TPP: Maybe Not So Horrible

From The Hill:

President Trump on Thursday instructed top administration officials to explore re-entering the Trans-Pacific Partnership (TPP) — a trade pact he pulled the U.S. out of last year while calling it a “disaster.”

With this whipsaw of trade policy announcements, is it any wonder that economic policy uncertainty is rising? As measured by the Baker, Bloom and Davis index:

Figure 1: Daily EPU index as of April 12 (blue), and 7 day centered moving average (bold red). Source:, and author’s calculations.

A longer term perspective on economic policy uncertainty is shown in this post.

And of course, most of us knew it wasn’t so horrible at all, back when we had a chance to influence the nature of TPP.

Update, 8:15PM Pacific 4/13: Reader Ed Hanson asserts that EPU is rising for most countries. I plot below the monthly indices; I honestly don’t see what he’s claiming.

Figure 2: Monthly EPU indices. Source:

44 thoughts on “TPP: Maybe Not So Horrible

    1. ilsm

      Trump (with cheese eater Macron and pliable May) about to publicly eat the ‘fake news’ burger over Douma, Syria staged gas event……….. like no one acknowledges, except no headline Mattis a few months ago, that there is no evidence behind war monger’s ‘proof’ from Apr 17 al Nusrah staging in Idlib.

      In both cases there may have been gas, there is no hard evidence it was state sponsored gas…………

      1. Moses Herzog

        So, you’re obviously leaning towards the USA Girl Scouts as the culprit on the Syria chemical attacks?? Or possibly the Royal Canadian Mounted Police are the masterminds?? Actors and dramatists are “volunteering” to live in displaced tent cities for years without end??

        Deep stuff “ilsm”. Have you been auditing Steven Kopits’ class “Geopolitics and International Security” again?? I told you before ilsm, just because Dan Quayle, Sarah Palin, Hillary Clinton, and Michael Flynn ALL recommended Kopits’ class doesn’t mean much.

        1. ilsm

          Why no physical evidence, with all those iPhones?

          The demands for delivering the gas mean no high temperatures and no excessive explosions.

          Rusty pipes bent to fit in pot holes are not consistent.

          There is no evidence from either April event.

  1. Moses Herzog

    Here’s another interesting one related to the raid on Michael Cohen’s offices:
    The New York Times Charlie Savage asks for explanatory reasons: “Are all lawyer-client materials off limits??”

    “No. In certain cases, lawyer-client materials do not receive special legal protections. One of them is called the “crime-fraud exception.” Under this doctrine, the privilege does not protect lawyer-client materials in situations in which the lawyer was helping the client commit a continuing or planned crime or fraud, since that would not serve society’s goal of ensuring lawyers can render sound legal advice. If the judge who signed off on the warrant invoked that doctrine, it would be “extremely significant,” said Katrice Bridges Copeland, a law professor at Pennsylvania State University and a former white-collar defense lawyer.

    “To have gotten this search warrant means they are finding that there was no separation between the attorney and the client, meaning they were working together in furtherance of a crime or some sort of fraud to cover up some previous crime,” she said. “That is a big deal. It’s not easy to make that showing to the court and get a search warrant on an attorney.”

    Colbert puts it in much more comical terms. Lots of good stuff here, wait until he mentions the bank robbery analogy. Talk about hitting the nail on the head.

  2. pgl

    I’ve been watching Trump’s old speeches saying TPP was horrible but he never says why. Jeff Frankel did note the concern that TPP extended IP protection. Oh wait – the Trump cheer leaders here want more IP protection. So then what was Trump’s real concern again? Oh yea – Obama might get credit. Got it!

  3. David O'Rear

    Now that other countries have set the TPP terms . . . great timing.
    It reminds me of the UK and Brexit: we want to be able to access your markets, so we’ll agree to everything you ask but By God and Her Majesty we will no longer have any say in the rules of the game.

    1. Moses Herzog

      @ Mr O’Rear
      No doubt, you have a strong argument there. But there are some who believe we haven’t got to the half-way mark of reading a long storybook. If Britain sticks to their guns, how do they look if peripheral countries start hitting the exits?? Not to mention as British voters are getting bitched out by all the wisenheimers, it seems like they were smart to stick with their own currency. What would Greece have done to have their own currency back when Cypress accounts were froze, etc?? Seems a lot of pro-EU folks have an abbreviated memory. Greece still is sitting in a pool of feces, a significant portion of which backed up from France’s sewer. The only thing that has changed is, people have gotten bored reading about it. But just because you and Pro-EU folks have gotten bored reading about “golden dawn” in Greece and fascists taking different lawmaking seats, doesn’t mean the fascists magically vanished.

