Thank Trump for killing the TPP

Trump did the U.S. as well as the rest of the free world a favour in dumping the Trans-Pacific Partnership. The TPP wasn’t about unleashing the power of the private sector to bring prosperity to millions — does anyone really believe Barack Obama staked his reputation on TPP in order to further a capitalist utopia? No, Obama wanted TPP as a legacy issue partly to fetter the free market and partly to establish his “Asian pivot,” a dubious project involving the abandonment of allies elsewhere in order to bring China to heel.

“With TPP, China does not set the rules in that region; we do. You want to show our strength in this new century? Approve this agreement,” Obama urged in his final State of the Union Address last year. He needed TPP for geopolitical reasons, “to advance American leadership in Asia.”

Here, Obama — who called himself America’s first “Pacific President” — was merely echoing his 2015 National Security Strategy that affirmed that trade deals are often motivated more by foreign policy considerations than economic benefits. “Sustaining our leadership depends on shaping an emerging global economic order … we must be strategic in the use of our economic strength to set new rules of the road, strengthen our partnerships, and promote inclusive development.”

Obama’s secretary of Defense, Ashton Carter, was even more blunt in a speech that year on the Asian Pivot, stating that “passing TPP is as important to me as another aircraft carrier.” He believed TPP would “promote a global order that reflects both our interests and our values.”

America’s free trade agreements — going back to its first FTA with Israel in 1985 — have typically been motivated more by geopolitical than economic considerations, whether to bolster an ally’s economy, as was the case with Israel, or to secure co-operation in the fight against terror, as with the Bahrain, Morocco and Oman FTAs. They serve a foreign policy goal of locking countries into the U.S. sphere of interest.

They also serve economic goals, allowing them to be sold to the public on their economic merits, and justifiably so. The deregulation, lower tariffs and expanded markets that trade deals usher in generally create more winners than losers. Obama’s TPP version of free trade, though, was different. While it would have delivered the goods by lowering tariffs and vastly expanding markets — TPP would have encompassed countries representing 40 per cent of the globe’s GDP and 33 per cent of world trade — it also would have bound the parties to policies and philosophies anathema to true freetrade regimes.

“TPP puts American workers first by establishing the highest labor standards of any trade agreement in history, requiring all countries to meet core, enforceable labor standards as stated in the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work,” the Obama White House announced upon reaching agreement on the TPP’s terms with its 11 Pacific partner countries.

Under TPP, the trade advantages developing countries now offer in the form of lower wages and informal work environments would have been undercut by their need to conform to ILO requirements on minimum wages, hours of work and unionization. “In fact, TPP will result in the largest expansion of fully-enforceable labor rights in history, including renegotiating NAFTA and bringing hundreds of millions of additional people under ILO standards,” the Obama White House boasted.

The economies of developed countries such as Canada, too, would have been undercut by TPP through “the highest environmental standards of any trade agreement in history,” as the White House announced. “The agreement upgrades NAFTA, putting environmental protections at the core of the agreement, and making those obligations fully enforceable through the same type of dispute settlement as other obligations.” This, along with TPP’s high-sounding provisions to “promote sustainable development and inclusive economic growth” creates openings to arbitrarily attack resource projects, as Canada has learned to its sorrow through economically senseless restrictions on oilsands and pipeline developments.

In cancelling TPP, Trump cancelled the TPP’s ability to undermine the free market and the sovereignty of countries representing 40 per cent of the world’s GDP. That’s a blow against the regulatory state and for economic freedom, one no free marketer should lament.

THE DEAL CREATED OPENINGS FOR ATTACKS ON OILSANDS AND PIPELINE PROJECTS.