Why is Donald Trump's tax plan ridiculed but the TPP deal gets a pass?

Dean Baker
Tuesday 6 October 2015

Trade deals seem to enjoy a special status among economists. While they are happy to use the economic toolbox to take apart policy proposals on minimum wage, financial regulation or almost anything else, for some reason they don’t like to use standard economic tools when it comes to the impact of trade deals like the Trans-Pacific Partnership (TPP).

There was no shortage of economists who were prepared to ridicule Donald Trump’s claim that his tax cut proposal would lead to 6% annual GDP growth. But where are the economists who will ridicule the Obama administration’s claims that the this new trade deal will lead to more rapid growth?

There is an argument that lower trade barriers increase growth, but this story doesn’t really apply in this case. The problem is that most of the barriers between the countries in the new pact have already been removed. The agreement will not do much to lower barriers to trade between the US and Canada since Nafta already eliminated most barriers. We currently have trade deals with six of the 11 TPP countries. The existing tariff barriers with Japan and New Zealand are already low. Reducing barriers with Vietnam might have some impact, but it is not that large an economy and it is located on the other side of the planet.

This is why efforts to analyze the impact of the TPP on growth have found little or no effect. An analysis by the United States Department of Agriculture found the impact would be negligible. An analysis by the Peterson Institute found that the cumulative gains after 12 years, when most of the trade deal’s impact will have been seen, were just 0.07%. A more recent study upped this to 0.4%.


more
http://www.theguardian.com/commentisfree/2015/oct/06/why-is-donald-trumps-tax-plan-ridiculed-but-the-tpp-deal-gets-a-pass