    2. Moses Herzog

      Mr O’Rear
      You’ll have to sign into Youtube to “verify” you’re adult to view this. It’s video of the Spain Federal government explaining to Catalan voters in “docile terms” the beauty of EU membership.

      I guess 6 months is as far as a Pro-EU memory goes…….??

  4. Ed Hanson

    No, Menzie,

    “most of us” did not and could not“knew it wasn’t so horrible at all, back when we had a chance to influence the nature of TPP.”

    As well written by Jeffrey Frankel,

    “It is true that these trade negotiations include more emphasis than many in the past on issues of labor and environment, on the one hand, and intellectual property rights and investor-state dispute settlement on the other hand. And it is true that, to get it right, the details of these issues need fine calibration. But here is the point that everyone seems to have missed, in my view: even if it were somehow logistically possible for international negotiations to proceed while the US Congress were more intimately involved along the way, the outcome would be far more likely to get the details wrong — with big giveaways to special interests – than under the usual procedure of delegating the detailed negotiations to the White House. I know that no commentator is ever supposed to say that any political leader can be trusted. But I do trust President Obama on this, far more than I trust Congress.”

    I, too, do not trust Congress for the details, but I also did not trust President Obama on this. The lack of “details” pointed out by Frankel, was enough not to know how horrible the deal was. I would have been reasonably satisfied if the agreement had been presented to Congress (Senate if it was a treaty}, but that, as far as I know, never happened. The completion of fast track authority, by the way is a method I agree with, never finished. I for one, never saw the finished agreement. And, just as Frankel relied on the duly elected President Obama for the knowledge of the details to get it right, I rely on the current elected President Trump, if he chooses to reenter negotiations with the other countries, to get those details right.

    P,S. And by the way, we still have an influence on the nature of the TTP, if it is agreed to reopen negotiations. And just possibly and happily, a different we.

    1. pgl

      Since Trump likes to negotiate by Twitter, I guess the details will be very transparent. Of course the fact that he put Kudlow in charge should make us wonder how badly we will get suckered by the rest of the world. Openness is a good but complete stupidity is not.

    2. Moses Herzog

      @ Ed Hanson
      You’ve long since proven to us you’re an idiot on the level of Trump judicial nominee Matthew Peterson. But if you could get verb tense right and the correct abbreviation for TPP right, it would make all of Menzie’s regular readers less embarrassed when recommending newbies to come visit the site.

      1. Ed Hanson


        Perhaps New Zealand sunk in from your global warming fantasies, because the link to that 2015 agreement text no longer works. So you say the agreement was solidified then but a year later President Obama still could not present it to Congress. Should make you wonder, but of course your partisanship won’t let you.


          1. Ed Hanson

            Thank you Menzie, I never would have thought of google. Strange that the posting of the final text of the TPP by the Trade Rep is on an undated page. Do you have any idea when it was posted? And where to find the considerable side agreements which come with such complicated, multi-country, bureaucratic diplomatic efforts.

            Oh and I am learning but I found something called Bing. Guess what a ten second search found.

            Query “Obama submits tpp to Congress”.

            From before we know it was not in November of 2015, when your New Zealand text was posted.

            From query, first return
            Obama puts Congress on notice: TPP is coming By ADAM BEHSUDI 08/12/2016 [from Politico]

            Second return
            It’s official: Obama to send TPP to Congress…Published: 08/14/2016 [from WND]

            Third return (and maybe the most telling)
            GOP in no hurry to move Obama’s TPP By Alexander Bolton and Vicki Needham – 01/06/16 [from The Hill]
            Within the text of article; “Lori Wallach, director of Public Citizen’s Global Trade Watch, said the only legally enforceable time requirement is the mandate that the administration must notify Congress 90 days in advance before signing off on the deal. The administration submitted its notice on Nov. 5.
            “The way the Fast Track statute is written, legally the president could submit the TPP implementing bill on Feb. 5 or any date thereafter and Congress wouldn’t have any legal recourse,” she said.”

            Anyway enough of that for now. I simply did not find a date that President Obama actually submitted the TPP to Congress, and am under the assumption it never happened. It wasn’t after 90 days of notice of signing. It wasn’t 08/12/2016. It wasn’t 08/14/2016. So much for The Presidents political courage. It seems to be lacking.

            And if you want to know or care, both sides of the political spectrum, the repubs and the dem leadership, told him too late, too little effort, and just hold off. And then the election decided it. Imagine that, the electorate got to decide their own future. Got to love it.

