Why Paul Krugman is wrong to oppose the Trans-Pacific Partnership

I agree with much of the economics in his post, though I would frame the points with a different kind of rhetoric.  But I think Krugman is nonetheless wrong to oppose TPP.  You will notice the word “China” does not appear in his argument.  He closes with a question: “Why, exactly, should the Obama administration spend any political capital – alienating labor, disillusioning progressive activists – over such a deal?”  The answer is simple: either this deal happens on American terms, or an alternative deal arises on Chinese terms without our participation.  For rather significant foreign policy reasons we prefer the former, and the pragmatic side of President Obama understands this pretty well.

Addendum: Brad DeLong comments.


I would note that "on American terms" means expansion of Intellectual Property rights and copyright terms and patent protections. However, for various reasons American policymakers in a position to choose will always try to dictate such rights, given how important such industries are to the USA (especially to the Democratic Party coalition as well.)

Historically the Democratic Party was anti-patent. A Dem named Representative John D. Dingell, who served for 60 years, was for a long time anti-patent because he was 'pro-consumer' (he finally retired last year). As for Krugman's anti-patent claims, I agree with Brad DeLong on this issue (see his comments). Also keep in mind that study after study has shown that patent protection is AGNOSTIC as to whether it is a net plus or minus to the economy, whether it is good or bad for greater innovation. Agnostic. So when Krugman is anti-patent, you should be wary, and, as DeLong does, ask for data. Likewise, when I am pro-patent you should also be wary. I base my evidence on my lifelong interest and participation in the field, and I notice how businesspeople routinely get patents before they will innovate in a field. In fact, without a patent, often VCs will hesitate to fund a project. However, you should still be wary as I don't have any hard evidence that patents are good (and Krugman nor AlexT does not have any hard evidence that they are bad). Of course studies with 95% confidence show they are good/bad but that's only data mining.

Exactly. It means an expansion of American rules of Intellectual Property, but without any expansion of environmental or labor rules. It also means shifting disputes into easily-captured arbitration panels, so that companies can override the public safety laws of member countries (like the Ethyl Corporation v. Canada suit years back).

Exactly. I'd like to hear Tyler's argument for Chinese terms being worse, because it's not at all clear that they would be--certainly not on copyright.

I'm not saying there isn't a convincing argument, btw. There may well be. But I'd like to see it rather than infer it.

Actually, I believe the correct phrasing is 'this deal happens on American terms, which we can change whenever we elect a new president.' Unless 47 Republican sentaors have no idea of what they are talking about, of course.

"Unless 47 Republican sentaors [sic] have no idea of what they are talking about, of course."

When you typed that did you immediately push back from the keyboard, throw one fist in the air and yell, "Booyah!" while imagining a studio audience cheering you on?

Nope - at this point, why would anyone trust any treaty, especially something like a trade treaty, that was negotiated by the U.S. government?

That letter was remarkable - it basically said to the entire world that in the eyes of 47 American senators (sic), the United States government is only bound by treaties until the president changes.

Why bother having a treaty with a government where a significant component of that government's highest law making body say that any treaty is only as binding as the U.S. wishes it to be, whenever a new president comes to power.

Recently, Prof. Cowen has been talking about how important Very Serious People are to the effective running of government. It seems as if Greece is not the only place where a lack of Very Serious People in elected office is on extremely public international display.

And yes, such a public display will harm American interests, especially when the U.S. expects other parties to a treaty to follow that treaty's terms, even when the partner's government changes. Because that new government need only refer to the publicly expressed position of 47 Republican senators to say that their own form of government gives them the right to break a treaty whenever that new government feels the whim.

Not even the craziest Not Very Serious Greek politician currently in power has suggested that Greece has the unilateral right to change any treaty it wants merely because of the result of a single national election. But America is exceptional, as we all know.

The President cannot make a treaty without ratification by the Senate. Remember Kyoto? Bill Clinton signed it and then the Senate voted it down 98-0. The U.S. is not a party to Kyoto. If President Obama tries to ignore the Constitution and make an executive deal with Iran, it isn't a treaty under U.S. law, hence the next president, Republican or Democrat, could cancel it by executive order.

