Half-empty, or half-full?

Photographer: Dario Pignatelli/Bloomberg via Getty Images

One Cheer for the TPP

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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I’ve spent the morning reading about the Trans-Pacific Partnership. I went in prepared to deliver a column full of details, winners and losers, strong opinions about the good provisions and the bad. But what really comes to mind is a dismal thought: “Is this the best we can do?”

Oh, yes, I know the statistics. Forty percent of the world’s economy. Thousands of tariffs falling. I know the opposition points too, about giveaways to business, intellectual property rules, outsourcing jobs. No one is talking about the larger story, though, which is that the biggest trade news in a decade involves a regional deal of relatively limited impact.

It was not always thus. When I was a fledgling journalist, a wee slip of a thing, we economics writers looked to major global trade negotiations to advance the cause of freer markets, and not incidentally, the material progress of mankind. We looked down on regional side-deals because they were such weak tea compared with the robust brew of a global agreement. Regional deals distorted the flow of trade, encouraging people not to exploit comparative advantage and production capabilities, but rather to seek the best combination of tariff rules from among competing regional frameworks. I have heard arguments that such deals, by distorting trade and weakening the pressure to make global deals, were actually worse than doing nothing. Indeed, I may have made such arguments.

QuickTake Free Trade Feud

You don’t hear those arguments any more, and that’s because we free-traders have largely given up on global trade agreements. The Doha round of World Trade Organization talks collapsed in the face of European agricultural protectionism and intransigence among countries with large numbers of subsistence farmers. Nativism, protectionism, nationalism seem to be rising as a political force in many countries. Global trade volumes are looking anemic. In this climate, regional agreements seem attractive, in much the same way that the remaining bar patrons assume a winsome glow around closing time.

How have things come to such an unpretty pass?

The most cheerful argument is that previous rounds of negotiations came so far, so fast, that what was left was both more contentious, and less important, than the progress we’d already made. Regardless of your opinion on intellectual property (and I’m pretty strong on the stuff), the economic benefits of trading it, and protecting it, are more nebulous than the benefits of trading steel and shoes. Agricultural protections are pretty clear cut -- they’re indefensible -- but even in rich countries where farming is heavily industrialized and food makes up a small fraction of a typical household’s consumption, the romance of the hearty native peasant still exerts a strong pull on the national heart. We’ve still come an amazingly long way from the days when practically every modern country had a bunch of moribund state-owned industries, foreign automobile imports were regarded with only slightly less horror than foreign armies, and autarky was a word that passed the lips of Very Serious Analysts. Free trade's very success has made the few remaining issues less urgent.

The dismal story, of course, is that free trade has fallen prey to other, darker forces. As automation has done away with what used to be high-paying, semi-skilled jobs, people have given in to the natural human urge to find a foreigner to blame for their troubles. That has undercut the support for free trade when falling global growth rates mean we most need it.

Which of these stories is true? In fact, we don’t have to choose: Free trade has been a great success, and that has probably made further liberalization seem less urgent. But just look to the success of the Trump campaign to understand that this is not the only reason that trade liberalization is struggling.

Which makes any celebration of the TPP more than a little wistful. The good news is that it’s the biggest trade deal to come down the pike in a long while. Unfortunately, that’s the bad news, too.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor responsible for this story:
James Gibney at jgibney5@bloomberg.net