Bird Flu, FTAs, and How Some Rules of the Road are Better than Others

Jared Bernstein

Jared Bernstein Senior Fellow, Center on Budget and Policy Priorities

Chad Bown of the Peterson Institute sends me a link to a piece of his showing, he argues, a benefit we get from “free-trade” agreements (FTAs) that’s under-appreciated in a national debate that’s turned extremely hostile to FTAs. It’s about last year’s bird flu outbreak, and he makes the case that “a global trade framework kept this situation from becoming far worse.”

While our chicken exports declined due to the outbreak, Bown argues that they fell less than they would have absent FTAs. The trade deals set up a framework wherein scientists could assure our trading partners that certain regions of the US were unaffected by the bird flu and thus exports from those areas were safe. That led to a more geographically discriminate ban, and, Brown claims, boosted exports relative to a situation with no FTAs, wherein trading partners could just ban all US poultry exports.

“If a country can make the scientific case that a particular disease outbreak has been contained to a geographic region and limited set of products, then partners’ trade bans should not target unaffected products from other regions of the country.”

His evidence is a figure showing that poultry exports fell a lot more in non-FTA countries than in FTA countries. That’s certainly indicative of something but it’s hard to know what. It could be that we have better communication ties with our trading partners regardless of the trade deals. That’s certainly what Bown’s TPP evidence suggests. Remember, the TPP hasn’t been passed and is thus not implemented, so how could it be yielding these benefits? Perhaps this evidence shows that we should negotiate trade agreements, not ratify them!

I’m kidding on the square here. If just talking and planning to cooperate itself enhances cooperation, which is likely the case, perhaps the type of cooperation Bown presents here could be nailed down outside of fractious trade agreements. That’s a point I’ve made elsewhere in support of not FTAs but TFAs, or “trade facilitation agreements:” basically, agreements between trading partners on how to reduce logistical frictions and trade more efficiently.

Putting aside these evidentiary questions, I found Bown’s argument pretty convincing, and, in fact, a useful example of what I and others mean when we say trade deals can create useful rules of the road. A framework for this sort of science-based regulatory cooperation seems unequivocally positive, assuming, of course, that the science is sound (one worries about industry pressures on regulators to cut safety corners).

It is, however, essential to recognize what’s left out of his analysis: other “rules of the road” that are not nearly this positive. Contemporary FTAs, like the TPP, have useful provisions and damaging provisions (to workers and consumers). Brown’s piece should remind all of us of the benefits and shouldn’t convince anyone that we have to accept the bad to get the good.

Regulatory cooperation does not require the kinds of dispute settlement procedures that put at risk hard-won sovereign gains (including environment and health standards) to protect investors and enrich financiers making big bets on these disputes. Such cooperation does not require extended patents on vital drugs, expansive intellectual property rights, or other protectionist measures in the TPP. And there are important areas where regulatory cooperation does not go far enough in these agreements, as with currency manipulation, which is left out of the FTAs Bown cites.

This in-with-the-good-out-with-the-bad is, in fact, at the heart of the new trade agenda that progressives are beginning to push. Our key motivation is to preserve parts like the one Bown presents here and dispose of ideas that steer the benefits of globalization away from workers and consumers and toward the corporate interests that have come to dominate negotiations.

Lori Wallach and I describe this agenda in a forthcoming piece structured in precisely this manner: what should stay and what should go in FTAs that create a new set of progressive rules of the road (here’s a short summary, but stay tuned for the full piece, out in September).

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This was reposted from On the Economy.

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow.  From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute in Washington, D.C. Between 1995 and 1996, he held the post of deputy chief economist at the U.S. Department of Labor. He is the author and co-author of numerous books, including “Crunch: Why Do I Feel So Squeezed?” and nine editions of “The State of Working America.”

Posted In: Allied Approaches, From Jared Bernstein

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