Tuesday, January 24, 2017

TPP is Not Free Trade

There's a fire that's been burning
Right outside my door
I can't see, but I feel it
And it helps to keep me warm
--Phil Collins

One of the executive orders issued by Donald Trump on his first day in office was a statement that the US would withdraw from the Trans Pacific Partnership (TPP) process. The TTP is a pact being negotiated between various countries concerning trade. It had not yet been ratified by the US. Trump is exercising the authority granted to him under Article 2, Section 2 of the Constitution to make treaties (or to not make them as the case may be).

Many outlets have wrongly termed the TPP as a 'free trade agreement.' As these pages have discussed, free trade requires no treaty. Buyers and sellers just...trade. No permission is required.

By withdrawing from the TPP, Trump has not hindered free trade. He has helped it. He would do similar if he withdraws the United States from NAFTA.

Unfortunately, free trade is not a consistent theme in the president's stated policy intentions. He has indicated that he wants to replace broad trade bloc agreements with bilaterial deals negotiated on a country-by-country basis. This is still managed trade, not free trade.

He also has signaled desires to impose tariffs to encourage a 'build and buy American' theme to economic activity. This, of course, is not free trade either.

Thus, while Trump has done some good for trade with his order pen in the early going, there is some likelihood that future signatures will be associated with rules designed to restrict exchange rather than to liberate it.

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