Tuesday, 28 April 2015

Difficulties in Kaldor-Hicks compensation

Tyler Cowen's right: the TPP will be great for poor East Asian countries like Vietnam, who would get both improved access to American markets and stronger domestic liberalisation.
Here is an assessment from the Peterson Institute that Vietnam will be the biggest gainer from TPP.  Do you get that, progressives?  Poorest country = biggest gainer.  Isn’t that what we are looking for?  And if you are a deontologist, Vietnam is a country we have been especially unjust to in the past.

Yes, I am familiar with the IP and tech criticisms of TPP, and I agree with many of them.  But if you add those costs up, in utilitarian terms I doubt if they amount to more than a fraction of the potential benefit for the ninety million people of Vietnam.  TPP is more of a “no brainer” than a close call.

Most generally, one of the big dangers today is “The Great Unraveling of Globalization.”  Is the passing or the striking down of TPP more likely to contribute to that trend?  People, you are allowed only three guesses on that one.
Tyler's writing for an American audience, where TPP opposition is concentrated among the anti-trade left. But that's not the only source of opposition: some foreign opposition comes from the silly IP and tech provisions, though we won't really know what's all in there until the full deal is released.

New Zealand, as best we understand things, has been working hard to ensure that American copyright interests not appropriate too substantial a share of the gains here at stake.

I don't get what's going on in the US domestic politics on this one. The deal is important to Obama, not just for the good economic reasons but also for the geopolitical "maintain US relative influence in the Pacific" considerations. The deal will produce a fair bit of surplus, both in the US and elsewhere. There seem to be some side-payments to US labour interests in mandating environmental and labour standards; the budget for American domestic side-payments is a bit leaner than it could have been where there are big chunks carved out for Hollywood - which also annoy a bunch of the potential trading partners. Maybe it's just harder to put together a package that appropriately divvies up sidepayments where negotiations drag on for years and years.

I still think NZ does better in being prepared to walk away from the whole deal and try for an alternative Pacific free-trade area that leaves the US out if the copyright provisions would block parallel importation or commit New Zealand to other absurdities.

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