I am constantly amused by the contortions that people go into trying to explain how their protectionism is different from everybody else’s protectionism. the latest example is in this Wall Street Journal editorial, which opens with a critique of the protectionist tariffs that Canada and Mexico want while defending the protectionist patent protection that the United States wants:
Most of the remaining disputes stem from classic protectionist special pleading. Canada, the third-largest economy in the 12-nation talks, wants to keep dairy farmers shielded from competition with measures like 241% tariffs on milk imports. U.S. dairy farmers want similar protections if they can’t sell into Canada. This mercantilist domino effect, as economist Richard Katz puts it, could be a dealbreaker for New Zealand, the world’s largest dairy exporter, which co-founded the TPP largely to secure new markets for milk, cheese and eggs.
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Also short-sighted: The U.S. still wants to protect domestic sugar growers from Australian competition, while Mexico wants to shield auto manufacturers from Japanese competition on grounds that Japanese firms source too heavily from non-TPP countries such as Thailand. Given TPP’s stakes, officials should be able to cut deals on both issues.
A more consequential trouble spot is patent protection for “biologic†pharmaceuticals—in other words, for the innovation crucial to U.S. prosperity. The U.S. position is that biologic protections should last a dozen years, after which foreign firms could make generic copies.
As I’ve pointed out any number of times before, a free trade agreement would insist on no tariffs on the part of any of the participating countries on anything, no subsidies for domestic companies for which foreign companies are not also eligible, and no patents, copyrights or other attempts at limiting entry into the market. When you’re dickering over how long the term of patents should be or how high the tariffs may be, you’re merely picking winners and losers.
The sad truth is that U. S. dominance in the pharmaceutical business:
Of the some 5,600 drugs in the pipeline among TPP nations, some 3,400 are being developed by U.S. companies. The other countries are ganging up in the name of cheaper drugs while undermining the incentives to make risky investments in the country where they matter. The result would be fewer cures for the world market and less U.S. growth.
is largely dependent on robust and extraordinary lengthy U. S. patents. Companies venue-shop and the U. S. is a good place in which to register your intellectual property for protection. Trying to paint that as natural advantage or free trade is absurd.
It seems to me that if our protections for, say, automobiles or consumer electronics were as committed as our commitment to defending the holders (not creators) of titles to intellectual property, the U. S. auto companies would have nothing to worry about and most U. S. consumer electronics would be produced here rather than in China as is the case now. Think of all of the jobs that could be created!
The meat of the WSJ editorial is the fear that President Obama’s desperation to conclude a trade deal on any terms so long as it’s concluded on his watch might impel him to make concessions that shouldn’t be part of the agreement:
But the danger is that other countries are driving a hard biologics bargain to take advantage of the Obama Administration’s desire for a deal before it leaves office. The biologics standard in TPP will be the template for every future trade deal, and the U.S. should not casually erode American law in an industry so crucial to future growth and public health. Better to make concessions on sugar or another industry where the U.S. is protectionist rather than to capitulate on scientific discovery.
The biologics issue highlights why TPP is essential global growth: It would be the first major trade deal to liberalize trade in services and include protections against commercial intellectual-property theft and official expropriation of assets. Such protections are essential to modern industries, from biotech and software to movies and music, that are particular strengths of America’s innovative, knowledge-based economy.
It’s a reasonable enough fear given the pattern in Obama Administration negotiations. However, let’s be frank. Intellectual property laws are not a natural right; they’re a legal right. Other countries’ ignoring our intellectual property laws is no more theft than our enacting them and for exactly the same reasons.
As I’ve said before, my only concern about the TPP is that it be of net benefit to the U. S. generally and particularly to ordinary Americans. I’m parochial. I don’t much care if the agreement results in $285 billion in global economic growth or $285 trillion if it’s all in countries other than the United States. Just tell me how it helps us. Don’t lecture me about the benefits of free trade, particularly when you’re not willing to let trade be free.
