NYT Op-ed: Trade and Trust

In his New York Times column, Nobel Prize-winning economist Paul Krugman took apart the administration's arguments in support of the Trans-Pacific Partnership (TPP).

Krugman pointed out that the TPP, contrary to the administration's claims, isn't really about trade at all. It's about Big Pharma and Hollywood lobbying to extend restrictive intellectual property laws. It's about allowing multinational corporations to sue governments in partially privatized tribunals, a process known as investor-state dispute settlement (ISDS).

Krugman says:

"Critics like Senator Elizabeth Warren warn that this could compromise the independence of U.S. domestic policy - that these tribunals could, for example, be used to attack and undermine financial reform.

"Not so, says the Obama administration, with the president declaring that Senator Warren is 'absolutely wrong.' But she isn't. The Pacific trade pact could force the United States to change policies or face big fines, and financial regulation is one policy that might be in the line of fire. As if to illustrate the point, Canada's finance minister recently declared that the Volcker Rule, a key provision of the 2010 U.S. financial reform, violates the existing North American Free Trade Agreement. Even if he can't make that claim stick, his remarks demonstrate that there's nothing foolish about worrying that trade and investment pacts can threaten bank regulation.

"As I see it, the big problem here is one of trust."

On "Fast Track," Krugman concludes:

"International economic agreements are, inevitably, complex, and you don't want to find out at the last minute - just before an up-or-down, all-or-nothing vote - that a lot of bad stuff has been incorporated into the text. So you want reassurance that the people negotiating the deal are listening to valid concerns, that they are serving the national interest rather than the interests of well-connected corporations.

"Instead of addressing real concerns, however, the Obama administration has been dismissive, trying to portray skeptics as uninformed hacks who don't understand the virtues of trade. But they're not: the skeptics have on balance been more right than wrong about issues like dispute settlement, and the only really hackish economics I've seen in this debate is coming from supporters of the trade pact."

Read the full column here.