The whole point of the Senate letter was to contrast the contemplated executive understanding with Iran with a duly ratified formal treaty, such as TPP. Much of the just criticism which the letter received dealt with the condescension of explaining that contrast to the Iranians-- when in fact only some foreigners are too ignorant to grasp it.


Oh noes! We were condescending towards a country which executes gays, among other horrible things, and wants to murder 6 million Israelis.

The criticism is mainly just because the senators have committed lese majeste towards the God Emperor.

"when in fact only some foreigners are too ignorant to grasp it. "

I think that technically Prior_approval isn't actually a foreigner, but an American living in Germany. However, he's clearly an obsessive ideologue.

Note: TPP will not be submitted as a treaty - that is the entire point of the president asking for Trade Promotion Authority, TPA. Under TPA, the TPP will only need 51 votes to gain approval in the Senate, not a 2/3 majority, and there will be no vote on cloture (60 votes). It truly is expedited procedure, not regular order.

It should be considered a treaty, but who cares about the Constitution anyway when there's money to be made?

"The Constitution did not explicitly give me power to bring about the necessary agreement with Santo Domingo. But the Constitution did not forbid my doing what I did. I put the agreement into effect, and I continued its execution for two years before the Senate acted; and I would have continued it until the end of my term, if necessary, without any action by Congress. But it was far preferable that there should be action by Congress, so that we might be proceeding under a treaty which was the law of the land and not merely by a direction of the Chief Executive which would lapse when that particular executive left office. "

Theodore Roosevelt. An Autobiography.

Yes, Theodore Roosevelt is a fine example of someone who did what he wanted, even knowing that it might only be in the shorter term, because he felt it the nation's best interests. And not caring about Congress at all in the meantime.

And this is an example of how a treaty can be ended by an executive, without bothering with the Senate's advice or consent - 'Although the Soviet Union ceased to exist in December 1991, in the view of the U.S. Department of State, the treaty continued in force.[13] An additional memorandum of understanding was prepared in 1997, establishing Belarus, Kazakhstan, the Russian Federation, and Ukraine as successor states to the Soviet Union, for the purposes of the treaty.

On December 13, 2001, George W. Bush gave Russia notice of the United States' withdrawal from the treaty, in accordance with the clause that required six months' notice before terminating the pact—the first time in recent history that the United States has withdrawn from a major international arms treaty.[14] This led to the eventual creation of the American Missile Defense Agency.' http://en.wikipedia.org/wiki/Anti-Ballistic_Missile_Treaty

Nations break treaty obligations all the time, or simply terminate them as in the above example. The interesting thing being that a treaty can be ended by executive order, by a new president - without requiring Senate action at all.

At least the Russians recognized that reality of dealing with the U.S., as seen by how they handled the terms of START II - 'While will never really know how events would have unfolded had the Bush administration stuck with the ABM treaty, we can speculate. The 1993 START II treaty, signed by President George H.W. Bush, never entered into force in large part because of his son’s ABM treaty withdrawal. Both countries ratified START II, but the Russian Duma conditioned its approval on keeping the ABM agreement in place. Russian President Putin announced he would not abide by START II on June 14, 2002, the day after the U.S. unilateral abrogation of the ABM treaty took effect.' http://armscontrolnow.org/2012/06/12/2969/

Pointing out to the entire world that the U.S. is not to be trusted whenever presidents change (see example above about terminating a treaty by executive action alone) is not in American interests.

(And just a note - 'The Senate does not ratify treaties—the Senate approves or rejects a resolution of ratification. If the resolution passes, then ratification takes place when the instruments of ratification are formally exchanged between the United States and the foreign power(s).' http://www.senate.gov/artandhistory/history/common/briefing/Treaties.htm )

Yes, Theodore Roosevelt is a fine example of someone who did what he wanted, even knowing that it might only be in the shorter term, because he felt it the nation’s best interests. And not caring about Congress at all in the meantime.

