Studies

by Glyn Moody


Filed Under:
australia, canada, economics, tpp, us, world bank



World Bank Report: TPP Will Bring Negligible Economic Benefit To US, Canada And Australia

from the well,-that's-awkward dept

Supporters of TPP generally insist it's absolutely worth doing, despite any infelicities it might contain, because of the huge overall economic benefit it will bring to participants. But when challenged, they are unable to cite any credible evidence for that claim. That's because there isn't any: despite the impact that TPP's measures will have on how the US and other countries do business, there are astonishingly few studies on whether it will indeed have a positive impact overall. Just over a year ago, we wrote about one of the rare attempts to model TPP, commissioned by the US Department of Agriculture, which came up with the following result for countries like the US and Australia:

TPP is projected to have no measurable impacts on real GDP
However, that particular study only looked at the effect of removing traditional tariffs; as it pointed out, TPP includes other elements that might also boost GDP. Fortunately, we now have a new report from the World Bank, no less, which took into account all aspects of the proposed deal. Here's the summary of what it found (pdf):
The model simulations suggest that, by 2030, the TPP will raise member country GDP by 0.4-10 percent, and by 1.1 percent, on a GDP-weighted average basis.
That's a little vague: 10% GDP increase is very different from only 0.4%, so it really matters who gets what. The detailed figures are as follows:
Vietnam -- 10%
Malaysia -- 8%
Brunei -- 5%
New Zealand -- 3.1%
Singapore -- 3%
Japan -- 2.7%
Peru -- 2.1%
Mexico -- 1.4%
Canada -- 1.2%
Chile -- 1%
Australia -- 0.7%
US -- 0.4%
But those figures too are misleading, because they refer to the cumulative GDP gain from TPP by 2030. It's not clear when the World Bank econometric model assumes TPP will come into effect, but by 2030 it's clearly been running for at least ten years, and maybe even 12. That means all of the figures above need to be divided by at least a factor of 10 in order to arrive at the annual boost to growth, which provides a better measure of TPP's impact than the overall figure.

So according to the World Bank's figures, the US will gain an extra 0.04% GDP per year on average, as a result of TPP; Australia an extra 0.07% annually, and Canada a boost of 0.12% per year. In other words, they differ from the USDA's earlier projection of "no measurable impacts on real GDP" by amounts that are so small they will be swamped by the general imprecision of the model -- trying to predict what will happen to a big chunk of the global economy out in 2030 is hard, and that's putting it mildly.

The fact that two econometric models of TPP's effects, both from highly-respected institutions, predict that TPP will produce vanishingly-small economic benefits for key countries, including the US, could explain why there are so few such studies. A cynic might suggest that others were started but generated such inconveniently-awful outcomes that they were quietly dropped and never published.

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  • icon
    dpaus (profile), 14 Jan 2016 @ 4:14am

    Counting ISDS?

    Given that Canada is ALREADY facing a $500 million claim from Eli Lilly over 'potential lost price gouging opportunities', I can't help but wonder if this study takes the costs of ISDS settlements into account in coming up with the tiny net gains. If they're not already counted in there, the net effect could actually be negative.

    reply to this | link to this | view in chronology ]

    • identicon
      Glyn Moody, 14 Jan 2016 @ 4:24am

      Re: Counting ISDS?

      My understanding is that this modelling takes no account of possible ISDS awards. So you're right: it is quite possible that the net effect of TPP will be negative for Canada - and many other countries.

      reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 14 Jan 2016 @ 4:44am

      Re: Counting ISDS?

      Given corporate sovereignty allows one to sue a government over expected or potential profits as you pointed out in your comment, I imagine if you factor that in not a single country would show an increase. Many a company would, but none of the countries.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 14 Jan 2016 @ 5:32am

        Re: Re: Counting ISDS?

        The way that GDP is defined, ISDS settlements have n o impact on it, as it not a good or service produced within the country, and those are all that GDP accounts for. Therefore GDP can increase, while the country is being robbed blind by corporations.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Anonymous Coward, 14 Jan 2016 @ 8:17am

          Re: Re: Re: Counting ISDS?

          So the lawyers prosecuting and defending and adjudicating the ISDS complaints are NOT providing a service?

          Good to know.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 14 Jan 2016 @ 11:47am

            Re: Re: Re: Re: Counting ISDS?

