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Home Publications Blogs Beat the Press A U.S.-EU Trade Deal Will Not Have a Measurable Impact on Growth

A U.S.-EU Trade Deal Will Not Have a Measurable Impact on Growth

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Thursday, 13 June 2013 05:28

The NYT implied that politicians in the United States and Europe are pushing a trade deal because they want to boost growth in a prolonged period of stagnation. This is not plausible.

Even optimistic projections of the impact of a trade deal show that it would only increase GDP by around 1.0 percent. This increase would only be felt after the changes in the agreement are fully phased in which will almost certainly be more than a decade. The implication is that the impact on annual growth will almost certainly be less than 0.1 percentage point, and even this would be an optimistic scenario.

The more obvious explanation is that powerful corporate interests could benefit from a trade agreement that would over-ride national or local health, safety, and environmental regulations. The most obvious news in this piece is that political leaders are misrepresenting their motives, trying to claim that a trade deal is about economic growth, which could provide benefits to most of the population, as opposed to special interest rules that are intended to benefit a narrow group of corporations.

Comments (6)Add Comment
...
written by foosion, June 13, 2013 6:07
Don't forget the corporate interests which would benefit from more restrictions on the population's use intellectual "property".
Square Deal Trading, American Style
written by Last Mover, June 13, 2013 7:19

Why shouldn't this trade deal work? Hasn't it already been proven to work? It clearly worked in America with textiles for example.

There was a time when American labor could make up to $22/hour producing clothing and related goods. Then the multinationals moved in to take the production out of the country, stripping away domestic textile jobs but providing a price reduction through imports of up to $2 off for items like pants and a shirt.

Americans have been better off since and it just keeps getting better. Who needs a job making $22/hour when the things produced can be had practically for free?
Language
written by nassim sabba, June 13, 2013 7:37
There must be a more appropriate name for such agreements. They have nothing to do with trade. They are about protecting a specific niche for wealthy financiers and capital managers.

"Financial and Property Protection Pact" comes to mind, but doesn't roll off the tongue as Trade Agreement (agreement is more smooth than pact, as the latter implies conspiracy, which is the truth), and trade sounds like an everyday act that we all do.

CPP, Corporate Protection Pact?

SPP, Select Protection Pact?

It is very important that the word trade be removed from the language of these pacts. And they are pacts.
...
written by Ryan, June 13, 2013 1:42
One only needs to look at the Trans-Pacific Partnership (admittedly, what little we know of it) to get any sense of what these agreeements are intended to do. I am curious as to services trade with a proposed agreement, but I suspect that ultimately, consumers lose in this deal.
trade and growth...don't forget labor or labour
written by pete, June 13, 2013 2:23
Truly free, U.S. joins EC (not ECB). Doctors and nurses flee Europe to U.S., instantly saving us thousands of dollars each year per person in health costs by driving down nurse and doctor salaries. That money is freed up to buy french and italian wines, cheeses, Mercedes, etc. I'd say that is a win win.
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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