The same could be said for Hugo Chavez.

'The same could be said for Hugo Chavez.'

Who did not earn a Nobel Peace Prize, by the way. 'Theodore Roosevelt, President of the USA, received the Peace Prize for having negotiated peace in the Russo-Japanese war in 1904-5. He also resolved a dispute with Mexico by resorting to arbitration as recommended by the peace movement.' http://www.nobelprize.org/nobel_prizes/peace/laureates/1906/roosevelt-facts.html

And how did the advice and consent of the Senate work out for Roosevelt before arbitration started? 'Roosevelt and Hay yielded to their pleas, and Hay, in 1904 and 1905, negotiated treaties with France, Switzerland, Germany, Portugal, Great Britain, Italy, Spain, Austria-Hungary, Mexico, and Sweden and Norway. To the anger of Roosevelt and Hay, the Senate in advising ratification insisted that the preliminary arbitration agreements be actual treaties and therefore subject to the ratifying process. Roosevelt thereupon refused to proceed further, but Hay's successor, Root, was convinced that treaties amended so as to meet the Senate's requirements would be better than none. He prevailed upon the president to consent to negotiation in 1908 of a new set of treaties.' http://www.americanforeignrelations.com/A-D/Arbitration-Mediation-and-Conciliation-The-hague-peace-conferences.html

Which, since Roosevelt received his Peace Prize in 1906 meant that he simply had gone ahead and used his executive authority. And when the Senate balked, Roosevelt also balked, until convinced otherwise.

Besides, I think Putin would have been a better example of a leader who is utterly unconcerned about international treaty obligations, while also feeling that what he does is in the best interests of his nation.

Putin isn't a Latin American dictator like Chavez - and unlike Chavez, Putin represents a nation state that possesses the ability to roll its tanks past whatever borders it cares to ignore, regardless of any treaties that may exist.

You'll notice that prior_approval wrote those long, mostly off-topic posts rather than admit he was wrong.

No, this is binding, would be subject to the Senate's advice and consent, and would be ratified. Unlike the Iran thing. http://www.lawfareblog.com/2015/03/the-case-for-the-presidents-unilateral-authority-to-conclude-the-impending-iran-deal-is-easy-because-it-will-likely-be-a-nonbinding-agreement-under-international-law/

I actually don't mind other countries agreeing to stronger patent protection on pharma drugs as the US consumer (and insurance companies) pay the premium for the research of the new drugs. So a greater sharing of these costs would be a good thing for us. Otherwise the deal is relatively small potatoes.

Anyway, I don't think TPP popular in other nations so I am not worried about China terms here.

If those countries have a monopsony, a patent is not very useful. They just don't buy your drug.

A better system would be a most favored price regime, where Medicare demands a price based on the most favorable price given in the OECD.

So if France pay 10 cents a pill, so does Medicare.

The goal not being to squeeze pharma, but to have pharma price globally.

Or even pricing at the Median OECD price.

Of course, this would have a drastic effect on multiple large pharmaceutical companies and would likely result in a reduction in spending on future drug R&D. Which would certainly slow down drug development.

Specifically, median by population in the OECD.

"Which would certainly slow down drug development." Hmmm. I'm not expert in the field. Not even well read in the field. I have seen occasional articles to the effect that, in fact, R&D has slowed greatly, except to the extent of making minor tweaks to the production process to get new patents on old drugs whose patents are expiring. I'm not sure that new drugs which have a price of $800,000 for a course of treatment (cost of production $300) and 25 patients worldwide is a good thing. OK, I made that up, but there are actual examples out there. There's another blog I read, don't remember which -- driftglass? avedon's sideshow? the confluence? other? -- whose author was a research scientist with Big Pharma, who has ranted about the shutting down of research programs. According to her, not only are many programs being shut down, management is taking control of the research process in ways which will make progress impossible.

