Trade expert Gary Hufbauer grades the global trade agenda “incomplete,” but bright prospects for the Trans-Pacific Partnership and progress at the WTO still bode well for trade liberalization.
At the beginning of the year, I held out hope that 2015 could be a decisive year for globalization policy — decisive in a positive direction. A little more than midway through, I see pluses and minuses, but overall the grade is “incomplete.”
When the year started, several big trade and investment deals were on deck: the Trans-Pacific Partnership (TPP), the Trans-Atlantic Trade and Investment Partnership (T-TIP) and two pacts under the World Trade Organization (WTO) — the Trade Facilitation Agreement (TFA) and an updated Information Technology Agreement (ITA).
After heated battles and contortions worthy of a circus freak, Congress in late June finally enacted Trade Promotion Authority — the legislative authorization President Obama needs to conclude the trade deals, provided the president’s team can find willing partners abroad.
A Promising Pacific Pivot
Looking across the Pacific, omens are excellent for the TPP, an agreement that would expand trade among a group of 12 countries anchored by the United States, Japan and Australia. U.S. Trade Representative Michael Froman and his negotiating partners seem almost ready to tie a bow on the TPP package.
The TPP promises significant liberalization in foreign markets as far away as Japan and Vietnam and as close as Canada, opening fresh opportunities for U.S. exporters and creating not more jobs but hundreds of thousands of better-paying jobs for working Americans. Calculations by my colleagues at the Peterson Institute suggest that, when fully implemented, TPP will boost U.S. exports by $125 billion annually, and raise US GDP by $80 billion.
Equally important, the TPP will establish 21st century rules for subjects not covered in existing agreements: state-owned enterprises, intellectual property rights, and labor and environmental standards. The remaining big hurdle is Congressional ratification before the end of 2015 – as close as it gets to a government Christmas present for the American people.
Clouds Over the Atlantic
While the Pacific talks counts as the bright star on the trade and investment policy horizon, prospects for T-TIP appear pretty dim. On the American side of the Atlantic, the TPP battle has sucked up all the energy the Obama administration seems able to devote to trade affairs. On the European side, T-TIP has been eclipsed by never-ending Greek and Ukrainian crises.
For now, the trans-Atlantic talks are focused on technical details, postponing the big policy questions on market access and regulatory convergence for a later day — probably not before 2017.
Hope for Results at WTO
WTO negotiations seem midway between bright TPP prospects and dim T-TIP progress. The Information Technology Agreement merely awaits a handshake between China, Taiwan and Korea as to the extent flat panels will be covered. The Trade Facilitation Agreement will probably not get the assent of 107 WTO members at the Nairobi Ministerial meeting in December 2015, but prospects for securing ratification in 2016 look good.
If 2015 delivers TPP, ITA and a clear path to TFA, then the year will earn a B+ grade for globalization policy. In the midst of a lackluster world economy — with growth marked down every time the International Monetary Fund delivers an oracular forecast — a grade of B+ grade for trade and investment policy is good work.
(Top image: Courtesy of Thinkstock)
Gary Hufbauer is the Reginald Jones Senior Fellow at the Peterson Institute for International Economics.