TPP and TTIP Trade Deals Can Do Good, If Governments Let Them
The trade-deal battles are in full force as globalization expands. Two major pacts are drawing praise and criticism as the deals' supporters move to put them into practice.
The deals are the Trans-Pacific Partnership, TPP, between the United States, Japan, and ten other nations, and the Transatlantic Trade and Investment Partnership, TTIP, between the United States and the European Union.
Trade between countries is the foundation for understanding and law that binds people and cultures, argue Benn Steil and Manuel Hinds in their book Money, Markets & Sovereignty.
Steil and Hinds quote the economist and philosopher David Hume that "it is commerce itself that gives rise to notions of justice between people and peoples."
They add that "it is much more accurate historically to see law as something which emerges because of its vital importance in commerce-particularly commerce involving foreigners."
To make trade pacts work, there must be give and take. Dialogue and compromise help resolve misunderstandings and conflicts and create trust.
In terms of the TPP, the discussion is attempting to create the appropriate environment for nations to deal effectively with one another. Last Thursday, the nations in the TPP "pledged not to engage in currency wars with each other and to disclose any interventions in foreign exchange markets."
The pledge was aimed at addressing one of the biggest gripes of U.S. critics of the TPP. It also established an annual forum to discuss currency issues.
Furthermore, a new Pacific Rim trade agreement will serve as a vehicle to reform the opaque international arbitration system that for decades has been used to resolve disputes between foreign investors and governments.
According to a senior U.S. Treasury official, this will tie "TPP members, who represent some 40% of global economic output, to more stringent commitments than those required by the International Monetary Fund, the G7 or the G20."
The official added, that this "will become the new high standard mark in terms of currency practices."
The TPP discussions are progressing in a way that talks on the TTIP are not.
Daniel Michaels has written about these difficulties and highlighted the social issues that are resulting from major protests in Germany and elsewhere.
The high-level talks that are addressing these issues, "TTIP's details remain murky as the talks, which started two years ago are conducted in secret," Michaels wrote. The issues primarily deal with questions of national sovereignty.
Michaels added, "German TTIP opponents list a litany of potential dangers: the EU won't bet able to prohibit processed foods from the U.S.; Germany would lose its ability to prioritize social issues in public procurement because of market-oriented government-purchasing rules; special courts to resolve disputes between companies and governments would strip Europeans of their sovereignty."
There is the crucial word sovereignty.
Michaels wrote, "German opposition is largely tied to broader concerns about U.S. domination..." and that TTIP opponents fear the pact would degrade Germany's emphasis on social issues,"
It is not as if these concerns cannot be discussed.
These issues are dominating the press. The Financial Times said "that one decade after TTIP's enactment, the bloc's economy would be €120 billion ($130 billion) bigger than without the pact."
As Steil and Hinds point out, sovereignty is at the heart of the anti-globalization side of the argument.
The reality, however, is that globalization is taking place, whether or not people oppose it. Information technology and the flow of information have hastened this trend.
Furthermore, the flow of international capital is uncontainable. With capital, trade follows.
That is why governments must spend time on discussing and working out problems. That is why they must focus on education, training and restructuring their economies so that as markets open up and national sovereignty becomes less of an issue, the people of these nations can benefit from the windfall that trade brings.
Both TPP and TTIP are things that should happen. But they should be connected with a movement that uplifts societies. That will enable people in these societies to benefit from an expanding world.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.