I somewhat embarrassingly change my mind about three times in this (excellent and carefully balanced) piece by Danny Vinik in The New Republic on the economics, politics, and legal issues invoked by the prospect of the Trans-Pacific Partnership trade agreement.
FWIW, I write this not because I think my personal views matter that much but because I seem to be one of many going through this process regarding this furshlugginer multilateral trade agreement.
The reason for our indecision is simple, I suspect; at least I know that's the case for me. As far as I know, virtually none of us writing about it have read the damn thing (Public Citizen's Lori Wallach excepted, as far as I know -- the woman does her homework and has gotten access to some chapters, I'm told). That's why I've been pretty careful not to say much about what's in the deal, focusing my energies on what clearly is not in there, i.e., rules against signatories managing their currencies to subsidize their exports and tax their imports, thus driving the US trade deficits Vinik correctly identifies as a serious problem in terms of labor demand in the US (Bernanke agrees).
Yes, that lack of knowledge of the deal's content has led me to pull my punches, but it's also why I'm quite taken aback by those writing strong endorsements of a deal that to my knowledge they've never seen (if they have, I sincerely apologize -- but if they've seen it, why haven't I?). If we want to have informed debates in this country, then that of which we do not know we should not speak of. Especially if what we do know is coming solely from sources with major skin in the game (e.g., USTR).
So, let me summarize my own position, as in the Vinik piece:
- I largely take the administration's argument that insisting on a currency chapter would kill the deal.
- However, I'm not convinced that our negotiators tried hard to get such a chapter in the deal. I find some of their objections overwrought. Sensible rules, like those that the IMF has but doesn't enforce, would never put our own Federal Reserve in the crosshairs (though it would do so to central banks in countries that manage their currency by running large surpluses and buying excess reserves).
- Similarly, it's hard for me to see why a reciprocity rule which I endorse here would be a deal breaker. This is the idea (following Daniel Gros) that if countries can go into currency markets and buy dollars, then we must be able to do the same re their currency (this has been an issue with China and other countries that employ capital controls). Again, I'm unconvinced our negotiators have seriously pushed for even such a mild partial solution to the currency problem. China's not in the TPP, but they could conceivably join later.
- All that said, if the TPP is really a good deal for the US, and since I haven't read it I can't say, then based on the first bullet above, I understand, conditional on greater effort than I believe has been expended thus far, that a currency chapter could kill the deal. But then, I strongly stand by my position in the Vinik piece re currency:
"What I view as unacceptable is the position that we can't do anything in the TPP and we can't do anything out of the TPP and therefore we just have to live with the status quo."
This post originally appeared at Jared Bernstein's On The Economy blog.