I was brainwashed when I studied economics (my undergraduate major) on the benefits of international trade, comparative advantage, and the rest, so even today, with the global economy and many "lost" American jobs, I nevertheless favor anything that reduces trade barriers. I'm only slightly older than Krugman, so he studied economics when "free trade" was taught as much as a religious belief as economic theory. At the time, more than a few in the economics faculty were already adults in 1929 and practicing or teaching economics during the Great Depression, which they attributed in part to the adoption of trade barriers (do today's economics students even recognize the term Hawley-Smoot Tariff). Anyway, some things learned are never forgotten. My indoctrination, I suppose.

Anyone who has seen Ferris Bueller should be more or less up to speed here.

The release of Ferris Bueller is closer to the moon landing than to the present day.

The division between ancient history and recent history is at about the age you turn 5.

But it is still closer to us than it is to Johnny Cash's "I Walk the Line" charting, and I usually find that when I enter a bar and that is playing that the place is too young and obnoxious for my tastes.

Dave Barry also flagged the Hawley-Smoot Tariff in his history of the U.S. as the most amusingly named.

Economics, as it was taught when I was in college (40 plus years ago), was very different from today. The economics faculty at my college, a large public university, was decidedly Keynesian; indeed, only one faculty member had received his degree from Chicago (back to him in a second). The belief in Keynes was absolute. Well, almost absolute: comparative advantage was the one classical theory that was treated as gospel (thus, my brainwashing). As for the Token (as he was called), he was assigned to teach labor economics, which showed that the department chair had a sense of humor (or not). Anyway, the first class he went on and on about the title of the textbook he was required to use, The Economics of Work and Play, revealing that he didn't think much of the course or the book. The students sat in silence, no doubt wondering if the Token, like all those strange creatures at Chicago, had gone round the bend. Finally, near the end of the hour, the Token asked if there were any questions about the course. One brave (or confused) student raised his hand and asked where he could get the textbook for the course, the one that was available at the campus bookstore being titled The Economics of Work and Pay.

If the Chinese were writing the international trade rules, what exactly would they change? I don't think anyone knows. The current system seems to be working quite well for them.

I suspect they would eliminate all patents and copyright. This would allow their factories to copy the iPhone and get most of the gain, for example.

They probably would love to force all foreigners selling into China to open domestic factories there, with 51% control by local partners, etc., too.

They already do that to a large extent.

Of course, as they rise in domestic innovation themselves, they might back off the patent aspect.

But really, I think many average nationalist Chinese have no idea that these policies end up doing great harm.

j r - Unlike Obama's proposed Iran agreement, The TPP would be ratified by the Senate to become law in these United States. Obama doesn't want to sign a treaty with Iran...more of an understanding. He can have e Un ratify anything he wants; an agreement with a foreign party doesn't have power in the U.S. Until ratified by the Senate, until the administration or someone else litigates otherwise (which I think they might win).

I should know this, but how much regulatory integration is typically included in these trade deals, including NAFTA, the EFTA, the TPP, and the proposed TTIP?

So for example, does NAFTA mean that the U.S. and Canada have common standards for chicken cleaning or milk pasteurization or whatever? So then if the U.S. and the EU got into a TTIP, would THEY have common standards for all those things, and would that drag Canada and Mexico in as well because it's all transitive?

Thanks in advance for anyone who knows this, and if you happen to know of a book or article that explains all the intricacies of trade agreements, I would love to know it.

I don't think I quite phrased this right. I mean, I know that the U.S. and France aren't going to have common food safety standards under TTIP. I guess I'm more just wondering, does it even matter if the tariffs are reduced or eliminated, then? Would French manufacturers have to explicitly produce stuff meant for export to the U.S. to comply with U.S. standards? How does that work exactly?

I get so confused with all the deets in these trade agreements.

'Would French manufacturers have to explicitly produce stuff meant for export to the U.S. to comply with U.S. standards?'

Amusingly, currently, American meat can only be exported to the Germany (and one assumes other EU states) when it complies with German/EU regulations. Some of the plastic wrapped American beef that one sees at a German store like Edeka at the buther counter explicitly states, in English, that this meat is for export only. It also costs something like $15 and up per pound.