            P.S. It is reported that the TPP was 5,554 pages long. And you expect to think to know all the details, Menzie. More power to you if you do. What won’t be fun, though, is a comparison to any future TPP agreements, too many dead trees.

          2. Menzie Chinn Post author

            Ed Hanson: I don’t claim to know everything in TPP as agreed to by the US. Do you know every word in the U.S. Constitution includig amendments? But I bet you support (except maybe the 13th). But I have read various analyses including CRS which I do trust.

          3. Ed Hanson


            I am not surprised you do not know every detail of the TPP. But I suspect if it was your job to know you would, no insult intended. So support/oppose of the TPP comes down two ways. One comes from the political faction, the normal political supporters from either side, whose support comes fairly unquestioned. The second comes from study of those who job is to know the details of the agreement, and have done analysis. Again there could be some selection bias of which study is read, used and believed due to political bias. Nothing can be done here to change political bias, especially those described in the first case. So, if you don’t mind I would like to ask questions about the studies of the TPP you know of

            To test the waters, I would start with a very general question, a question that is not specific to the TPP.

            Is there any economic theory which demonstrates a negative effect on a large country like the USA when entering into widespread free trade.?

            The context of the question is opposition to free trade is quite widespread, and the opposition can be found on all sides of the political spectrum. Does this opposition have any economics study or theory to support the opposition.


      2. Moses Herzog

        @ Professor Chinn and @ Ed Hanson
        I don’t know if the two of you trust Wikileaks (ever, or at the current moment). I know the Russian thing does open some legit criticisms of Assange. I would also say I have some issues with some of the opinions Assange has given roughly since the middle of Trump’s 2016 campaign. However you two feel, when not stated as Assange’s own editorializing, I trust Wikileaks on the same level I trust NYT, WaPo, LA Times, etc. Plus this version has an actual search function for the TPP document, which I dare say 98% of the uploaded official TPP texts do not have.

        Whatever your thoughts on Assange, I basically dare you (Menzie and/or others) to find any factual errors in this English version compared to any you view as “the real deal”.

    3. 2slugbaits

      Ed Hanson Okay, so let me get this straight. You would not have trusted President Obama, but you would have trusted people like Sen. Grassley or Sen. Cruz or Sen. Inhofe or Sen. Shelby or Sen. Ernst or Sen. Johnson or any of those other geniuses??? And you don’t trust Obama, but you do trust Traitor Trump? And to think, you’re allowed to vote! Have you been drinking before posting?

      1. Ed Hanson


        Did you not read that I have no problems with fast track authority? No, although Treaties must be consented to by the Senate, the Senate is not designed to negotiate the details. Separation of powers is just fine. But to speak realistically, in order to get such trade Treaties past any Senate, all administrations have to keep pertinent Senate leadership (both parties) informed. I assume it happened with TPP, but have no idea how much an effort President Obama made to consultation, nor do I have any idea how much he listened to political and economic and trade concerns of the Senators.

        And you are over the top with your name calling.


        1. 2slugbaits

          Ed Hanson Yes, I can read well enough to know that what you wrote was incoherent. You said that you didn’t trust Obama, but you also said that you didn’t trust Congress. Well, at the end of the day you’re going to have to trust at least one of them if you also support “fast track”. That’s the way it works. I suspect that what you really meant to say was that you would only trust “fast track” under a Republican President. Amiright?

          BTW, senators have plenty of staffers along with an army of lobbyists pounding at their doors to help them understand where things are with large trade deal negotiations. Senators who claim the old Sgt. Schultz defense of “I know nothing!” are simply lying. Do you really believe that there’s any chance Sen. McConnell wasn’t aware of what was in TPP?

          I’m surprised that the anti-Hillary crowd hasn’t raised the flip-flop flag on this issue. This is a legitimate case of being for something before you were against it. She wasn’t exactly a towering figure of political courage on this issue.

          1. Ed Hanson


            After all these years of posting and you can not understand my writing style.? Funny but you are too intelligent not to understand my writing and my style. I suspect you would rather feign confusion in order to attempt to slant what I have to say. So be it.

            To your points. That is correct, I do not trust President Obama in these trade negotiations. But lack of trust does not mean that I think he does not have the right, and responsibility to negotiate treaties and agreements. That belongs to the executive, and fast track authority is reasonable legislation to allow negotiations. No, I do not have to “trust” either branch, trust is not a condition for accepting Constitutional authority of the executive responsibility of negotiation of treaties, and extending that to agreements.

