The ITC Wednesday released its mandated report on the economic effects estimated to result from the TransPacific Partnership. As is usual in standard trade models, the estimated welfare gains may sound small: on the order of ¼ % of income. But that would still be way worth doing. Furthermore the ITC study, by design, leaves out a lot. For example, the Petri-Plummer study from the Peterson Institute estimates income gains from TPP that are twice as large, in part because it takes into account Melitz-style opportunities for more productive firms to expand.
I am quoted twice in the associated press coverage this week. They can be tweetably summarized in one sentence:
(1) US rejection of TPP would signal withdrawal from Asia; (2) US acceptance of Trump would signal withdrawal from the entire world!
(1) One quote appeared in an Associated Press article (titled “Complex US politics of trade will follow Obama to Asia”):
“Many in Asia have come to think that maybe they can’t depend on us, that we’re withdrawing. That feeling may be worse in this presidential election year,” says Professor Jeffrey Frankel of Harvard University‘s Kennedy School of Government. “The international relations aspect of this is if we don’t pass TPP, Asians are going to interpret it as a U.S. withdrawal from their region. And they’re going to get closer to China.”
(2) Another appeared in a Financial Times article today (titled “Obama fights back against Trump over US trade deals”):
“It is hard to believe he would really be able to follow through — much of it is illegal [and] contradicts US international agreements,” Jeffrey Frankel, a professor at Harvard’s Kennedy School of Government, said of Mr Trump’s economic agenda. “The global impact of that would be tearing down the entire postwar international . . . order.”