Tags

, , , , , , , ,

The foreign policy and economic policy establishment verdict is in: President Trump’s decision at the start of his administration to abandon the Trans-Pacific Partnership (TPP) trade agreement has been a “disaster.” Economically speaking, in particular, they insist, the deal would have significantly boosted U.S. exports, and therefore the nation’s growth and worker incomes. No less than Barack Obama said so when he was President. And the recent decision of the other eleven TPP countries to conclude the agreement on their own will only increase the costs to Americans.

No one has a perfect crystal ball on these matters, so these gloomy predictions could well be right. (At the same time, none of these forecasters seems to admit that, as I’ve pointed out, the United States would have represented nearly two-thirds of the total TPP economies, and that most of the major members depended heavily on net exports, especially to the United States, for their growth.) But it’s now been more than a year since Mr. Trump announced the pull-out, and raise your hand if you can see a trade or economic disaster.

Let’s start with one of the establishment’s main measures of U.S. trade policy success – boosting American gross exports – and let’s keep in mind that Mr. Obama signed the TPP in early 2016. The year before, U.S. goods exports to these eleven other countries combined fell by 6.51 percent. So that looked like one pretty strong argument for improving the situation with some effective trade diplomacy. For comparison’s sake, U.S. goods exports to the entire world that year decreased by somewhat more – 7.32 percent.

This export-focused pro-TPP argument seemed pretty convincing the following year, too, after the former President signed the deal and when he spent considerable time trying to secure Congressional ratification. That year, U.S. merchandise exports to the other signatories combined fell slightly faster (by 3.62 percent) than they did to the rest of the world (3.47 percent).

And what about the first year of TPP killer (at least for the United States) Donald Trump’s presidency? American goods sales to the “TPP Eleven” are back up by 5.98 percent. That’s somewhat weaker growth than global goods exports, (6.60 percent), but this particular section of the sky doesn’t seem to be falling.

It’s hard to find a disaster in the trade balance figures, either – my favorite method of evaluating American trade policy. Between 2014 and 2015, the year before the Obama signing, the United States’ merchandise trade deficit with the TPP countries grew by two percent, and with the world as a whole by 1.44 percent. So American trade with these prospective treaty partners was faring relatively well – though not very well.

The year after, mainly following the signing, came a major change. The goods trade shortfall with the TPP Eleven rose by 6.38 percent even as it was falling by 1.12 percent with the world overall. And in Trump Year One? Both such U.S. deficits rose – by 10.18 percent year-on-year for the TPP countries, and by 8.06 percent for the world as a whole.

In absolute terms, this means that the TPP gap lately is up faster than the global gap. So score one for the TPP fans? But the numbers also show that the deficit worsened much more dramatically with the rest of the world when compared with the previous year. So score one for the opponents.

As I see it, the opponents deserve far more credibility, since the next euphoric trade deal prediction by supporters will be their first. But given that the Trump TPP decision is only a year old, and the new agreement hasn’t even been signed yet, I’m willing to let a decent interval pass before rendering a firm conclusion. If the trade cheerleaders have any grip left on reality, they’ll do the same.