TPP: some economists

Eric Crampton had a post this morning drawing attention to recent posts on TPP by Brian Easton (“to the left of the NZ economist punditsphere”) and me (“to the right of the same”).

In our posts we primarily asked slightly different questions.  Brian posed the question “Can we afford not to adopt the TPPA?” .  He doesn’t express a strong view one way or the other on the economic merits of the deal itself (but, as Eric notes, he doesn’t come across as overly enthusiastic).  Instead, his focus is on the fact that the deal has already been agreed, and that if New Zealand were not to ratify it now, it could be deeply damaging to a range of international relationships.

The logic in this column is that we now do not have much choice about the TPPA. The government is trapped into agreeing to it because rejecting it has implications for other trade deals and our wider international relations.

That is probably right.  I didn’t give that dimension much attention in my post, as I take for granted that having signed the deal the current government will ratify it.  It doesn’t need a vote in Parliament to do so, but would have the numbers even if it did.

My focus was different –  more about the question of whether we, as New Zealanders, should welcome, or regret, that the deal was done at all.  Given that the deal has been done, the implications are quite different if it eventually falls over because the US political process rejects it (neither a President Sanders nor a President Trump might even submit to Congress), than if a single minor country (eg New Zealand) were to walk away unilaterally.

I suspect we’d be better off if the deal had not been done.     But I’d feel more confident of any view  –  positive or negative –  if we had had a proper independent evaluation of all the aspects of the agreement from a capable independent agency (such as the Productivity Commission).

I was also interested in Eric’s own take on the deal

I’ll remain a fence-sitter as it would take just too much work to come to a strong view on it. My confidence interval on whether the thing’s worth signing spans low/mid positive and low negative figures, and it wouldn’t be easy to tighten that up. If Congress decided not to pass it and the other partners could then clear out the worse parts on copyright, it wouldn’t bother me that much – though the deal on copyright is far better than I’d thought it could have been.

Eric is also on “the right of the economist punditsphere” (probably more so than I am).  In a sense, his point about “it would take just too much work to come to a strong view” echoes the argument for a proper independent expert evaluation.

And, of course, from the left was the sceptical paper on The Economics of TPPA which I linked to other day, which had substantial input from economics academics Geoff Bertram and Tim Hazeldine.

Perhaps I’ve missed someone, but I haven’t seen a ringing endorsement of the overall economic benefits to New Zealand of TPPA from any New Zealand economic commentators.      Perhaps the overall deal is slightly beneficial, or slightly detrimental, to New Zealand’s overall interests.  And different people might reasonably reach different views, by placing different emphases on the various strands of a complex deal.

In the Herald this morning, the Trade Minister argues that “today is exceptionally important day for New Zealand”.  Frankly, that seems unlikely either way.  He claims to believe that his own National Interest Assessment understates the likely economic gains to New Zealand.  It seems unlikely, but it would be interesting to see his argumentation and evidence.

Either way, I had a circular National Party e-mail from McClay yesterday, with a link to a site allegedly “setting the record straight on TPP”. He lost me here

FALSE: Supporting the TPP is a left-right issue

Actually, it’s an economic literacy issue.

I know it is politics, but I rather wondered who the Minister of Trade thought he was convincing.  The issues are important enough –  whether McClay is right or some of the sceptics and outright opponents are – for a rather more serious level of discussion and debate.