Obama's Asia visit: Do free trade deals really boost economies?
President Obama hopes to ink a US-South Korea free trade agreement Thursday. Trade deals among Asian countries are all the rage, but some say they may not have much impact.
With global trade talks stalled indefinitely, bilateral and regional deals are all the rage, leading to what some have called a "noodle bowl" of overlapping free trade agreements, or FTAs.
Such deals typically lower tariffs and improve market access between two or more countries. They also spark fierce debate, with backers promising eye-popping economic growth and opponents warning of massive job losses.
But a chorus of experts is saying such deals may not make much difference either way.
"There's an increasing acknowledgment that a lot of these preferential trade agreements do not deliver what they promised," said John Ravenhill, an expert on Asian trade at the Australian National University, at a recent talk in Taipei. "And the potential benefits are often grossly exaggerated – in actuality, they will make very little difference to people's welfare."
Mr. Obama hopes to ink an "adjusted" version of the US-South Korea free trade deal Thursday. The two countries signed the deal in 2007, but it has stalled in Congress amid flagging enthusiasm for more trade deals amid economic downturn, and objections from automakers and beef exporters, among others.
In Japan, Obama is expected to beat the drum for the newest trade grouping on the block (and the latest clunky acronym), TPP – for Trans-Pacific Partnership. Originally a free-trade bloc of Singapore, Chile, Brunei, and New Zealand, several big economies including the US want in on the action. Japan's center-left government is interested too, but already faces protests from farmers.
One factor behind the latest round of deal-making is Asia's growing economic clout. East Asia ( ASEAN, China, Japan, South Korea, Taiwan, and Hong Kong) will be the world's largest economic bloc by 2015, surpassing the North American Free Trade Area and the European Union, according to the US International Trade Commission.