TPP! You heard those three letters a lot during the presidential campaign. Donald Trump repeatedly denounced the Trans-Pacific Partnership as being bad for American workers, as did Bernie Sanders. Even Hillary Clinton, who played a part in negotiating TPP and called it a "gold standard," came out against it.
Since both presidential candidates were opposed to it, TPP was on life support, but with Trump's victory, it's pretty much straight-up dead. Killing it is one of the few promises you can expect Trump to actually keep, and he can do it with the stroke of a pen. And without the US in it, TPP doesn't make much sense.
So now that it's gone, let's look back on it: Why did so many people hate it, and what does it mean that it died?
The basics: TPP is a multilateral trade deal. That means it's a treaty by which a bunch of countries agree to a bunch of rules on how trade happens between their borders. It includes 12 countries from the Pacific Rim, notably not including China. Like other free trade agreements, the basic idea was to make it easier for goods to move across borders.
And the thing is, it's not that big a deal.
Big-time politicians campaigned a lot about it. There were massive protests, all over the world, against it. But it wasn't the game-changer so many TPP opponents portrayed it as.
The thing is, the barrier-lowering process has been going on for some decades now. The tariffs between TPP signatories are really low as it is. The US International Trade Commission's report on TPP said that "few tariffs remain between the United States and its existing [free trade agreement] partners," which are most of the TPP countries.
As Paul Krugman put it in 2014, "old-fashioned trade deals are a victim of their own success: there just isn't much more protectionism to eliminate. Average US tariff rates have fallen by two-thirds since 1960. The most recent report on American import restraints by the International Trade Commission puts their total cost at less than 0.01 percent of GDP." It's worth recalling that Krugman earned his Nobel Prize in Economics for his pioneering work in trade economics, so this is something that he really knows inside out. In this case, he agrees with me: TPP is meh. "If the big trade deal comes to nothing, as seems likely, it will be, well, no big deal," he wrote.
TPP did have important provisions relating to intellectual property. Two big areas are especially important in that regard are movies and drugs. Disney was looking for expanded protection for its entertainment brands. And drug companies were looking for more protections for their drugs to fend off generics. That last part was especially controversial—it was seen as boosting big companies' drug profits at the expense of the little guy. The NGO Doctors Without Borders even came out against that provision of the deal, and having those humanitarian do-gooders come out against your ho-hum trade deal is not a good look, PR-wise.
But, again, this is something on which there can be reasonable agreement. Virtually all economists and business experts agree that you need some form of rights protection around drugs. It costs billions to develop a new drug, and companies—whether it's Pfizer or some startup—aren't going to spend that money if they can't legitimately expect billions more. The question is where to put the needle. Maybe TPP put it a little too far. But again, the drug regime isn't going to fundamentally change.
So why all the excitement around TPP? Well, sometimes our political fights become all the more vicious precisely because the issues involved are small. Because the stakes are low, symbolism can run rampant.
The fight over TPP wasn't about TPP, exactly, but what TPP represents. You may have noticed that globalization and technological change have destroyed a lot of jobs, and keep destroying jobs. People are angry about that. They look at TPP and they see more of the same trade deals that drove a lot of that job loss and all of its horrible consequences.
Now that that anti-free trade forces have won a major victory, what now? Trump plans to pursue bilateral trade deals with the countries that would have been part of TPP, and those deals would come with more worker protections, or so Trump says. A deal with Japan would probably make a lot of sense, as it's the biggest economy in the region, and since it's as advanced as the US, jobs are unlikely to be offshored there.
Meanwhile, China is happy as pie. TPP was less about economics than geopolitics. The point of doing a trade deal with every important Pacific nation except China was obvious: It would tie those countries closer to the US, and make sure they didn't fall into China's orbit. Now China is pushing its own version of TPP. Economically, TPP wasn't going to make a big difference either way, but the politics of it will stay with us for a long time.