I’ve dealt with both of these questions already, but re-reading the relevant posts, I realized there were points I would have liked to develop but left at best implicit, so here I go again.

First: what’s wrong with the TPP (Trans Pacific Partnership)?

Under the guise of “free trade,” the TPP is a business protection agreement (I’ve also used the phrase “investor protection agreement”) whose main purpose is to shield internationally active corporations from the presumed excesses of government regulation. It does so through a broad range of industry-specific provisions as well as through an all-industry investor-state dispute settlement  system (ISDS) that enables corporations to sue governments for lost profits attributable to government regulations.   (For examples, see my first post on the TPP.) The TPP thus restricts the ability of governments—our own and those of other signatory countries—to regulate business in the public interest.

Now, if you’re a free market fundamentalist—if you believe that government regulation is always or nearly always bad—then the TPP should pose no problems for you. But if you believe that an essential function of progressive government in an advanced global economy is to subject markets to public purposes, then the TPP does pose serious problems. That essential function of government is all the more critical under globalization, which tends to enhance the power of capital in relation to both labor and government. Corporations seeking freedom from government regulation enjoy the ability to pick the countries in which they operate. Potential host countries naturally want foreign business investment. Footloose companies can bargain for favorable investment conditions, inviting host country governments to compete to offer the most hospitable, least onerous tax and regulatory treatment. It’s called “the race to the bottom.”

It’s a cliché that globalization is inevitable. Under the right conditions, it can do much good, but agreements like the TPP make it harder for government to control those conditions.   Left to its own devices, the global market tends to exacerbate economic and political inequality, degrade the environment, and, every so often, generate crises.  Decent globalization calls for strengthening of the ability of governments to restrain markets; the TPP works in the opposite direction.

But, Obama isn’t a free market fundamentalist—why is he for the TPP? This is a question that TPP’s Democratic critics never seem to ask. It seems to make them squeamish, I suspect because they don’t want to personalize their conflict with a president who remains popular with the Democratic base.   I also think that they are  reluctant get into the wider foreign policies issues the TPP raises (more on this in a minute).

A good start at answering the question is a negative: Obama is not promoting the TPP because he thinks it would be a boon to the US economy. It is telling that the administration has not offered any serious economic analysis demonstrating significant economic benefits from the TPP. With the vast resources of the federal government at their disposal, it’s a safe bet that they would have developed and publicized such an analysis if they could. But they can’t.

The TPP is only incidentally about economics; it’s about politics, both international politics and domestic politics.

Internationally, President Obama has shown a keener sense of the limits on American power than any of his predecessors, but his views remain within the Washington establishment consensus that both our own country and the rest of the world are best served by an America that remains the world’s pre-eminent superpower. American global primacy* relies heavily on its unapproachable military strength, but economic power also plays an important role. With the TPP, and with its intended follow-up, the Trans-Atlantic Trade and Investment Partnership, the Obama administration means to preserve and expand the worldwide presence of American business and thus assert continued US leadership of the world economy.   It is no accident that China, the only real threat to American primacy, has not been invited to join the TPP.

The domestic politics of the TPP are relatively straightforward. US business is overwhelmingly for it, as is the Republican Party. President Obama, always inclined to seek common ground with his political adversaries, is not one to buck that united front, especially since some of his party’s own closest business allies—in Silicon Valley, Hollywood, and Wall Street—are among the expectant beneficiaries of the TPP.

So, for President Obama, support for the TPP has a dual purpose: it responds to powerful domestic constituencies while it serves important foreign policy objectives. Opponents of the TPP aren’t solicitous of those constituencies. The foreign policy issue is more complicated. This isn’t the place for an extended discussion, but I believe that the benefits of American global primacy are much exaggerated, while the costs are under-appreciated. I think intuitively if not consciously, most TPP opponents are appropriately more concerned with the threats the TPP poses to progressive governance than they are with maintaining America’s pre-eminent role in the world. The latter objective in any case requires resources (a huge military budget) that could better be directed to genuine human needs.

There is little to gain from the TPP, and much to lose.


* Other words frequently used to characterize the US pre-eminent role in the world are “leadership,” “hegemony,” and even “empire.” Take your pick.


  1. John Duggan June 1, 2015 at 2:53 pm

    Thanks for a good post on an important topic Tony. We don’t hear enough about TPP and even less of substance.

    It’s my understanding this is one of those vehicles that would allow cigarette companies to limit other countries’ governments from regulating smoking in the interests of local public health. Outrageous if true, or have I got TPP confused with something else.

    Thanks again,

    • tonygreco June 1, 2015 at 8:38 pm


      Phillip Morris has used other “free trade” agreements to challenge anti-smoking policies. I don’t know whether the ISDS system in the TPP would allow for similar challenges. I would imagine it probably would.

  2. Daniel June 1, 2015 at 4:32 pm

    I haven’t been following the TPP debate closely, but I’m skeptical about this paragraph:

    “Obama is not promoting the TPP because he thinks it would be a boon to the US economy. It is telling that the administration has not offered any serious economic analysis demonstrating significant economic benefits from the TPP. With the vast resources of the federal government at their disposal, it’s a safe bet that they would have developed and publicized such an analysis if they could. But they can’t.”

    The reason I’m skeptical is that I’ve seen links to at least one study from what, as far as I can tell, is a genuinely non-partisan think tank, that projects pretty large economic benefits from TPP, including for the US: http://www.iie.com/publications/pb/pb12-16.pdf

    I wasn’t antecedently familiar with the Peterson Institute for International Economics, but their wikipedia page gives me reason to think it’s not strongly biased in favor of deals like TPP–Dani Rodrik, a notable critic of excesses of globalization, used to be a resident scholar there, and the other resident scholars whose names I recognize are certainly not partisan hacks.

    I haven’t seen any comparable studies on the other side–I’ve seen criticisms, but no attempts to weigh up economic gains and losses.

    So while I haven’t been following the discussion closely, inferring from the administration’s strategy in promoting the TPP that there’s no purely economic case to be made for it, strikes me as too hasty. That’s not to say that the sorts of political considerations you mention aren’t among Obama’s motivations in supporting the deal, just that the more straightforwardly economic motivations may well be too.

    • tonygreco June 1, 2015 at 8:30 pm


      I had the Peterson study in mind when I wrote that the administration hasn’t tried to show significant economic benefits. Peterson found that by 2025, the US would enjoy a gain of just $77.5 billion in income from the TPP. That is a big fat 0.4 per cent of GDP, according to Peterson’s own calculations. Significant? I would say no in any case, but especially given the large margin for error that inheres in such long-term economic projections. The administration has cited the Peterson study in support of the TPP, even using it as a basis for claims about job generation that aren’t supported by the study.* I think it fair to suppose that if the administration can’t do better than that, they don’t have much of a case.

      * See, e.g., http://www.washingtonpost.com/blogs/fact-checker/wp/2015/01/30/the-obama-administrations-illusionary-job-gains-from-the-trans-pacific-partnership/.

    • Jeffrey Herrmann June 2, 2015 at 10:54 pm

      “Pete” Peterson is CEO of the Peterson IIE, and has very conservative political views. His other major activity seems to be the Peter G. Peterson Foundation, of which we can read on Wikipedia: “According to Nobel laureate economist Paul Krugman, the Peter G. Peterson Foundation is “deficit-scold central.”[16]”.
      I don’t know whether the IIE is strongly biased in favour of deals like the TTP, but I suspect any biases it may have as a result of Peterson’s leading role would not be pleasing to progressively minded people.

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