            Yeah; GDP is all about goods and services, and states nothing about disservices, either from lawyers or politicians.

            reply to this | link to this | view in chronology ]

  • identicon
    Henry Pooter, 14 Jan 2016 @ 5:10am

    Still fighting over Vietnam

    Vietnam and east Asia benefit the most? It looks like the theory that TPP is a bribe from the USA to partners who might otherwise cleave to China are validated.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2016 @ 5:31am

    Obviously, the only "people" who benefit from TPP are the corporations. Entire countries full of hard working individuals will be subjected to the ridiculous demands of entitled dipshits. Think they have a PR problem now? Just wait.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Jan 2016 @ 9:34pm

      Re:

      All hail the mighty Corporation!
      Bow down to your new masters.
      Any bad words against the Corporation will see you jailed and/or executed by the rights bestowed upon them by the government, just like the bad old days.
      Looks like history does repeat itself, coming soon to the UK via 10 year jail terms for file sharing.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2016 @ 5:33am

    like the other 'Trade Deals' the main aim is to give the entertainment industries far more protection than at present, backed by such ridiculous punishments as to be totally outrageous! these are the main aims of these deals but the only way to get them into operation, into law, is to mask them with all sorts of other bullshit that covers the main aim and pisses negotiators off so much that they just waive them through. not a single one of the 'Deals' done in the past has proven to benefit any of the countries involved, including the country that not only pushes harder, but is actually the instigator of them, the USA! when it is behind these so much but as a nation, like the others, is gaining so little, it can only mean that it is good for a very limited area and that area, in the main, is Hollywood! why the fuck it thinks of itself as being so indispensable, i'll never know!!

    reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 14 Jan 2016 @ 5:37am

    Hmm, you don't actually divide by ten if it's composite. And even if it causes any noticeable economic improvement at what cost will it come? I mean, to go straight Godwin here, the 3rd Reich did help the German economy at some point but at what cost? Are we okay with economic development at the cost of lives because the pharma industry got their ways? Are we really ok with economic development at the cost of innocent, naive people having their lives ruined because of a 10 second copyrighted clip?

    reply to this | link to this | view in chronology ]

  • identicon
    David, 14 Jan 2016 @ 5:47am

    0.4% are a _net_ benefit

    TPP is a tool that is most important for internationally acting large corporations, and the U.S. hosts most of those. Of course they are going to profit a lot more than those 0.4% by offloading more work to countries with lousy work standards and civil rights while lowering the work standards and civil rights in more developed industrial countries. Of course this means that they'll be able to give more expensive Americans the pink slip.

    So the totals will be something like 20% up for the management of big corporations, -10% for U.S. citizens in general, huge additional costs and cuts for national benefit programs, increase of national debt, and of course _huge_ amounts of palm grease for Congress members.

    When you are screwing over the hoi polloi, there is a lot to pass around for nobility.

    So 0.4% net benefits. It may sound like "meh", but it's really a lottery where everybody pays and a few people get large payouts. It's a lot more that will be going on than "0.4%" suggests, and those who are in power are going to pocket a lot more than that. They are not fighting as dirty as they do for a mere 0.4%.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Jan 2016 @ 6:09am

      Re: 0.4% are a _net_ benefit

      Actually that's incorrect. TPP increases working standards in these countries, which then brings into question the assumptions of the model.

      If it is assumed that these working standards do not harm the country's competitiveness, then that is likely to be false, as while Vietnam could be seen to benefit through increased investment, it is more likely that other nearby countries would instead get the relevant investment because they do not have the labour standards required by TPP and hence can offer cheaper labour.

      I have not read the report, so this may be covered in it (and would hope it is...), but it's the sort of thing that means the "obvious" benefits of such trade deals frequently never materialise. If you assume Vietnam would be better off because of higher working condition standards, the actual result might be it being worse off because it becomes too expensive to compete with other nations for labour costs.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 14 Jan 2016 @ 6:46am

        Re: Re: 0.4% are a _net_ benefit

        "TPP increases working standards in these countries"

        The glass is half full, of what we do not know.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2016 @ 6:19am

    Is this really a surprise , we all knew that this was just created to give corporations more power and ownership over the general population and governments.

    reply to this | link to this | view in chronology ]

  • icon
    Bill Jackson (profile), 14 Jan 2016 @ 7:29am

    US Balance of trade

    The USA is under great pressure to earn non manufacturing income. One of the ways they do this is to strengthen and EXTEND the duration of IP protection laws.
    Look to the USA to lengthen copyrights and patents and trademarks so that they can keep sucking money from offshore wallets.
    We already know that big pharma might charge $10 per pill for Viagra in the USA, and charge $1 for that same pill in India, even as the pill has a cost of less than one cent. Pfizer tries to bamboozle us with innuendo saying only genuine Viagra by Pfizer works in their ads - other stuff will make your dick go black and fall off(just kidding).
    They try to block genuine Pfizer Viagra from being shipped to Canada/USA by their IP.

    Pfizer and other pharmacos do this all the time.

