clock menu more-arrow no yes mobile

Filed under:

The best case for Obama’s trade deal has nothing to do with America

Pool/Getty Images

Economist Tyler Cowen makes the simplest, and perhaps most persuasive, case for the Trans-Pacific Partnership trade deal that I've seen.

His argument? Vietnam. The country is very poor, very big, and, according to simulations run by the Peterson Institute for International Trade, likely to be the biggest beneficiary of the TPP.  Here's why:

  1. Vietnam does a lot of trade with the United States.
  2. There are strong protections against footwear and apparel, which are key exports for Vietnam.
  3. Vietnam is well-placed to gain from China's rising labor costs.
  4. Vietnam has a lot of trade protections on its own market that TPP will reduce.
  5. There will be "powerful scale effects" in Vietnam's principal production clusters.

The other issue is that Vietnam is not a very free or well-governed country, and so a structure that forces better economic management and labor practices consistent with a liberal trading order could have some second-order advantages, too.

Cowen concludes:

Poorest country = biggest gainer. Isn't that what we are looking for? And if you are a deontologist, Vietnam is a country we have been especially unjust to in the past.

Yes, I am familiar with the IP and tech criticisms of TPP, and I agree with many of them. But if you add those costs up, in utilitarian terms I doubt if they amount to more than a fraction of the potential benefit for the ninety million people of Vietnam. TPP is more of a "no brainer" than a close call.

What you'll notice about Cowen's case is that it's based on the welfare of people who live outside the United States, which is, unfortunately, a mode of argument that tends to hold almost no weight in American politics unless someone is trying to justify a war.

My sense of the TPP, at this point, is that the arguments made by both its critics and its supporters about the trade deal's likely effects on the US are overstated. TPP just isn't going to matter very much for the US economy one way or the other. But it might matter quite a bit for non-US economies.

Read more:

Sign up for the newsletter Sign up for Vox Recommends

Get curated picks of the best Vox journalism to read, watch, and listen to every week, from our editors.