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TPP, Multi-party Deals, Best Match for Complex Global Economy

Wendy Cutler in The Hill

New Zealand Prime Minister John Key and Ministerial Representatives from 12 countries pose for a photo after signing the Trans-Pacific Partnership agreement in Auckland on February 4, 2016. (Michael Bradley/AFP/Getty Images)

New Zealand Prime Minister John Key and Ministerial Representatives from 12 countries pose for a photo after signing the Trans-Pacific Partnership agreement in Auckland on February 4, 2016. (Michael Bradley/AFP/Getty Images)

6 January 2017
Wendy Cutler in The Hill

In an article for The Hill, ASPI Vice President Wendy Cutler argues that bilateral trade deals are not a great fit for today's global economy. This is an excerpt from the article. 

President-elect Trump and his cabinet picks have stated a clear preference for bilateral trade agreements over those that include a group of countries, like the Trans Pacific Partnership (TPP). As a former trade negotiator who has worked on both types of deals, I urge the incoming administration to give regional trade deals a serious second look.

"The problem with regional trade agreements is you get picked apart by the first country, then you negotiate with the second country, get picked apart. You go to the third one, get picked apart again," Secretary of Commerce-designate Wilbur Ross said.

In a one-on-one setting, the logic goes, the United States has more leverage to pressure a country to do what it wants them to do. While there’s some truth to that, things actually aren’t that clearly defined.

The reality is that bilateral deals are based on one side “paying” for concessions from the other. The U.S., which already has a largely open market, has fewer concessions to offer. 

But, in multi-party talks, countries sell the deal at home based on concessions they receive from all participants, not just from the U.S. As a result, the U.S. is able to gain more from others while paying less.

Additionally, in a multi-party negotiation, you can build coalitions with countries with similar objectives. As a senior negotiator for the TPP, which involved 11 other parties, I found that through coalitions, the U.S. was often more effective in getting a country to do what we wanted it to do.  

Read the full article here.