    And as for Disney, in 10,000 years, the Disney Corporation will be lobbying to extend their copyright on Micky Mouse to 10,200 years....

    reply to this | link to this | view in chronology ]

  • identicon
    Pixelation, 14 Jan 2016 @ 9:19am

    What it shows

    It is pretty clear TTP is about pushing our laws overseas while putting pressure on our Congressmen to pass laws here that otherwise would not get through.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2016 @ 2:06pm

    Well obviously the benefits are not the goal of setting this up. There is some other motive the leaders of these countries have. Probably massive payoffs from the corporations involved when their terms of office are finished.

    These politicians have already proven they will destroy hundreds of thousands of lives if they gain from it.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Jan 2016 @ 5:37pm

    What do the statistics represent?

    Are you sure those statistics are for GDP growth? Are you sure it's not the percentage of the population that supports TPP?

    reply to this | link to this | view in chronology ]

  • identicon
    GameOver, 14 Jan 2016 @ 6:09pm

    Done deal

    I wonder if Malcolm reads Techdirt cause I'm pretty sure Bill doesn't.

    The TPP, as far as Australia is concerned, is already a done deal regardless of any evidence of its affect on the economy (positive or otherwise).

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Jan 2016 @ 9:52pm

      Re: Done deal

      Well, when the leader of the Australia & his minions regularly head over to New York to run future government policy by a foreign citizen to see if it is to his liking & they actually boast about it to the press, owned by the same foreign citizen, the outcome is rather clear for all to see.

      The TPP will be passed by Murdoch's puppets no matter how much it damages the long term prospects of the national interests of Australia, such as the downgrading of the National Broadband Network from fibre to the home to copper wires at Murdoch's demands so as to protect his profits from attacks by Netflix & the like on his pay TV company Foxtel.

      Our Australian politicians should be tried for treason as they consider the interests of a foreign citizen to be more important than the prosperous future of the entire nation.

      It appears that the TPP will see more of the same treasonous activities from many other governments around the Pacific, just so the USA can try to keep China in a box. It will be as successful as their plan to put Putin & Russia back in their box by punishing them for invading Ukraine by reducing the price of oil, thereby supposedly bankrupting Russia.

      reply to this | link to this | view in chronology ]

  • identicon
    David E.H. Smith, 15 Jan 2016 @ 1:46am

    TPP, et al, Costs harmless Taxpayers

    TPP, et al; Corporate ‘America’ Desperate ‘Extortion’; Join in U.S. Increasing Avaricious
    Debts to harmless taxpayers, or, Scorched Earth, Global Depression?

    TPP Costs harmless Taxpayers. Why not make Global Corporate Partners pay for ‘Privilege’ of joining TPP, et al & Corporations pay TPP Tribunal’s punitive penalties NOT the harmless taxpayers?

    Do ‘We’ (& PM Trudeau) want ‘Good Corporate Citizens’, or, more of Stephen Harper’s & Corporate Canada’s Global assocs. to Punish the harmless taxpayers & complete the Info Deprivation?

    After New Zealand’s PM admitted that medicines will cost more, have the citizens of New Zealand & other TPP nations also noticed similar moves like Canadian Prime Minister Harper below? ‘To help pay for the harmless taxpayers ‘guilty transgressions’ against Global Corporations in Canada, Prime Minister Harper has recently cut the funding for health care by $36 billion dollars’. (please see article below)

    There is a great deal more to the ‘Foreign’ Treaties/’Arrangements’ (TPP, CETA, TTIP, et al), than Tobacco Carve-out, Piggy-backing Autos & Parts from China to N. America &/or the EU via Japan, Gouging Drug Prices, Fish, IP, Privatizing Public Health Care, Dairy products & Pork;
    Why didn’t Someone Tell me that the Punitive Penalties of the TPP’s Tribunals would come off the Top of Signatory Governments’ Budgets & Not the Bottom after All other Expenditures? Corporations & Shareholders First and the lil’ guy gets left overs, if any.

    Should Politicians Have to Sully Their ‘Beliefs’ & Sales Pitches with ‘Sordid’ Facts that Come from Actually Reading & Understanding Global Treaties/’Arrangements’? Just the Facts; ‘We’, The People can Draw our Own Conclusions? Unless they’ve been paid via ‘future considerations’…
    2 Republican Senators Admit that They Have read the TPP.
    Congress/Parliaments; Deluded, or, Deluding; 'IGNORAMUS et IGNORABIMUS' (I do not know & I will Not Know)?
    ‘Quis custodiet ipsos custodies’? (Who Will Guard the Guards?)

    Canada’s (US’s) Traditional Media (Corporate Canada, et al) seem to be Adjusting the TPP ‘Goal Posts’ in order to ‘Demonstrate’ how Canada Won more than it Lost & similarly in all of the other Traditional Media of the other TPP nations. How did ‘We’ all ‘Win’ if everyone else ’Lost’? Isn't more accurate that the Global Corporations WON BIG time & ALL the citizens of the Trans Pacific nations LOST BIG time?