            To further clarify what trust means. Because of political faction, it is true, I trust President Obama and his high level appointed diplomatic service less than I would trust a Republican one. Two thing to that, neither is an absolute trust or distrust, and the intelligent words, “Trust but Verify” becomes the final check. In this case it is quite clear, the negotiated TPP is not a free trade agreement, it contains too many unnecessary conditions detrimental to American interests both in trade and other areas, and is a over-the-top bureaucratic monstrosity. Top evidence of the last, it should not take a 5,554 page agreement to agree to free trade. But it does take some volumes to create an agreement which free trade simply becomes the calling card to a whole host of other political motivated goals.

            To answer your next points, it simply takes a little perspective of the history of the agreement. And it all pertains to President Obama and the type of President he was. TPP Negotiations began in 2011 and was a very top priority of the administration. It took the Obama administration almost 5 years to conclude negotiations, a length of time way too long for a true high priority commitment. At the start of the 6th year February 2016, legal notice finally had been given and the agreement was signed by the administration. The time line from then on is key for insight of the Obama administration. February ends, March goes by, April flows, May comes and goes, June has no action, July, is too hot in DC for action, but there is always August. Now is the time to submit the agreement. But no not yet. Instead the administration will be sorta bold, it does a press release saying it will submit the agreement. But August fades into the summer heat, September makes no difference. On and on, no action. Until finally, even the Democratic Congressional leaderships has to say, Oh, dear we are going into lame duck session and that is not the time for big international agreements to be considered, we will return to it after the new year after the voters have had their say.

            And that is how the man you trust more than anyone deals with a very top priority of his administration. A President without political courage and without the ability of presenting his agenda to the legislature is no one to be trusted not to rolled over in the much tougher arena of international negotiations.

            I could go on, and will if you answer this post, slug.


  5. Ed Hanson


    As for the uncertainty, I can not make your author’s calculation but I can look at the front page of the site and look at the headline monthly index they present. All the countries, except India, show a similar chart. So I doubt if such uncertainty across the spectrum is caused by a minor thing such as TPP. But I would not be surprised if some of the spike is coming down from the Chinese US trade spiff. Both these countries show very similar recent chart.


    1. Menzie Chinn Post author

      Ed Hanson: I’ve plotted the EPU series on FRED — and added a figure to the post. I don’t see what you are asserting.

      You can replicate my graph by downloading the daily data, leading the data by 4 days, and taking a 7 day moving average. I am confident this can be done in Excel…

      1. Ed Hanson


        I believe you when you say, “I honestly don’t see what he’s claiming.”

        But if you had followed what I said and understood that I wrote of the Monthly Economic Uncertainty Indexes found on the front page at

        Just click or watch as they scroll by the circle blips 1,4,5,6,7.and 8. You will see the Global, US, UK, European, Chinese, and Indian monthly index. They look as I described. And no excel, the very good website does it. Quite user friendly.

  6. Tim

    One thing you can count on, if the U.S. under Trump returns to the TPP the deal for us will be worse than it was before. The others will make him pay for his ignorance.

    1. Ed Hanson


      If the US gets into a TPP deal, how will you know it is worse or even if it is better. I would like to point out that Frankel articles were from around June of 2015. That is a year and a half left to President Obama term. The details could not be worked out in in time for him to present the agreement. And I would suspect that the agreement got worse for the US as that deadline approached, which probably saw the administration agreeing to terms because of the deadline coming up. And finally, I would ask you directly, have you seen the agreement in its details as well as the side terms that always exist without transparency. I haven’t. As for ignorance, the only certain ignorance is that of the hundred of millions of you and me which who never saw the original agreement nor ever will except in leaks of dubious nature.


  7. Moses Herzog

    BTW, I heard Trump had an alternate plan to the TPP, Trump was tentatively naming “Ritz-CarltonMattressPP” Plan. They’re keeping this “under wraps” for now. The logistics became quite convoluted due to the number of professional women involved and the large amounts of soda pop the women would have had to drink at the unveiling.

  8. don

    His appeal to authority aside, Frankel’s desire to keep currency manipulation out of trade negotiations makes them pretty useless, imho. Currency manipulations probably have distorted trade flows by an order of magnitude more than conventional trade barriers. Frankel’s appeal to authority is too vague to be meaningful. Does he mean to imply that none of the 14 CEA heads would approve of sanctions against currency manipulation, regardless of circumstances? Is that why Treasury consistently failed to brand China a currency manipulator, even as it amassed $trillions in foreign reserves?

