If there is one “expert” that you should listen to on the Trans-Pacific Partnership (TPP) trade agreement it is Paul Krugman. In 2008, Krugman won a nobel prize in economics for his contributions to New Trade Theory, so it is fair to say that he knows a thing or too about trade agreements.
In March last year, Krugman wrote a stinging rebuke of the TPP, noting that it would “increase the ability of certain corporations to assert control over intellectual property [including] drug patents and movie rights”. Krugman also claimed that “there isn’t a compelling case for this deal, from either a global or a national point of view”, and that the “economic case is weak, at best”, with “the push for T.P.P… weirdly out of touch with both economic and political reality”.
In March this year, Krugman followed up with another flattering analysis of the TPP, noting that it “doesn’t look like a good thing for either the world or the United States, and you have to wonder why the Obama administration, in particular, would consider devoting any political capital to get this through”. Krugman also noted that the TPP’s strengthening of intellectual property protections “means creating a monopoly” and “introduces a distortion that would make the world a bit poorer”.
Overnight, Krugman wrote another short blog at the New York Times claiming that the TPP is political not economic:
[The TPP] is not a trade agreement. It’s about intellectual property and dispute settlement; the big beneficiaries are likely to be pharma companies and firms that want to sue governments.
Those are the issues that need to be argued. David Ricardo is irrelevant.
The Abbott Government would do well to heed the warnings of Paul Krugman and back-track from the TPP before it is too late. The agreement has absolutely nothing to do with advancing the cause of free trade.
Rather, it is about significantly strengthening the pricing power of the powerful US pharmaceutical and digital industries, in turn lessening competition, and worsening outcomes for consumers and taxpayers alike.