    Guaranteeing the Net Tax Gains for the Voters with Global Corporate Assets Defeats the Purpose of the Global Corporate Treaties/’Arrangements’; ie. it’s like playing the ‘Shell’/Shill Game without Hiding the Pea.

    TPP & other Global Corporate Arrangements Accelerates Disparity at Voters Expense.

    • Can Piggy-backing 80% of products from China, BRICS, et al, on to Canadian products exported to the U.S. really lower the taxes of Canadian citizens by 7% if Corporate Canada increases our Taxes (Global Corporate Tribunal Penalties) by 2- 12%+?

    • Canada’s Remorseless Prime Minister (Pay for The WAD Accord's
    Compensations, etc.) & Depriving Citizens, et al, of Due Diligence Info?

    • There is no melodramatic ‘Boom, or, Bust’ in the TPP & the other Global
    Corporate Treaties/’Arrangements; it’s just a huge Shift of
    Liabilities from Corporations to the harmless lil’ guy
    and taking Huge amounts from the lil’ guy via Punitive Penalties ‘giving’ it
    to Shareholders as ‘Profits’;
    Tort Reform on Steroids is Tort Abolishment.

    • TPP & other Secret (‘Omerta’) Global Corporate Treaties/”Arrangements’;
    It doesn’t matter that it’s a secret, ‘You Should have Known’, Pres. GHW
    Bush on Corporate ‘US’ Reneging on FTA.

    • If it isn’t a Schedule to Reduce Trade Tariffs then it’s a Secret American led
    ‘Slave’ (Democratic Rights) Trade by Info Deprivation.

    • How long have Global Corporate Associates been ‘Passing’ Legislation in
    Anticipation of Suing Once Ratified? ‘Trickle’ Up & Out Economics.

    • Corporate America, after its 2008 ‘Tactical Probe’ into Deregulation & Its Sub sequential Buying Short on its Global Recession, is Anxious for Its Legitimized & Globalized (TPP/TTIP/CETA) ‘Full Invasion’; HSBC’s money laundering, Enron’s insider trading, Chase Bank’s fraud, etc.
    Corporate Canada & its Traditional Big 3 Political Parties are desperate to
    increase its play time under the ‘skirts’ of Corporate U.S. in the
    International Glitter Game.

    • TPP, TTIP, CETA; Roll-back NAFTA, et al, Tribunal Penalties (ISDS) paid by Canadian lil’ guy; $125 M & $25 M legal fees to Reneging Corporate America. U.S. Pays ‘0’. ‘You Should have Known’; President Bush. Prohibit Future TPP, et al, ISDSs.

    • Corporate America is Leaving Grassroots U.S./Canada, et al, Fatally Vulnerable; China can Kill TPP, et al, by Offering its Trade Partners Alternative to citizen Punishing Dispute Settlements (ISDS) & few other ‘Hearts & Minds’ choices? CHINA too ‘Humbling’ for Corporate America & Assocs.? Is a Kinder & Wiser CHINA too ‘Humbling’ for Corporate America & Assocs.?
    • China & BRICS can Kill TPP, et al, by Offering its Trade Partners Alternative to citizen Punishing Dispute Settlements (ISDS) & few other ‘Hearts & Minds’ choices? BRICS too ‘Humbling’ for Corporate America & Assocs.? Is a Kinder & Wiser BRICS too ‘Humbling’ for Corporate America & Assocs.? Corporate ‘U.S.’ is Leaving Grassroots America, et al, Fatally Vulnerable.

    • But, will the lil' guy get 6 years to read, consider, discuss & improve upon (with lawyers paid by Global Corporate Assocs.)?
    ***
    FULL Article, see; davidehsmith.wordpress.com
    ***
    Also see; Excerpts from
    'The Submission' to The SUPREME COURT of CANADA: ‘The SHAREHOLDERS & Corporations of AMERICA, China, Canada, the EU, the Trans Pacific nations, et al
    v.
    the (harmless) Canadian NON shareholders, both; Native & non Native, et al’
    including
    'The MERKEL (Chancellor of Germany) Letter; To Sue, or, Be Sued?'
    (see; davidehsmith.wordpress.com)
    ***
    For the FULL ‘Submission’, see; The SUPREME COURT of CANADA
    ***
    Please consider sharing the enclosed information & questions with 10 friends who will share it with 10 others...
    ***
    Also See; ‘You Should have Known’; President Bush re; Corporate ‘America’ reneging on FTA at davidehsmith.wordpress.com
    ***
    FULL Article, see; davidehsmith.wordpress.com

    reply to this | link to this | view in chronology ]


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