- TPP renegotiates parts of NAFTA, a campaign promise of President Obama in 2008, though I doubt he or his supporters envisioned this agreement as the result of that promise. The administration is promoting the fact TPP includes labor and environmental standards that were not part of the original NAFTA agreement. Opponents question whether those standards will be enforced and if the labor standards are tough enough.
- It brings three of the four Pacific Alliance countries into a broad multilateral trade agreement that includes the United States. That multilateral trade framework can play an important role in hemispheric integration.
- It changes auto origin rules from 55% made in North America under NAFTA to 45% made in TPP, which means more cars finished in Japan can be sold in the North American market and more Chinese auto parts are likely to make it into North American supply chains. It is a potential (but only potential) blow to Mexico's auto industry, one of the strong sectors of the economy.
- It will open up Japan's closed economy, a huge market that needs more than commodities, to increased goods and services from this hemisphere.
- It creates potential avenues for our hemisphere to challenge labor and environmental violations in Asia that undercut this hemisphere's products. Once again, whether and how these provisions will be enforced is of concern.
- TPP will place pressure on CAFTA country economies that were not included in the negotiations, as countries like Vietnam and Malaysia will now have similar or better access to US markets than Central America.
All trade deals come with some good and some bad; they have winners and losers. This trade deal, with 12 countries and 30 chapters, requires analyzing and balancing costs and benefits across a variety of very different issues. I'm disappointed by analysts who can take such strong stands in favor or against without acknowledging that both sides have some reasonable points.
As someone who is broadly in favor of increased trade and strong, enforceable trade agreements, one of the things certain analysts have to get over is the idea that "free trade" is something to be reflexively supported or opposed. This isn't a "free trade" agreement. It's a fairly complex trade agreement. Some barriers are knocked down (including taxes on many US exports to the participating Asian economies) while other barriers are strengthened (such as the provisions regarding pharmaceutical patents). Some barriers and regulations have a good reason for existing or being strengthened (new rules to fight overfishing or child labor, for example), while others are simply enshrining 21st century protectionism into a multilateral deal (DRM anti-circumvention rules). These are difficult policy issues made harder by the challenge of weighing them against each other across unrelated sectors.
I find some of the strategic reasons for TPP compelling. We are competing globally with China and this hemisphere needs some enforceable trade rules to do so. But details matter. Once the final text is released, we all can read the agreement, analyze the details, and decide whether it should be passed or if the negotiators need to get back to work.