An independent federal report on the Trans-Pacific Partnership (TPP) found that the trade agreement between 12 countries would have only modest benefits to the U.S. economy and job growth. The report was mandated by US law as a final step before President Obama could send legislature to Congress for a vote.
The highly anticipated report, conducted by the US International Trade Commission, was revealed on Wednesday. It predicted that by 2032 the TPP would likely increase the national income by $57.3 billion a year, just 0.23% more than what it would be without the trade pact.
This falls short of what private studies had projected would be an increase of over $100 billion annually, including a study by the Peterson Institute for International Economics, which in January of this year estimated an increase of $131 billion in annual real income by 2030.
While the report projected US exports would increase, imports would grow at a faster rate with free trade partners in Japan, Malaysia and Vietnam. Job growth would also be modest in the US with a projected addition of 128,000 jobs by the 15th year of the TPP’s implementation, which is only 0.07% greater than baseline estimates.
Dean Baker, co-director of the Center for Economic and Policy Research, notes the unreliability of these types of projections because of their inability to account for future currency fluctuations and exchange rates.
Top White House trade representative, Michael Froman, who finalized the TPP at the end of last year, emphasized that the International Trade Commission report did not acknowledge the non-tariff benefits including measures to help American firms protect intellectual property, solidify more free and open Internet commerce and reduce the red tape and competition from state-subsidized foreign competitors.
“There has been tremendous focus on the impact on manufacturing,” said Joel Nied, the chairman of the Transactional Group of Price Benowitz, a US law firm that focuses on international business transactions, “but the agreement will have a profound impact on intellectual property protection issues for US companies as well.”
It is important to note that the US-led pact does not include China. Obama stated that the TPP is critical to securing US economic interests in Asia. The Pacific partnership includes Canada, Australia, Mexico, Singapore, Chile, Peru, New Zealand and Brunei, binding economies that constitute nearly 40% of global economic production.
It will abolish duties on many goods and will standardize regulations on intellectual property, labor rights, environmental impact and trade in these regions. Among the TPP members only Malaysia has ratified it while Japan expects to follow suit in September.
If implemented, the TPP would be the world’s largest regional trade deal, but the US has become the pact’s greatest battleground. Obama has been struggling to gain support for the trade deal in Congress, and even lawmakers in his party have opposed the deal while support among Senate Republicans is diminishing.
Republican critics have cited the length of patent protection for certain pharmaceutical companies and a stipulation on access of tobacco companies to special arbitration panels that aid them in challenging anti-smoking laws as major concerns. Democrats and US workers expressed concerns over the impact on jobs especially in manufacturing and energy industries.
If the TPP is not ratified before November elections, it is uncertain if it will be passed under a new presidency. Democratic contender Hillary Clinton and Republican nominee Donald Trump have expressed concerns over the trade pact’s effect on manufacturing jobs. During an election year, Obama will be hard-pressed to gain much momentum for a trade deal because it is such a hot-button issue.
In the event that it does pass, what would the TPP mean for US firms, workers and citizens? With new technology and increasing globalization, many worry that the TPP will negatively impact US workers and trade, especially in manufacturing as seen with past free trade agreements and market access in China that saw many jobs go overseas.
Additionally, part of the intellectual protection laws may include extending patent protections for pharmaceutical companies that will grant them greater power over pricing of their medications that could mean those suffering with illnesses like HIV/AIDS or cancer may find life-saving medications unaffordable with longer waits before prices drop and generic brands become available.
While we enter the full-swing of the presidential campaigns for the 2016 election, it will be important to monitor the progress of the TPP and the candidates’ stances on this massive partnership that could hugely impact global trade.
Whether 57 billion or 130, since 80-90% of it will go to the top .01%, any affect on the US economy will be essentially nil or may actually be a negative for the 99.99% of the rest of us.