As more journalists and commentators discuss the Trans-Pacific Partnership, we’ve seen very conflicting descriptions of the agreement. For some, the TPP isn’t about trade at all but about giving power to corporations and ending U.S. sovereignty, or about containing China and building U.S. influence in Asia. When commentators do focus on the potential economic impact of the agreement, they either describe the TPP as a very big deal or as a very small one. It all depends on your perspective.
My colleague Simon Lester has written about problems in how GDP gains from the TPP have been estimated. I’d like to take issue with a different figure commonly cited to bolster the idea of the TPP’s hugeness—that the 12 countries involved account for almost 40% of global GDP. This number is correct but highly misleading as a gauge of the TPP’s economic significance.
For one thing about 22.5% of global GDP comes from the United States. So, one could claim accurately that the U.S.–Jordan Free Trade Agreement covers almost a quarter of the global economy. Also, most of the remainder comes from Canada and Mexico, with whom the United States already has a free trade agreement. In fact, the United States has free trade agreements with all but five countries in the TPP negotiations.
The only large economy country in the TPP that the United States doesn’t already have a free trade agreement with is Japan. So, if you’re going to measure the “size” of the TPP, it would be best understood as a U.S.–Japan free trade agreement. That’s a pretty big deal, actually, but it’s not two-fifths of the world.
Read more at http://www.cato.org/blog/tpp-huge-deal-or-no-big-deal
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