In the case of the TPP, there is a further concern. Asia has developed an efficient supply chain, with goods flowing easily from one country to another in the process of producing finished goods. However, the TPP could interfere with that if China remains outside of it.
With formal tariffs already so low, negotiators will focus largely on non-tariff barriers, such as regulatory barriers. Yet the USTR’s office, representing corporate interests, will almost certainly push for the lowest common standard, leveling downward rather than upward. For example, many countries have tax and regulatory provisions that discourage large automobiles, not because they are trying to discriminate against US goods, but because they worry about pollution and energy efficiency.
The more general point, alluded to earlier, is that trade agreements typically put commercial interests ahead of other values — the right to a healthy life and protection of the environment, to name just two. For example, France wants a “cultural exception” in trade agreements that would allow it to continue to support its films, from which the whole world benefits. This and other broader values should be non-negotiable.
The irony is that the social benefits of such subsidies are enormous, while the costs are negligible. Does anyone really believe that a French art film represents a serious threat to a Hollywood summer blockbuster? Yet Hollywood’s greed knows no limit and the US’ trade negotiators take no prisoners. That is precisely why such items should be taken off the table before negotiations begin. Otherwise, arms will be twisted and there is a real risk that an agreement will sacrifice basic values to commercial interests.
If negotiators created a genuine free-trade regime that put the public’s interest first, with the views of ordinary citizens given at least as much weight as those of corporate lobbyists, I might be optimistic that what would emerge would strengthen the economy and improve social well-being. However, the reality is that we have a managed trade regime that puts corporate interests first and a process of negotiations that is undemocratic and non-transparent.
The likelihood that what emerges from the coming talks will serve ordinary Americans’ interests is low and the outlook for ordinary citizens in other countries is even bleaker.
Joseph Stiglitz, a Nobel Prize in Economics laureate, is University Professor at Columbia University.
Copyright: Project Syndicate