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<body><div style="font-family:Arial;"><a href="http://cepr.net/blogs/beat-the-press/are-news-outlets-obligated-to-do-propaganda-for-trade-deals">http://cepr.net/blogs/beat-the-press/are-news-outlets-obligated-to-do-propaganda-for-trade-deals</a><br></div>
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<p>Regular readers of the NYT and other leading outlets might well get
that impression. The one-sided nature of the discussion of these deals
(invariably dubbed "free" trade agreements, because no one can be
opposed to freedom) is hard for careful readers to miss.<br></p><p>We got yet another example with a <a href="https://www.nytimes.com/2017/07/11/opinion/will-trump-kill-the-bourbon-boom.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region®ion=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region">column</a> warning that Donald Trump may kill the bourbon boom with his trade
policy. The piece uses the example of bourbon to tell us all the ways in
which Trump's decision to pull back from the Trans-Pacific Partnership
and other trade deals can harm people in the United States and be bad
for the world generally.<br></p><p>Starting at the basics, it tells us:<br></p><blockquote><p><div style="font-family:Arial;">"Take Vietnam, a TPP member that increased American spirits imports
by 173.9 percent between 2015 and 2016, to $45.9 million, making it the
category’s fastest-growing importer. Under the trade deal, the country
is expected to drastically increase its American whiskey consumption.<br></div>
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<div style="font-family:Arial;">"Without
American membership in the TPP, a 12-nation pact that created zero
tariffs for American products, Vietnam’s 45 percent duty on bourbon and
other distilled spirits will no longer be phased out, putting those
expectations on ice."<br></div>
</p></blockquote><p>There are several points worth noting here. First, apparently, our
whiskey exports to Vietnam appear to be doing just fine even with the 45
percent tariff. Perhaps U.S. whiskey is considered a luxury in Vietnam
and the people who buy it are not that concerned about the price. I have
no idea whether that is the case, but is possible that the reduction or
elimination of the tariff may not affect sales very much.<br></p><p>The second point is that the implicit assumption in this story is
that the people in Vietnam have no interest in getting cheaper whiskey.
The piece assumes that they will continue to impose a 45 percent tax on
the whiskey they buy from the United States for the indefinite future.
This is, of course, possible, but it's also possible that Vietnamese
with access to textbooks on public finance, or who like U.S. whiskey,
will push their government to reduce the 45 percent tax with or without a
trade deal.<br></p><p>Finally, we should be asking how people in the United States feel
about paying more for their whiskey. After all, there is a limited
amount of whiskey that U.S. distilleries can produce, at least in the
short-term. If Vietnam and other countries will buy more, then there is
less left for us whiskey drinkers back in the United States.<br></p><p><div style="font-family:Arial;"><br></div>
<div style="font-family:Arial;">The impact on the domestic price of whiskey from increased export
demand may not prove to be too much, but there certainly are examples
of cases where it has been large. The Soviet wheat deals signed by Nixon
had a very visible effect on the price of wheat and a wide range of
food products in the United States. In any case, there can be little
doubt that the direction of domestic whiskey prices as a result of
increased exports is upward. Is the NYT prohibited from pointing out
that the TPP would mean higher prices for U.S. whiskey drinkers?<br></div>
</p><p>But there's more:<br></p><blockquote><p>"But absent trade agreements, other countries are free to sell their
own versions of American products. Like Champagne and cognac, bourbon’s
name protection relies largely on trade deals that set standards and
definitions; without them, foreign distillers are surely tempted to slap
'bourbon' on anything they want."<br></p></blockquote><p>Okay, this one also cuts both ways. Back in the old days, we used to
have California "Champagne." Trade deals killed this product, so we can
only buy sparkling wine from California, not Champagne. There are also
issues about "Provolone" and "Gouda" cheese from Wisconsin and many
other products produced in the United States that carry the name of the
regions in other countries.<br></p><p>Sales of these products are jeopardized by rules in trade deals that
could specify that only products from these regions can carry the name.
Such restrictions would also raise the price for consumers. We can
debate whether this is the right path, but there is no doubt there are
losers from such prohibitions. Is the NYT and other news outlets
prohibited from making this obvious point?<br></p><p>Then we get:<br></p><blockquote><p>"Trade deals also create structures to combat counterfeiting, another
big problem for exporters. Asian countries already pose a great
counterfeit risk for iconic brands like Jack Daniel’s Tennessee Whiskey
and Maker’s Mark. While the TPP would not entirely have curbed this
problem, it would have given American companies distilling the real
thing stronger legal protection."<br></p></blockquote><p>This paragraph commits the common crime of confusing "counterfeits"
with unauthorized copies. With a counterfeit product, the buyer is
deceived. They think they are purchasing Jack Daniels Tennessee Whiskey,
when in fact they are buying something that may be far inferior. As a
result, the consumer is getting ripped off. They are paying a premium
price for something they are not getting. In this case, cracking down on
the trade is a gain for both the maker of Jack Daniels and the
consumer.<br></p><p>On the other hand, an unauthorized copy plays on the identity of the
product, but the consumer knows she is not actually buying Jack Daniels.
In this case, there is no ripoff. The consumer is getting a product
that they know is not Jack Daniels for a price that is considerably less
than they would have to pay for Jack Daniels.<br></p><p>The result of the trade deal, in this case, is to close off this
discount market. That is good news for Jack Daniels, which will benefit
from reduced competition, but it is bad news for consumers in our
trading partners. How are we supposed to feel about making people in
Vietnam and other poor countries pay more for their whiskey and a wide
variety of other products? Also, if they give more money to Jack
Daniels, they will have less money to buy our wheat and computers and
whatever else we might sell to them. Is there some reason the NYT can't
mention this aspect of the story?<br></p><p>And, there are the pure protectionist components of these trade deals
in the form of longer and stronger patent and copyright protections.
This means making these people pay more for prescription drugs, medical
equipment, software and a wide variety of other products. The impact of
these types of protectionism can be equivalent to tariffs of several
thousand percent. They can jeopardize public health and also mean much
less money for other imports.<br></p><p>Again, this basic fact is never mentioned in the NYT or other news outlets. Is this also prohibited?<br></p><p>Anyhow, it is unfortunate that news outlets like the NYT feel an
obligation to do fluff pieces promoting trade deals rather than honestly
discussing their plusses and minuses. I guess they don't think they
have a very good case. <br></p><div class="jwDisqusForm"><div id="disqus_thread"><br></div>
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<div id="sig4939963"><div class="signature">--<br></div>
<div class="signature">Alan Barber<br></div>
<div class="signature">Director of Domestic Policy<br></div>
<div class="signature">Center for Economic and Policy Research<br></div>
<div class="signature">202-293-5380 x115 | 202-486-6180<br></div>
<div class="signature">barber@cepr.net<br></div>
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