Yesterday, the Cato Institute released a working paper with a “chapter-by-chapter analysis of the TPP from a free trader’s perspective.” Among the chapters scoring highest on a scale of 0 (protectionist) to 10 (free trade) was the National Treatment chapter detailing tariff cuts (Chapter 2), which scored an “8.”
While not the traditional lens through which trade policies (and politics) are viewed, the paper notes upfront that “the benefits of trade are the imports we obtain, not the exports we give up” (p. 5). Therefore, its assessment of the National Treatment chapter focuses more on the potential benefits from U.S. tariff cuts than on those from the much-touted “18,000 tax cuts on Made-in-America exports.”
In terms of the tariff provisions’ impact on American manufacturers, the assessment states:
The chapter provides for the elimination – immediately or eventually – of nearly all U.S. tariffs on goods from the other TPP parties. That dynamic is more likely to ‘secure America’s emerging role as the world’s most attractive site for manufacturing…’ than is the reduction of barriers to U.S exports (p. 18).
In terms of the impact on Americans more broadly, the assessment states:
It also promises that American consumers will enjoy greater variety of goods at lower prices, thus improving living standards and easing the strain on family budgets (p. 18).
It also notes that upon entry into force:
the proportion of MFN duty-free tariff lines on U.S. imports from TPP parties will increase from 36.4 percent to 90.5 percent, and to 99 percent upon full implementation (p. 20).
Those are significant benefits indeed, and TPP partners open their markets to U.S. exports “just as wide and usually faster.”
Yet the analysis also notes some negative aspects of the TPP, including long tariff phase outs for “autos, beef, clothing, and much of U.S. agriculture” (p. 21). For example, the current 25 percent tariff on U.S. imports of light trucks from Japan will remain unchanged for 30 years (!) following implementation, after which it will be eliminated. By that time, the more relevant question likely will be whether the U.S. creates separate tariff lines with different rates for self-driving light trucks.
Additionally, some of the product specific rules of origins for politically sensitive items such as autos (addressed in Chapter 3) and textiles and apparel (addressed in Chapter 4) limit the benefits of tariff reductions detailed in Chapter 2.
In the end, the Cato chapter-by-chapter analysis is in line with the opinions of most TPP supporters: the agreement may not be perfect, but it represents a major improvement over the status quo for U.S. companies, workers, and consumers and therefore deserves support.