TPP and AGOA

Free trade agreements are designed to be a win-win, or else no party would sign them in the first place.  But who are the actual winners and losers?  And how are they presented to the American public?  The TPP and AGOA are two examples of current free trade agreements.  Arguments surrounding the former tend to be more self-interested whereas arguments surrounding the latter tend to package the agreement as an act of altruism.

The Trans-Pacific Partnership, or the TPP, has gotten a lot of news coverage recently, both in the United States and around the globe.  If agreed to, it would further link the economies of the United States and some dozen Pacific nations.

According to the Center for Economic and Policy Research, albeit a left-leaning think tank, the Trans-Pacific Partnership would have an adverse effect on income equality in the United States.  This chart shows that if the Trans-Pacific Partnership were to be ratified, the top 10% wage-earners would see their wages rise, while everyone else's wages would decline.

If wealthier Americans began making the argument that the TPP ought not to be ratified because it would create further income inequality, or voted based on that principle, it would certainly be an act of altruism. 

But government is about creating an environment in which all people can satisfy their wants and needs.  And in a democracy, there are tons of competing voices, all shouting for their own interests.  To an extent, every self-interested individual, or group of individuals, tries to get what they want, and hopefully, a democratic government will be able to work out a solution that addresses these wants.

The debate over the TPP is no exception.  Take, for instance, the variety of domestic interest groups that oppose the Trans-Pacific Partnership.  There are labor unions, which want to make sure that outsourcing doesn’t become even more prevalent.  You have farmers, which want to keep subsidies and other economic protections in place, just to name a couple.

But free trade is sometimes painted in a more altruistic light, and its self-serving properties are mentioned as an afterthought, particularly when it comes to Africa.  As part of a political internship I did over the summer, I attended the Rainbow/PUSHCoalition’s annual international conference in Chicago.  I sat in on a panel discussion about U.S. foreign policy toward Africa, and the rhetoric was very different from that of the TPP.

The academic panelists were much less political.  They focused on what the U.S. can do to help African countries than they did on how to help American jobs.  Many members of the panel called on Congress to renew the African Growth and Opportunity Act (AGOA), set to expire in 2015. Signed into law by  President Clinton in May 2000, this legislation is intended to “expand U.S. trade and investment with sub-Saharan Africa, to stimulate economic growth, to encourage economic integration, and to facilitate sub-Saharan Africa’s integration into the global economy. The Act establishes the annual U.S.-sub-Saharan Africa Economic Cooperation Forum (known as the AGOA Forum) to promote a high-level dialogue on trade and investment-related issues.”

But I also got to hear a more political perspective.  Governor Pat Quinn also attended the event, and he noted that among the 50 states Illinois is the leading exporter to Africa. He named Illinois companies Caterpillar and John Deere, which now sell high-tech agricultural equipment (such as combines with sophisticated information technology) to African farmers.  Governor Quinn did a much better job, I thought, of explaining how this trade is not simply charity, but rather, beneficial for the American economy, as well.

Now of course, Singapore and Nigeria are not in the same economic situation, and thus AGOA and the TPP are designed for somewhat different purposes.  But how we balance our own interests and the interests of others, domestically and internationally, is a dilemma that will never go away when it comes to trade agreements.