And Germany, which is the EU state most opposed to TTIP, find the idea of 'chlorine chicken' disgusting - there is no way any German chicken producer is going to produce something like that for the American market, unless they are willing to write off their domestic market completely.

"And Germany, which is the EU state most opposed to TTIP, find the idea of ‘chlorine chicken’ disgusting"

Once again you wrap up your personal belief and project them into some kind of Germany vs the US paradigm.

"Nothing wrong with chlorine-washed chicken, say German backers of TTIP

"There is no scientific proof that chicken disinfected with chlorine can be hazardous to health," said IW director Michael Hüther, indicating assessments conducted by the German Federal Institute for Risk Assessment (BfR)."


Yes, I had mentioned chicken-cleaning standards because I'm tangentially aware of a dispute there.

"Would French manufacturers have to explicitly produce stuff meant for export to the U.S. to comply with U.S. standards?"

Yes, and I can explicitly say that the US must meet French (EU) standards for food (for yogurt at least) shipments to France. Also, there's 0 difference in production standards. All of the work comes in on the reporting side. The EU requires a lot more paperwork (or at least a completely different set of paperwork). However, all of the production steps and indeed all of the data was already in the system. It was all a matter of creating the appropriate reports.

Interesting. I would have thought the standards for dairy products especially would be different, besides just the paperwork. I have heard of people's relatives in France sending them food and having it be seized by U.S. customs because the pasteurization requirements are different, so maybe there is still an asymmetry going the other way?

Pasteurization requirements are, with regards to milk products, pretty strict in the US.

Krugmans oped and slides have more content than this post, and I am in general agreement that gains from trade look small given the level of current impediments are low, except for agricultural protection, which will continue even under TPP.

But, I disagree with his attitude towards IP protection. I would think Alex would be agreeing with Krugman here. But, maybe he doesnt want to defend Krugman for mood affiliation reasons.

Tyler, not Alex.

Alex, because it is Alex who dislikes patent.

"this deal either happens on American terms, or an alternative deal arises on Chinese terms without our participation"

Too bad the same logic has not enlightened the Administration's kill-Keystone policy.


A trade deal with U.S. rules is bad for America. A trade deal with Chinese rules is great, because everyone can cheat and block Chinese exports, slowing their economic growth. Sometimes you have to go full Krugman.

I'm in favor of free trade. Further, I think John Thacker has described the treaty accurately. It's probably the case that granting limited monopolies for I.P. is productive but it's been taken too far and this treaty strengthens and extends that. I don't get a vote but if I did I'd vote it down.

I'd oppose anything dressed up with the word "Partnership"; or, come to that, "community". A bit of truth-in-advertising would not go amiss here.

Did you know that the English-speaking world is full of political entities called "commonwealths?"

That's like....communism. Yuck!

Since the TPP is still secret how can anyone be for it or against it?

Or are we suppose to ratify first before we know what's in it?

Interesting to see all these opinions about something no one on this forum has seen. Pig in a poke? No thanks.

"Or are we suppose to ratify first before we know what’s in it? "

Yes. That's what President Obama is asking for. "Fast track authority" means they approve now, and guarantee that when the actual treaty is presented for advice and consent that they will consent without debate or amendment. Since the treaty is not yet finalized and the working draft is secret I would assume the secrecy shows it is a terrible deal for America and vote against it.

I think the accurate text is 'Brad DeLong deletes comments.'

What's the evidence that there is a China-driven deal that will take the place of the TPP? Are there alternative talks going on in parallel? It seems doubtful that the potential members of the TPP - countries like Japan, Korea, the Phillipines, Australia, and New Zealand, which either have long standing military, political, social and economic ties with the US, or countries like Vietnam, which are currently involved in territorial disputes with China - are weighing whether to bind themselves to a Chinese dominated trading system. My understanding is that small and medium sized Asian countries want to balance against China, which is huge, close by, and potentially volatile in the medium term, rather than enter into agreements that permit China to dominate them.

