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Talking Trade blog

Trade agreements and me

Published 17 August 2016

Rhetoric against trade agreements mostly revolves around ideas of loss of sovereignty, inundation of foreign cultures and peoples, and an inability to control one’s own political destiny. This can be seen clearly in domestic arguments against TPP especially in the United States and a range of other countries, and perhaps nowhere has it been more clear than in the UK in arguments made in favour of exit of the European Union.

In this light, trade agreements give rise to a whole range of dangers and evils that are best avoided at all costs. 

But the ire is misdirected. When one reads the text of trade agreements, and especially those that are high quality, like the Trans-Pacific Partnership (TPP), one finds in them much related to the concerns of individual citizens, and a concern for how citizens’ interests can best be preserved as technologies and trade patterns change over time.

A trade agreement like TPP not only tries to make crucial goods and services cheaper for consumers, but attempts to deal with many of the causes and issues that citizens care about—like environmental issues and corporate social responsibility.

It has been a political failure of immense proportions to neglect to explain these concerns and focuses to citizens. And this failure might be because, in reality, the benefits are more difficult to explain than explaining the benefits of trade itself.

As we showed, there are real, tangible benefits from trade to every person almost every hour of their day. But trade agreements are a step removed from these benefits; they require an extra leap. Politicians find it far easier to fall back on the easy explanation of “trade is necessary if you want iPhones” than to explain why it is that they see trade agreements as being in citizens’ interests.

The most obvious way that trade agreements benefit individual citizens is through their effects on trade itself. This is, in essence, the “iPhone” argument, and there is indeed something to it.

Trade agreements at their most fundamental aim to reduce barriers to trade that exist in the forms of tariffs and non-tariff barriers (NTBs or NTMs). Different agreements succeed at this to varying levels, but this is the primary goal of any free trade agreement. Successful agreements will then directly lower the costs of all the goods and services that consumers use every hour of every day by reducing tariffs rates, and by reducing the kinds of red tape that make trade more expensive at borders. 

And high quality agreements—the Trans-Pacific Partnership (TPP) most notably—make attempts to consider what new products and services consumers want, and may want in future, which could be subject to tariffs.

For instance, TPP’s Chapter 14 on Electronic Commerce is careful to ensure that new technologies will not be arbitrarily subject to duties that might make them more expensive. “No party shall impose customs duties on electronic transmissions, including content transmitted electronically…”, TPP states. 

That is the simple part. Simple, but crucial—and yet a narrative that is often not explained sufficiently by politicians when discussing trade agreements. Trade agreements are about access to products, yes; but they are also about the prices of those products for consumers, and the kinds of products and services available to consumers that may be affected by in future.

And yet most agreements contain other elements that benefit individuals in non-financial ways, or in less direct ways.

Take, for instance, the rest of TPP’s E-Commerce chapter. The minutiae are often unrelated to areas where consumers might benefit financially, but explicitly aim to protect or aid individuals in areas of concern to them. 

TPP member countries recognise, the agreement says, “the importance of adopting and maintaining… measures to protect consumers from fraudulent and deceptive commercial activities… when they engage in electronic commerce.” This is vitally important to all consumers, and threatens their very trust in the predominant form of purchasing today.

TPP also tries to protect individuals from “unsolicited commercial electronic messages”; again, spam can be the bane of the online world, and TPP works towards protecting consumers from it.

The agreement even goes so far as to guarantee consumers the right to use electronic signatures as an acceptable form of document certification. It might not seem like a big deal, but these things can matter for individuals trying to save themselves time each day.

The E-commerce chapter is a perfect example of non-monetary areas in which trade agreements try to help individuals in their lives. And many trade agreements go further than this, acting to pressure other governments on issues that their own citizens care about and which harm individuals in other countries. 

For those concerned about corporate responsibility, “Each Party shall endeavour to encourage enterprises to voluntarily adopt corporate social responsibility initiatives.” For those concerned about environmental sustainability, “each Party shall take measures to control the production and consumption of, and trade in” substances that deplete the ozone layer. Likewise, there is a section on Marine Protection, and another on ensuring that each country affords the ability for the public to make submissions on the effects of climate change. These kinds of clauses do a great deal to help individuals in places where they often don’t have a voice.

The TPP is not a labour agreement or an environmental agreement. It is a trade agreement, and no trade agreement will ever satisfy every concern across the full spectrum of issues that people care about. Of course more could and should be done in many of these areas. But what is significant is that a trade agreement has taken care to deal with some of these other issues at all, beyond focussing on simply market access and tariff reduction.

In looking for a perfect agreement, TPP’s opponents have undermined causes they profess themselves to care deeply about. When one reads the text and speaks to those who negotiated the Agreement, one finds that the benefits accruing to individual citizens are a focus throughout.

Most crucially, to understand how trade agreements affect individuals, one should read the text. Repeating empty rhetoric without knowing one’s facts simply spreads misunderstanding, as we’ve seen with TPP. Trade helps everyone in every hour of their day; and trade agreements, while more complex to explain, support all those benefits while also focussing on non-financial areas of concern to citizens.

At a point where anti-trade rhetoric seems to be reaching fever pitch, what we need more than ever is to step back and look at the facts. And when one does so, one starts to see just how important trade agreements can be to individual lives.

© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).

Dr. Deborah Elms is Head of Trade Policy at the Hinrich Foundation in Singapore.  Prior to joining the Foundation, she was the Executive Director and Founder of the Asian Trade Centre (ATC). She was also President of the Asia Business Trade Association (ABTA) and the Board Director of the Asian Trade Centre Foundation (ATCF).

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