  9. Moses Herzog

    Since both Menzie and commenters have done a lot of debate on commodities lately, I thought this link might be fascinating to some readers, and possibly even Menzie (if he was creating any equations/logarithms for this year’s corn/soybean prices). Yes I know it’s not trade related, and I know some of the trade affects will be “latent” (not affecting 2018 much??). But I thought this article smelled legit and didn’t seem to have any hidden agenda, other than the garbage links on the page:

  10. Moses Herzog

    This is kind of an Addendum to the above comment, I should have included. This is basically the same site, but this link basically has ALL of the stories and analysis related to Soybeans.

    Also if you look under the large heading “Crops” at the top of the page, you can find most of the food crops that you might have a particular interest in (corn, wheat, etc)

  11. Ed Hanson


    I am so happy you brought TPP into discussion at this time. Its a gift that keeps on giving.

    From the link of the agreement. A part of the TPP, one of the 5,554 pages, that show seldom can something be all bad. Hurray for Tequila and Mezcal. Check out if you care.

    Letter Exchange re Tequila and Mezcal

    It saves the Mexican contribution for us all. Right up there with vacuum parts, don’t you think.


  12. Moses Herzog

    Canada and China EPU are rising for roughly the last quarter (1st quarter 2018), while Britain seems to be going down?? My eyes aren’t what they used to be, I had to magnify those damned thin lines about 5 times. I wonder if the recent China and Canada jump are directly linked to their bilateral trade with America, or other factors there??

    Menzie, you’d be proud of me, I been going back and studying my basic algebra online so I can get into some of this calculus you Phd SOBs put in your research papers. Today it was functions and quadratic equations [ insert reader laughter here ]. I also now know what a parabola is. Up until late lastnight I had thought parabola was the rodent cadaver on Trump’s forehead.

  13. Ed Hanson. vehemently


    This topic has gone somewhat stale, but I just reread something you wrote about me and, even at this late of a time, I have to, vehemently object. You wrote,

    “Reader Ed Hanson asserts that EPU is rising for most countries. I plot below the monthly indices; I honestly don’t see what he’s claiming.”

    Of course, you “don’t see what he is claiming,” I never made any such assertion. I never said uncertainty was rising. In fact I said uncertainty had fallen from the last peak, the peak which it is reasonable to assign for a reasonr – the US Chinese trade verbal battle. Following your link to my post, the only thing I say which deals with the change of uncertainty is the last sentence where I wrote,

    “But I would not be surprised if some of the spike is coming down from the Chinese US trade spiff. Both these countries show very similar recent chart.”

    I repeat, nothing wrote can be even remotely interpreted that I claimed a rising uncertainty.


  14. Menzie Chinn Post author

    Ed Hanson: Apologies if I thought you were asserting that the series were moving like the US at the end of the sample as shown in the graphs in the post we are discussing.

    However, you are still wrong about the series for US and China looking similar. Correlation coefficient is 0.43 for full available sample. Implied R2 = 0.18. For 2017M01-2018M03, rho = 0.578, implied R2 = 0.33.

  15. Ed Hanson. vehemently


    Could be wrong? Sure, but I stand by my qualitative analysis that the timing of the top peaks are more important than either the quantity of the uncertainty index or even the intermediate peaks. But I do not have any trouble looking at quantitative analysis especially for China.

    The quantitative level of the index of China reaches a level at Brexit of 558, and later at President Trump inauguration of 695. No other index I know of comes close to the 700 number any time or event. Just think of it, at Brexit, China at 558, even with the 558 of the most effected, UK, while Europe only reaches only 425, global at 268 and US at 234.

    I propose that index of China, quantitatively, cannot be directly compared to the ROW. To put a speculative reason for this, China is far from a country of free press. Because of this, editors, to be safe, limit the scope and type of article. More of the type of articles found safe to print in the past are printed on any given day. Economic analysis, as long as it is not criticism of the current regime, especially that pertaining to foreign economic trouble is one safe subject. Therefore, a quantitative higher number of articles and keywords are found. China due to its system, simply has a much higher percentage of like articles than is normal for the free ROW. And that translate into uncompareable uncertainty index.

    So, that is my response to your quantitative analysis that makes China – US charts different. I submit quantitatively they can not be the same, even when qualitatively they are.


  16. Ed Hanson

    First things first, your second example is beyond the dates of my analysis and those date contain no peaks, so qualitatively, all that could be said is in general uncertainty fell since 01/2017. That works for me.

    As I suspect your low moderate Correlation Coefficient of 0.43 works for you. I am just not sure it should.


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