Talking about trade, badly

I intended to write about media coverage of a supposed EU-Japan “free trade deal” (no deal, not free trade) showing a willingness to stretch to portray Trump administration failure. But my health demands a change. My media friends, here are a few suggestions that may improve your trade work. And lower my blood pressure.

• When world leaders get together, they exaggerate. A lot. Please consider being skeptical with all such grand announcements, not just skeptical when it’s convenient.
• At the moment, that’s especially true in trade. In many countries, not just the US, there is a wrenching domestic political process needed to approve anything with the word “trade” in it. What prime ministers and presidents decide at their two-day meetings doesn’t have as much weight as they pretend.
• Following this logic, it is useful to ask when a supposedly earth-shaking deal will noticeably change trade volume, price, and pattern among the parties. To this point, just as an example, the answer for when the EU-Japan announcement can be expected to noticeably change trade volume, price, and pattern:  Never.
• Related, when an agreement leads off with a strategic justification and gets to the trade element only later, perhaps it shouldn’t be called a trade agreement. Diplomatic agreements are nothing to be ashamed of.
• More broadly, most trade agreements are not “free trade.” Most existing agreements just embrace the status quo (which does prevent backsliding). Some take steps forward while reinforcing certain kinds of protectionism. Some genuinely move forward, although to nothing like the level of free trade. Few actually qualify.
• Because they are not free trade deals, they do not create blocs. It is disingenuous to add the economic size of the parties to a deal and claim a gargantuan trade zone. How much of each party’s domestic economy is impacted by the deal’s terms has to be evaluated. If 2% of each domestic economy is more strongly linked, say, that’s not a zone.
• This evaluation requires seeing the final terms of the deal. Sometimes the final terms are not quite what was promised earlier. And sometimes those talking confidently about the deal haven’t read the final terms.
• This one’s controversial. If pointing to a “new global trade leader” or the like, consider if the new leader offers the currency used in more than four-fifths of world currency trading? Is it willing to run $5 trillion in cumulative goods and services trade deficits over a decade? (A loud no for the EU and Japan, by the way). Then ask what happens to global trade if the true global leader stops being willing to run those trade deficits.

The world has two choices in trade: US leadership or none. The US has two choices: find a way to continue to lead or see global trade deteriorate in quality and benefit, harming ourselves but especially our friends. Media coverage that pretends otherwise is not good media coverage.