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Home Publications Blogs Beat the Press Washington Post Does Front Page Sales Pitch for Trade Agreements, Again

Washington Post Does Front Page Sales Pitch for Trade Agreements, Again

Saturday, 09 March 2013 09:05

The Washington Post just loves the trade agreements that recent administrations have been pursuing. It is willing to abandon all journalistic standards to help promote them. Post fans may remember back in 2007 when a lead editorial claimed that Mexico's GDP had quadrupled over the prior two decades in an editorial touting the benefits of NAFTA. (Mexico's actual growth over this period was 83 percent.)

Anyhow, it's back in the trade agreement promotion business with a front page article that touts the trade agreements being pursued by the Obama administration as a way to create jobs. The hard sell begins in the very first sentence where it tells readers that these are "free-trade" agreements.

This is of course not true. Formal trade barriers are already very low between the United States and most of the countries with whom we are negotiating trade pacts. These deals are in fact about imposing a set of standardized commercial rules, some of which, like increased patent and copyright protection, are the direct opposite of free trade. It undoubtedly sounds better to call a deal a "free-trade" pact, since most Serious People then think they have to support it, but it does not reflect reality.

It is also absurd to describe these deals as part of a job creation strategy in a period where the economy is operating way below full employment. Incredibly, the article holds up the prospect of opening up Vietnam's economy to trade -- in the same way that China's economy was opened up in the 90s -- as a goal of current negotiations. Needless to say, trade with China has not been a net creator of jobs in recent years.

However the whole idea of trade agreements as a way to create jobs is ridiculous on its face. There is an argument for reducing trade barriers to increase economic efficiency (increased patent and copyright protection go in the opposite direction), however this will have minimal impact on job creation.

This would be comparable to selling electricity deregulation as a job creation strategy. If it worked, electricity deregulation would lead to lower electricity prices which would provide clear economic benefits, but the impact on employment would be trivial. 

The same is true with trade agreements as every intro textbook shows. It is understandable that the Obama administration would want to mislead the public to better promote its trade agenda. But real newspapers are not supposed to assist in this effort.   

Comments (5)Add Comment
the TPP is particularly awful
written by Jennifer, March 09, 2013 9:23
"increased patent and copyright protection go in the opposite direction."

This is exactly what is being done with the Trans-Pacific Trade Pact. These talks are being held in complete secrecy with no input from non-corporate groups. According to MSF Access Campaign " . . . leaked texts reveal the most aggressive intellectual property (IP) measures ever suggested in a trade deal with developing countries." The Obama administration has stated that this will be the "template" for future trade agreements. This is awful on two levels. First, it will literally kill people in these countries who will not have access to medicine but it will also make the already big pharma companies that much more powerful. Strictly speaking, yes this will "increase trade" but it will do it in the worst possible way, and very few will benefit, you know the ones that always do.

when goods cross borders troops don't....
written by pete, March 09, 2013 10:24
Currently there is a massive misallocation of capital...or labor. Lots of very poor folks in the world, living on $3 a day. Best to get used to forthcoming redistribution. Dean, you fear growth for some reason. The fact is that with the huge gains in productivity, Europe and the U.S. are able to pay millions in their countries a very high global income not to work. Seems silly but thats the way it is. With freer trade and no minimum wage even school teachers in the U.S. could have maids and cooks from Thailand, a pareto move...they would be better off and so would we. Long run, of course, all would prosper.

Trying to preserve the global status quo is either racist or simply uncaring (or simply scary nationalism).
written by Ellen1910, March 09, 2013 11:59
@ pete " when goods cross borders troops don't...."

Tell that to Stalin and the Stavka.
some explaining
written by pjm, March 10, 2013 3:42
Dean, my academic economics (never that much) is long behind me and I, for one, could benefit from a bit of unpacking. I assume efficiency means the ratio of input to output, so increased efficiency means a "bigger pie".

So the disconnect between efficiency and job creation is about the indeterminate outcome of the distribution of the pie (who saves and consumes what) and likewise, the battle over policy decisions (fiscal, monetary) to pursue higher levels of employment? Just want to be sure I am on the same page.

I guess Krugman's mea culpa (don't have a link) about not anticipating the inequality affects of trade are germane here.

(p.s. as for whether you are anti-trade or anti-grwoth pete doesn't seem to be paying attention)
It's More Than Copyright and Patent Protections.
written by muysuave, March 15, 2013 8:12
Dean, there is more to it than patent and copyright protections. One problem we have here in Europe is many layers of protected industries. Take the media industry for instance. Countries such as France have many mechanisms in place that protect a certain percentage of domestic films be produced at the expense of Hollywood productions. Agriculture is another sore point. We all pay higher taxes inorder for French farmers to stay in business. Pharmacies is another sacrosanct industry. There are strick rules on who can open a pharmacy and there location. We have too many structurally rigid systems in place that keep prices high and competition mitigated.

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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.