Negotiations over the proposed Trans-Pacific Partnership (TPP) free trade agreement are continuing this week in Washington, but some economists say the talks shouldn’t be limited to traditional trade barriers like tariffs.
According to Market Pulse, among the issues on the agenda are “intellectual property and reform of state-owned firms to establish fair business competition,” as well as bilateral issues, “such as Japan’s proposed exceptional tariffs on some agricultural produce.”
A recent paper by supply-side economist Arthur Laffer makes the case that non-tariff barriers, especially currency manipulation, should be considered equally important.
Laffer explains that the collapse of the gold standard in 1971 enabled countries to adopt “beggar-thy-neighbor” policies, whereby they artificially devalue their currencies in order to make “domestic goods cheaper relative to foreign goods.”
“Undervaluation of a country’s currency can improve a country’s export competitiveness,” Laffer notes, with the result that “some countries have engaged in currency manipulation as part of a long-term, export-driven growth tactic.”