The Trans-Pacific Partnership is a global trade deal signed earlier this year between 12 countries—all of them with Pacific coastlines. The TPP is often described as the geographic counterweight to the Transatlantic Trade and Investment Partnership, the trade agreement which is currently being negotiated between the US and the European Union. The TPP, which has not gone into force yet, is the result of seven years of negotiations. It aims to lower trade barriers, increase transparency and reduce poverty, although some opponents say the agreement is bad for US industry and jobs.
These are all issues that Associate Professor of Economics Stephen Meardon wanted his students to get to grips with. As part of his advanced-level elective Trade Doctrines and Trade Deals, Meardon dealt with the TPP towards the end of the spring semester. “The course examines the formation of economic ideas supporting free trade or protection in response to the trade-policy issues of the moment,” said Meardon. “The particular issues that we study are those that come up when countries negotiate trade deals.”
Much of the conventional wisdom regarding the projected effects to the TPP concerns the research carried out by two prominent economists, Peter Petri and Michael Plummer.
“Their research forecasts the that the TPP would raise income on the whole in the US by about half of a percentage point over the next fifteen years or so compared to the status quo, and that it would raise income by a little bit less than that in the world at large,” said Meardon.
This model embodies the traditional view among economists that trade allows people to specialize in producing what they’re good at, he said. “In this way, the loss of jobs in one industry is the mechanism by which jobs arise in another and incomes rise on the whole.”
But not all economists hold that view. Take for example Jeronim Capaldo from Tufts University, who delivered a seminar at Bowdoin in early May called “The Risks of Large Trade and Investment Agreements: A Demand-Driven Perspective.”
Capaldo sounded a note of caution regarding the TPP and its effect on the US economy, arguing that growth would be more limited than is widely forecast. Capaldo also said that in some countries, including the US, economic growth would actually be negative, leading to losses in employment and increases in inequality. “The Capaldo lecture was used as the starting point for a classroom discussion about different assessments of the TPP,” said Meardon.
Students were asked to examine “sticking points” in the TPP, areas of contention, which opponents like Capaldo have honed in on. For Jordan Moskowitz ’16, one of the potential problems of the TPP is the language of the agreement itself. “I don’t think the wording of the TPP is as strict as it could be when it comes to the issue of child labor for example.” He quoted an article of the agreement that said countries could only discourage child labor when dealing with countries outside the TPP.
“Because of this weak wording,” said Moskowitz, “signatory countries could, in theory, get away with importing products made using child labor and using those products as part of their own manufacturing effort and still be in compliance with the TPP.”
Nicole Sadowsky ’17 looked at corporate intellectual property rights, particularly relating to the pharmaceutical industry, and how they would effect TPP member countries.
“There are many reports out there that criticize the TPP,” she said, “pointing out that the expansion of trade that comes with the TPP also means an expansion of intellectual property rights and patent law.”
This is something that critics say would only serve to benefit big business interests while preventing people in member countries like Vietnam from accessing affordable medicine.
There is a good deal of controversy about the inclusion of intellectual property rights in the TPP and other so-called “new generation” trade deals, admitted Meardon. Proponents however argue that it brings intellectual property laws into step with international trade, helps prevent counterfeiting and, said Meardon, “promotes the value of human capital.”
This led to a discussion about the extent to which the TPP is more than just a trade deal. “Reciprocal allowances for greater market access for trade in goods, or even services, do not make up all or even most of the contents of the deal,” said Meardon. “The deal is just as much about ‘deeper integration’ of the partner countries, to use a term usually favored by proponents.”
Meardon said one of the things he wanted to students to come away from the class with is a deeper understanding of the ways that economists with different values understand differently how the world works; “and how those different understandings can yield such widely varying estimates of the consequences of policy change.”