It doesn't matter. It's like the Dulles Brothers (and their unindicted co-conspirators) claiming in 1965 that there was a "monolithic Communist conspiracy," even though they must have known that the U.S.S.R. and China had been enemies (sporadically shooting at each other) since 1953. Rhetoric does not have to have a basis in reality.

Krugman, Reich, Bernstein and Stiglitz all oppose the TPP. Good enough for me.

Why is Reich in that grouping? His opinion should actually cause you to reconsider your conclusion.

So, do you oppose or support the treaty?

Oppose - not that anyone should care. Race to the bottom on wages - bad for the working class.

I like Reich's recent fight for the economically oppressed. People with two digit IQs are entitled to living wages although that belief isn't popular in these parts.

Is Krugman saying that the TPP is not worth it because it hurts the Democratic party?

I would suggest Krugman is against TPP because it would take too much political capital to pursue the deal. He rather Obama do other bigger goals.

It is sort being against a Fortune 500 CEO negotiating the price on office supplies. Negotiating office supplies is a good idea but it should not be done by a CEO.

Aren't international Trade Treaties exactly the kind of thing a US President should be involved in negotiating?

To compare negotiating the TPP with pricing office supplies might be an accurate assessment of Krugman, but if so it points out how ludicrous Krugman's idea is.

Trade treaties are exactly what a President is suppose to negotiate. However the energy it would take to push TPP through would be enormous as there is a lot anxiety with the Democrat & Republican base. (Republican Congress is the least of the problems.) Do you remember how much energy it took Bill Clinton to pass NAFTA? And TPP impacts are enormously small as the countries in the treaty for the most part have free trade with the United States. Again the impact is like a large company bottom impacted by negotiating lower prices office supplies.

I rather Obama focus on the Iran deal and ISIS right now.

I keep reading that there are secret courts that will protect foreign corporate interests. I think Elizabeth Warren talks about them.

For all you folks here that believe in the sovereignty of American borders this seems like a big breach. Elizabeth Warren says, "Multinational corporations are increasingly realizing this is an opportunity to gut U.S. regulations they don’t like."

Of course, Elizabeth Warren is a communist, but why allow international corporations to avoid our laws and step on the rights of our citizens?

Why isn't this agreement looked at like a power grab by international corporations?

"Why isn’t this agreement looked at like a power grab by international corporations?"

Because the international corporations wrote the treaty and also own the American media? The last few months have been interesting for noting what you DON'T see reported. Seen anything about Ukraine lately? Victoria Nuland? Seen anything in the major TV news shows about the number of trains derailing and exploding? Seen anything about fishing in the Gulf of Mexico?

It would be more accurate to say that discussion isn't coming up on the TPP because it is not something either party wishes to address. It's more important to fight over mean letters from congress to the president undermining a diplomacy to stop nukes that has been doomed for at least 15 years.

I'm gonna go a step farther and opposite Tyler on this one:

Nobody can reasonably claim to be a friend of individual liberty and for the TPP, PERIOD:

Here is just one of the so-called "IP provisions" of the TPP.

"The TPP requires that signatories hold civilly liable any person who “circumvents without authority any effective technological measure that controls access to a protected work,” or otherwise makes available devices or products or service that are intended to circumvent or have only limited commercial purpose other than to circumvent or are primarily designed to circumvent. There is no requirement that the infringing party be aware of their infringement in order to be held civilly liable (no knowledge requirement). The TPP requires that signatories provide for criminal penalties for persons who engage in these activities and are found “to have engaged willfully and for purposes of commercial advantage or private financial gain.”

So Tyler thinks that an international body should now judge technologies that MIGHT be used to infringe patent or copyright. I'm sorry, but how can somebody who likes individual liberty even come close to supporting such a thing?

These provisions are inherently anti-innovation and anti- entrepreneurship and anti-liberty:

All the elites suckle at the same teats. Tyler, Republicans, Democrats - it doesn't matter. As long as you have a high three digit IQ and laugh at the right notes you're entitled to plunder.

These all sound like legitimate questions and concerns.

Why does Tyler support them?

Also, where can one look for an intelligent discussion of these concerns?

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