The NYT ran a news article promoting a trade agreement between the United States and the European Union. The article wrongly referred to the trade deal as a "free trade" agreement three times. The agreement is almost certain to include greater restrictions on intellectual property. These restrictions are forms of protection, they are the opposite of free trade. It would have been possible to both make the piece more accurate and save space by leaving out the word "free."

It also told readers that European leaders:

"have argued that a free-trade deal would be both a cheap and a relatively painless way to stimulate growth. ...

"Richard Bruton, the Irish minister for jobs, enterprise and innovation, said in a statement that a trade deal could lift the E.U. economy by €120 billion, or $160 billion, per year and the U.S. economy by $100 billion."

The piece provides no clear context for these numbers, nor does it make it clear that these are one time gains that are projected to be realized over a substantial period of time. (Most of the terms in any agreement will be phased in over time.) These gains come to about 0.7 percent of GDP for the U.S. and 0.9 percent of GDP for the EU. Assuming it takes ten years to achieve them, the projections imply that the deal will increase growth in the U.S. by roughly 0.07 percentage points and in the EU by 0.09 percentage points.

This increment to growth will barely be noticeable and will have a minimal impact on employment. If the EU leaders are looking to this deal as a source of stimulus, as the article asserts, then they have a very poor understanding of economics.

 

 

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