Simon Johnson and Andrei Levchenko — The Trans-Pacific Partnership (TPP): This Is Not About Ricardo

The administration and its supporters on this issue, including leading Republicans, argue that the case for TPP rests on basic economic principles and is only strengthened by the findings of modern research. On both counts their claims are greatly exaggerated – particularly with regard to the notion that more trade, on these terms, is necessarily better for the United States. 

There is a strong theoretical and empirical case – dating back to David Ricardo in 1817 – that freer trade should make countries better off. However, modern-day trade agreements, including those currently being negotiated, are very different from earlier experiences with trade liberalization. 

The TPP is not only – perhaps not even mostly – about freer trade, and thus who gains and who loses is very much dependent on what exactly are the details of the agreement. The exact nature of the provisions matters and at this point, because the TPP text is not available to the public, we cannot be sure whom this trade agreement will help or hurt within the United States or elsewhere.

The Baseline Scenario
The Trans-Pacific Partnership (TPP): This Is Not About Ricardo

Simon Johnson, Ronald A. Kurtz Professor of Entrepreneurship at MIT Sloan, and Andrei Levchenko, Associate Professor of Economics at the University of Michigan