it as a poster child for how greedy drug companies are?)

(*) The vast majority of which is not federally funded, so please don't pull out that old canard.
posted by steady-state strawberry at 8:06 PM on July 9, 2016 [2 favorites]


this extra $50 comes out of the pockets of U.S. consumers as higher prices and goes into the pockets of

-- the people who make steel in the US. Instead of the entire $500 going into the pockets of the Chinese corporation that produces steel. I, for one, am fine with that.


Actually, no. Most of the money is going to go into the pockets of the owners of the steel mill. A tariff is just a tax on consumers, a sales tax. The proceeds of this sales tax, instead of being directed to the general welfare, are instead directed explicitly to one favored constituent who happens to have powerful lobbyists. Tariffs are not an efficient way of distributing consumer taxes and are highly distortionary.

A better solution would be to negotiate a reduction in import tariffs in exchange for China eliminating its currency manipulation. Eliminating the exchange rate distortion would be like removing 20% tariffs on U.S. exports across the board without the picking of individual winners and losers. Eliminating the trade deficit would boost U.S. employment by 2 million jobs.
posted by JackFlash at 9:02 PM on July 9, 2016


Likewise if India can produce Solvaldi for hepatitis C for $1000 and the U.S. patented Solvaldi costs $80,000 then for U.S. consumers ...
This is an entirely different issue, and would be a derail but for people insisting that it needs to be brought up


It is not an entirely different issue. It is effectively exactly the same as a tariff, a tax on consumers and highly distortionary to the economy.

You can't just wave your hand and say that we shouldn't ask if we are getting our money's worth for $450 billion dollars in patent taxes collected from consumers and handed over to drug companies every year. First off, more than half of that money is going not to research but to marketing, a complete waste of consumer patent taxes.

Second, as much as you would like to deny it, the basic research behind Solvaldi was indeed done by government funded researchers. If you took that $450 billion and gave it to government labs, we would have much more efficient drug research programs. There is an enormous amount of waste, corruption and fraud in drug research because patent monopolies are a machine the allows printing billions in windfalls.
posted by JackFlash at 9:20 PM on July 9, 2016


more than half of that money is going not to research but to marketing...
Second, as much as you would like to deny it, the basic research...

At this point, it's pretty clear you have no idea what you're talking about with regards to drug research, so I think that it's safe to conclude you have no idea what you're talking about with regards to steel mills, either. Do me a favor and Google the drug discovery process, and look into the costs of Phase I, II, and III clinical trials before you start talking about basic research. Even if basic research had anything to do with anything, those aren't the costs anyone cares about when it comes to the cost of bringing a drug to market.
posted by steady-state strawberry at 5:48 AM on July 10, 2016 [1 favorite]


The question is not how much do drug companies spend. We know they spend billions. The question is whether consumers are getting their money's worth for the patent monopoly tax. Most of that tax money is simply waste. Drug companies spend more money on marketing than research and development. That money is a dead waste.

Here is a paper from the Federal Reserve making the economic argument against patents for pharmaceuticals among others.

Here is Nobel economist Joseph Stiglitz explaining the problems with drug patents and proposing an alternative.

Here is economist Dean Baker making the case against drug patents -- in short form and long form.
posted by JackFlash at 7:38 AM on July 10, 2016 [1 favorite]


Don't forget the wonderful practice of tweaking drug formulations solely for the purpose of getting a new patent to extend their monopoly and profits.

Yes, clinical trials and etc. cost lots of money, but that doesn't refute the fact that these companies manage to spend even more on marketing...
posted by inparticularity at 10:08 AM on July 10, 2016 [1 favorite]


« Older Let's get a little dark with Amy Grant   |   Mrs. White, in the marketing office, with a focus... Newer »


This thread has been archived and is closed to new comments