Econ­o­mists sharply split over trade deal ef­fects

The Pak Banker - - OPINION - Jackie Calmes

LAW­MAK­ERS and pres­i­den­tial can­di­dates are hav­ing their say about the 12-na­tion Pa­cific Rim trade ac­cord that is Pres­i­dent Obama's top eco­nomic pri­or­ity in his fi­nal year in of­fice. But lately the liveli­est de­bate over the deal is among blue-rib­bon econ­o­mists. On Mon­day, it was the crit­ics' turn: Econ­o­mists from Tufts Univer­si­tyun­veiled their study con­clud­ing that the pact, called the Trans-Pa­cific Part­ner­ship, would cause some job losses and ex­ac­er­bate in­come in­equal­ity in each of the dozen par­tic­i­pat­ing na­tions, but es­pe­cially in the largest - the United States. Sup­port­ing the au­thors at the Na­tional Press Club was Jared Bern­stein, who was the top eco­nomic ad­viser to Vice Pres­i­dent Joseph R. Bi­den Jr. dur­ing Mr. Obama's first term.

The con­clu­sions of the Tufts econ­o­mists con­tra­dict re­cent pos­i­tive find­ings from the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics and the World Bank about the trade pact, which would be the largest re­gional ac­cord in his­tory and would bind na­tions in­clud­ing Canada, Chile, Aus­tralia and Ja­pan. Each side in the econ­o­mists' de­bate has crit­i­cized the eco­nomic model that the other used to reach its re­sults, while op­po­nents and sup­port­ers of the trade ac­cord have quickly seized upon whichever anal­y­sis but­tressed their own views. Michael B. Fro­man, Mr. Obama's trade rep­re­sen­ta­tive, plans to join other trade min­is­ters in Auck­land, New Zealand, on Thurs­day for the for­mal sign­ing of the trade deal, which they fin­ished in Oc­to­ber af­ter years of ne­go­ti­a­tions.

The fu­ture of the deal, how­ever, de­pends on the ap­proval of a sharply di­vided Congress. The ad­min­is­tra­tion is be­lieved to lack enough sup­port for pas­sage, though votes are not ex­pected un­til af­ter the Novem­ber elec­tion. Some other na­tions are de­lay­ing their own rat­i­fi­ca­tion pro­cesses pend­ing Amer­i­can ac­tion. Elec­tion-year pres­sures are not help­ing the pres­i­dent's cause, as lead­ing can­di­dates in both par­ties are op­pos­ing the trade agree­ment. Don­ald J. Trump, the lead­ing Repub­li­can can­di­date, told the con­ser­va­tive web­site Bre­it­bart News over the week­end that as pres­i­dent he would stop what he called "Hil­lary's Oba­matrade."

Hil­lary Clin­ton, the lead­ing Demo­cratic con­tender, has crit­i­cized the fi­nal agree­ment af­ter prais­ing it while it was be­ing ne­go­ti­ated. She con­tin­ues to be as­sailed by her main ri­val for the nom­i­na­tion, Sen­a­tor Bernie San­ders of Ver­mont, for her early sup­port. Against this back­drop, the econ­o­mists from pres­ti­gious univer­si­ties and re­search in­sti­tu­tions have been pro­vid­ing their takes and de­bat­ing their dif­fer­ences just as in­tensely, though with more schol­arly re­serve. The anal­y­sis from the Global De­vel­op­ment and En­vi­ron­ment In­sti­tute at Tufts was ti­tled "Trad­ing Down: Un­em­ploy­ment, In­equal­ity and Other Risks of the Trans-Pa­cific Part­ner­ship Agree­ment," and was writ­ten by the econ­o­mists Jeronim Ca­paldo and Alex Izuri­eta, with Jomo Kwame Sun­daram, a for­mer United Na­tions eco­nomic de­vel­op­ment of­fi­cial.

The au­thors wrote that they used "a more re­al­is­tic model" for their anal­y­sis, and that pre­vi­ous re­ports that pro­jected eco­nomic ben­e­fits from the trade ac­cord were "based on un­re­al­is­tic as­sump­tions such as full em­ploy­ment" and un­chang­ing in­come dis­tri­bu­tion. The Tufts re­port pro­jected that in­comes in the United States would de­cline by a half-per­cent­age point com­pared with the change ex­pected with­out the Trans-Pa­cific Part­ner­ship. The Peter­son In­sti­tute's re­port, by econ­o­mists from Bran­deis and Johns Hop­kins univer­si­ties, pro­jected that in­comes would rise by half a per­cent­age point. The Tufts pa­per also pro­jected that the over­all economies of the United States and Ja­pan would con­tract slightly. Em­ploy­ment in the United States would de­cline by 448,000 jobs; to­tal job losses in the dozen na­tions would be 771,000 - a small share of the na­tions' to­tal work forces, yet hardly a sell­ing point for lead­ers seek­ing to rat­ify the trade agree­ment.

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