The lead editorial in the Washington Post today called on Congress to approve "fast-track" authority which would require that new trade deals be put to a vote on an accelerated timetable without any possibility of amendment. It made this argument based on the proposition that such deals could boost growth and create jobs.
This assertion is extremely misleading at best. It is questionable whether such deals will have any positive impact on growth at all and the potential gains would be trivial in any case. One of the deals that would likely come up under fast-track authority is an EU-U.S. trade agreement. A study (Table 16) by the Centre for Economic Policy Research in the U.K. (which is supportive of the deal) concluded that in its mid-point scenario GDP would be 0.27 percentage points higher in 2027 as a result of the deal. This implies a boost to annual growth of 0.015 percentage point, an amount that is far too small to be picked up in our measurements of GDP.
This figure should be viewed as optimistic since it doesn't take account of any losses that might result from higher prices for pharmaceuticals and other products as a result of stronger protections for patents and other intellectual property claims. When these measures are taken into account it is very likely that this deal will be a net drag on growth. The same is true of the Trans-Pacific Partnership, the other major deal likely to be come up under this fast-track authorization.
Both deals are not really about "free-trade" even though the Post uses this term repeatedly. In most cases the formal trade barriers between the United States and the countries in the agreements are already very low. These deals are in fact primarily about putting in place a structure of regulation that will over-ride national and sub-national governmental bodies. In some cases, such as with intellectual property protections, these regulations are 180 degrees at odds with free trade. They will raise prices and reduce the flow of goods and services.
In other cases, the regulations will likely restrict the ability to impose legitimate health, safety, and environmental regulations. For example, they may make it more difficult to regulate fracking to ensure that oil and gas companies don't pollute groundwater. They may also make it more difficult to impose restrictions that would have prevented the sort of chemical spills that have denied much of West Virginia drinking water in the last week. These deals may also limit the ability of regulators to rein in the financial sector to prevent the types of abuses that fed the housing bubble and led to the financial crisis.
These are the sorts of issues that are at stake with the agreements that will likely come up under fast-track authority. The Post is seriously misleading its readers by calling them "free-trade" deals and claiming that they would have any noticeable impact on jobs and growth. In this respect, it is probably worth noting that many of the Post's major advertisers, such as drug companies and defense contractors, stand to be big gainers from these deals.
(Only one link allowed per comment)