What’s in a trade deal?

 

EXPLAINERS: Concepts in 300 Words or Less

America's trade agreements became a hot button issue on the 2016 campaign trail. Deals like NAFTA are widely criticized for infringing on US sovereignty and accelerating the decline of American manufacturing. It’s telling that one of Trump’s first actions in office was to withdraw from the Trans-Pacific Partnership.

Given all the talk about trade deals, it’s worth asking: what are they?   

Trade deals are formal treaties under which countries commit to market liberalization. This means promising tariff reductions as well as limiting the use of non-tariff barriers.

But trade concessions are only part of the story. Since the end of the Cold War, trade agreements have grown in complexity. Most of the deals struck in the last 25 years contain a wide diversity of rules and regulations. This includes provisions relating to:

  • labor rights

  • environmental protections

  • intellectual property

  • health & safety standards

  • dispute settlement

and many, many more policies related to doing business around the world.

America’s trade deals are no exception. They are highly “legalized” commitments that number, in some cases, thousands of pages.

Of course, those broad mandates help explain why trade deals are controversial. Criticisms usually take one of two forms. First, trade agreements overreach, tying the US government’s hands too tightly to trade liberalization. Second, it is widely argued by advocacy groups that trade agreements fail to promote better outcomes in the key areas of labor and the environment.

Those debates aside, the average trade agreement is a complex legal agreement that covers a lot of ground. This is perhaps best summarized by a simple list of the chapters in the original TPP: