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To improve their business climates and reinvigorate their economies, the REPs could undertake a range of trade, regulatory, and structural reforms. By reducing tariffs, quotas, and foreign investment restrictions, the REPs could open their economies at the border to more international competition. Trade-related reforms encompassing services regulation, regulation of food-safety and technical standards, intellectual property protection, public procurement, customs administration, and competition rules could also increase competition. Structural reforms to address corruption, labor and product market restrictions, and other regulatory barriers could also help free the economies of the REPs from government intervention. Overall, the resulting intensified competition could help improve worker productivity, economic growth, and living standards.
The United States has sought increased IPR protection in its FTAs that go beyond the level of protection provided in the WTO Trade Related Aspects of Intellectual Property (TRIPS) Agreement. Some of these efforts to enhance intellectual property protection have made considerable progress among U.S. free trade agreement (FTA) partners, but serious problems remain among the REPs. A study done by the U.S. International Trade Commission estimates those losses to U.S. industry from intellectual property infringements in China alone totaled roughly $48 billion in 2009. To crack down on piracy and counterfeiting, the U.S. government has brought two IPR-related cases against China in the WTO, and placed China, as well as India, Indonesia, and Russia, on a USTR Priority Watch List in an effort to secure greater and fairer access of intellectual property-intensive products exported to REP markets. Many of these countries have made significant strides to improve their IPR laws, but enforcement remains a significant concern.66
Most economists, however, also agree that while a nation's general welfare may increase, freer trade does not necessarily distribute those production and consumption benefits equally. While firms and industries that are competitive may gain by increasing exports or by expanding their operations overseas, some segments of the economy that are unable to survive increased competition could lose through worker layoffs and plant closures. In addition, there are growing concerns that today's more open global economy, which allows millions of low-wage workers around the world to compete with American labor, and digital machines to replace many forms of human labor, is responsible for a number of contemporary economic concerns. These concerns include income stagnation for the majority of American workers and increased job insecurity, particularly among lower-skilled workers.100
What economists call total factor productivity (TFP) is the third driver of economic growth and may be the most important. This is the extra growth that occurs when labor and capital are added together in an efficient and optimum manner. Rising TFP can come from a variety of factors including political stability, good governance, sound institutions, exposure to new technologies, and the right economic and financial policies. While there are no precise formulas to stimulate growth, some of the key ingredients are thought to include policies that allow the free flow of goods, money, and people; policies that encourage savings and banks to funnel money into productive investments; and policies that stabilize the economy with low inflation and low budget and trade deficits. Additionally, the rule of law and protection of property rights is required to attract technology transfers and innovation. Top quality education and training systems are also widely viewed as key components. But there appears to be no magic formula, only a long list of ingredients that offer no real insight into how these factors will or will not combine to produce growth in any given country at any given time.156 2ff7e9595c
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