Derek Scissors is a resident scholar at the American Enterprise Institute, and at a GBD event last Wednesday he debated the question:
"TPP: Too Risky To Pass Or Too Risky To Pass Up?" His opponent was
Lori Wallach, who is the director of Public Citizen's Global Trade Watch. Today's featured quote was something Mr. Scissors said after Ms. Wallach had referred to "the foreign policy argument" for TPP - the Trans-Pacific Partnership agreement.
"I don't really like the foreign policy argument," Mr. Scissors said. It "puts the horse before the cart," in the sense that it puts an undue emphasis on geopolitical rivalries and detracts from the real prize, namely, a good commercial agreement.
A Great TPP. Mr. Scissors' first observation was, "We have a problem here, which is that we're talking about TPP issues, and we don't have TPP." His answer to that challenge was to set out the goals that a good - indeed a great - TPP should advance, and then to discuss what such an agreement would need to include.
He began with this assumption, this belief:
"Prosperity stems primarily from competition." His second point was a broad observation about America as a participant in the global economy.
"U.S. comparative advantage is in agriculture and innovation." Those two ideas are directional. They suggest where a TPP that benefits the United States should be headed, but they are not a road map. They don't say which particular policies (agreement chapters) are most important for the United States. Mr. Scissors spoke plainly to that part of the TPP challenge as well, emphasizing the special importance of the following elements in the final TPP agreement.
Rules of Origin: "Rules of origin are taken for granted a lot, but they are the start of all trade deals," he said. "If rules of origin are not simple and transparent, they constitute barriers to entry. They limit the competition I'm talking about."
And, he said, there are lots of trade agreements in which the rules of origin are not simple and transparent. Indeed, in many cases, they are so burdensome and complex that they are, in fact, not used, rending significant portions of those agreements shams.
Agriculture: "We are by far the biggest excess agriculture producer in the world... . If we're not getting agricultural liberalization out of this deal, it's kind of silly." As for America's own agricultural trade barriers in areas like sugar and dairy, Mr. Scissors said "we should get rid of them" in return for "what could be massive opportunities overseas."
Innovation/IP: In TPP terms, taking advantage of American innovation is bound up in the negotiations on intellectual property rights. Here it is worth quoting a somewhat longer passage from Mr. Scissors:
"IP is more complicated because the situation at home is very different than the situation overseas. ... IP, with too much stringency, can suppress competition. We might have that problem here in some cases.
"We are nowhere close to that in almost all of the rest of the world, certainly not in the TPP countries. Where IP theft destroys the competition of ideas, because you can't keep your own idea and get any benefit from it, it would make the world more prosperous to have better IP protection than it has now."
State-Owned Enterprises and Competitive Neutrality. Here again a somewhat longer quote is in order:
"SOEs, state-owned enterprises, are used to side-step competition. They were used to side-step competition beforehand. Now they're used to side-step competition more because of the models of some countries. We have a chance to take countries that use SOEs fairly heavily, like Vietnam, and in a more particular way Singapore, and set a precedent.
"Competitive neutrality requirements cannot be voluntary, like the Australians' are. It can't be like the OECD, sort of outlines because they don't want to take a position. We have to have real competitive neutrality requirements. We have to have real limits on SOEs. [The] WTO doesn't have them. The TPP needs them."
Of Countries in the Mix. With the world's third largest economy, Japan, now in the TPP, and with the U.S. also pursuing negotiations with the European Union and its 28 Member States, Mr. Scissors talked about what America's approach should be vis-à-vis the other countries in the mix. He said:
"First of all, obvious, if we don't to liberalize, that's a huge problem we should get over. But if we have problems with countries - they don't want to liberalize in agriculture or they don't want competitive neutrality - just go on without them.
"I am not silly enough to say that the TPP is going to cause all of these countries to change their policies in a way that benefits the world and benefits the United States. But it's a way to influence them. It is a way to influence them without threats and sanctions. And that's how it should be used. We'd love for you to join. You need to liberalize across the board, and if you don't, we'll just move on."
