Security Scenarios And The Global Economy - ….pptVIP

NS3040 Fall Term 2016TPP: Arguments Against Overview Jeffrey Sachs, The Truth About Trade, Boston Globe, October 17, 2016 Believes in expanded international trade, but is an opponent of TPP and TTIP – does not see a contradiction Reasons: Proposed treaties are more than trade agreements 1. Would also establish many important rules beyond trade Feels it would give too much power to large multinational companies 2. Trade policy should not be crafted in isolation from related budgetary matters that would ensure fairness of economic outcomes Largely allocations that would assist those displaced by the treaty * Trade Agreements I Scorecard on TPP, TTIP and other related policies need to track four components of international economics Trade in goods and services The movement of foreign capital – GM opening up a subsidiary to manufacture parts in Mexico The offshoring of jobs – Apple contracts Foxcomm to assemble iPhones in China Regulatory policies such as the terms of patents and copyrights Modern trade agreements are not just about trade, they include all four parts of the international economic system. * Trade Agreements II Two key aspects of trade 1. Efficiency – the size of the economic pie (GDP) 2. Distribution – how the pie is divided between capital and labor and among different groups of workers (those with college degrees versus the rest) Currently, expanding U.S. trade with lower wage countries does improve efficiency, but redistributes US economy pie Towards capital and highly educated workers away from less educated workers 2. For trade, the gains to the winners are usually large enough to compensate the losers Taxes on winners and transfers to losers would result in everyone being better off * Trade Agreements III Sachs complaint President Obama championed further expansion of trade to Asia and Europe without securing any fiscal agreement on further compensation of the losers. Same principle applies to gains and losses from foreign investment an