Tuesday, October 6, 2015

Trans Pacific Partnership and the argument for Free Trade

The final agreement on the Trans Pacific Partnership was reached yesterday. Now it must be approved in Congress. I had noticed before (here, here and here) the bi-partisan support for TPP (not all bipartisanship is good after all) and the limitations of the agreement itself. Will write something later this week on the specifics revealed by the agreement (no big surprise, btw).

If you need a crash course on the limitations of 'free' trade based on Ricardian or Heckscher-Ohlin-Samuelson (HOS) models see the posts below, which include also a response to Mankiw's defense of TPP and Free Trade and an older discussion of the Free Trade Agreement (FTA) with Colombia:

On 'free' and managed trade (Ricardian model)

The Colombia FTA: Only Corporations Win

You can also read my paper "What do undergrads really need to know about trade and finance." It was a response to Krugman's "What do undergrads need to know about trade." He used to say comparative advantage and specie-flow mechanism (which means the balance of payments is self-adjusting; so his argument is about trade and finance really). I suggest that absolute advantage and unstable capital flows might matter too. Krugman seems to have wised up on this, and is not for TPP (even if his reasons are weird; if I have time I'll discuss that too).

1 comment:

  1. Hi Matias. Sounds like you are analytically ahead of these guys, but they did spend time reviewing TPP, so there may be something useful:
    http://www.vox.com/2015/10/5/9456757/trans-pacific-partnership-explained

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