End of the big trade deals

Jamaica Gleaner - - OPINION & COMMENTARY - Gwynne Dyer is an in­de­pen­dent jour­nal­ist whose ar­ti­cles are pub­lished in 45 coun­tries. Email feed­back to col­umns@glean­erjm.com.

UNITED STATES Pres­i­dent-elect Don­ald Trump an­nounced on Mon­day that he will can­cel the Trans-Pa­cific Part­ner­ship (TPP) on his first day in of­fice (Jan­uary 20, 2017). That will kill the TPP off for all 12 coun­tries that agreed on it just over a year ago: As Ja­pan’s Prime Min­is­ter Shinzo Abe said, the TPP would be mean­ing­less with­out the in­volve­ment of the United States. But then, it was pretty mean­ing­less even with Amer­i­can in­volve­ment.

Ja­pan and the US were the only two re­ally big eco­nomic play­ers in the TPP deal. All 10 other part­ners – Canada, Mex­ico, Peru and Chile on the east­ern side of the Pa­cific, and Viet­nam, Sin­ga­pore, Brunei, Malaysia, Aus­tralia, and New Zealand on the western side – have a to­tal pop­u­la­tion scarcely big­ger than that of the United States alone.

It was re­ally just an at­tempt to cre­ate a Pa­cific trad­ing bloc that ex­cluded China, thereby pre­serv­ing what was left of the tra­di­tional US-Ja­panese dom­i­na­tion of the re­gion’s trade. For just that rea­son, the other big trad­ing economies of the re­gion, In­done­sia, the Philip­pines and South Korea, stayed out of it. They pre­ferred to play the giants off against one an­other.

TRANS­FER OF POWER

Chi­nese in­flu­ence and trade in South-east Asia may grow mod­estly as a re­sult of the TPP’s can­cel­la­tion, but no pro­found trans­fer of power or wealth will en­sue. There were no big tar­iff cuts com­ing as a re­sult of the TPP any­way, be­cause ac­tual taxes on in­ter­na­tional trade were al­ready low. The real fo­cus was on re­mov­ing so­called non-tar­iff bar­ri­ers.

The clas­sic ex­am­ple of a non­tar­iff bar­rier was Ja­pan’s at­tempt in the 1980s to ban im­ports of for­eign-made skis on the grounds that Ja­panese snow was “unique”. A great deal of de­tailed hag­gling in the TPP talks went into break­ing down thou­sands of sim­i­lar (and some­times equally ridicu­lous) bar­ri­ers to trade, but any coun­try that wants to keep those gains can just in­cor­po­rate the same deals into bi­lat­eral trade treaties with other ex-TPP mem­bers.

Not many jobs would have been gained or lost in the US or else­where, if the TPP had gone into ef­fect. The same is true for the US-Euro­pean Union equiv­a­lent of the TPP, the Transat­lantic

Trade and In­vest­ment Part­ner­ship (TTIP), which was dead in the wa­ter even be­fore Trump was elected. Don­ald Quixote has been at­tack­ing wind­mills, not drag­ons, be­cause the great free-trad­ing spree of 1990-2008 was al­ready com­ing to an end.

It was not work­ing-class Amer­i­can vot­ers who killed TTIP. It was mainly Euro­pean con­sumers who didn’t want hor­mone-laden Amer­i­can beef, US­grown GM foods, and chlo­rinewashed Amer­i­can chick­ens on their su­per­mar­ket shelves.

To be fair, Euro­pean left wingers also played a role in mo­bil­is­ing op­po­si­tion to the deal by rais­ing the (prob­a­bly cor­rect) sus­pi­cion that the In­vestor-State in the pro­posed treaty was de­signed to crip­ple the abil­ity of Euro­pean govern­ments to im­pose high safety stan­dards in health and en­vi­ron­men­tal is­sues.

DI­MIN­ISH­ING RE­TURNS

Most of the jobs that moved from de­vel­oped to de­vel­op­ing coun­tries (or of­ten, in the US case, just from Rust Belt states to Sun Belt states where wages were lower and unions were weak or non-ex­is­tent) left long ago. In re­cent years, eight Amer­i­can jobs have been lost to au­toma­tion for ev­ery one that went abroad.

Most eco­nomic strate­gies, in­clud­ing both pro­tec­tion­ism and free trade, con­form to the law of di­min­ish­ing re­turns. The same goes for po­lit­i­cal strate­gies, but they tend to lag even farther be­hind the re­al­i­ties. That’s why the old white work­ing class in the US (and, there­fore, Trump) still feel com­pelled

to fight free trade – and why even Hil­lary Clin­ton, once an en­thu­si­as­tic ad­vo­cate of the TPP, was ul­ti­mately obliged to turn against it.

When she fi­nally made that Uturn, Reince Priebus, the chair­man of the Repub­li­can Na­tional Com­mit­tee, mocked her as “a case study in po­lit­i­cal ex­pe­di­ency”. Now he has been ap­pointed as Pres­i­dent Trump’s chief of staff, and he will change his tune ac­cord­ingly. But the cross-party con­sen­sus on this does not make it the right tune.

The truth is that these now aborted free-trade deals were merely the fin­ish­ing touches on an ed­i­fice whose ba­sic struc­ture was com­pleted more than a decade ago. Those who had devoted their lives to build­ing that ed­i­fice sim­ply kept on do­ing what they were good at do­ing, nec­es­sary or not. And all the while tech­no­log­i­cal change was con­spir­ing to make them as ir­rel­e­vant as the peo­ple who so ve­he­mently op­posed them.

Cul­tural lag be­ing what it is, the last bat­tles in this long war – prob­a­bly be­tween the US and its NAFTA part­ners, Canada and Mex­ico, and be­tween the US and China – are yet to be fought. We may be en­ter­ing the next decade be­fore the po­lit­i­cal process any­where se­ri­ously en­gages with the re­al­ity of au­toma­tion as the main de­stroyer of jobs. But re­al­ity al­ways wins in the end.

AP

Pres­i­dent-elect Don­ald Trump waves as he ar­rives at the Trump Na­tional Golf Club, Bed­min­ster club­house in New Jersey. Thou­sands of high-school stu­dents from Seat­tle to Sil­ver Spring, Mary­land, have taken to the streets since Trump’s elec­tion to protest his pro­posed crack­down on il­le­gal im­mi­gra­tion and his controversial com­ments about women.

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