Are you down with TPP? Yeah you know me.

Sorry, but cannot help but think of the similarly-named song every time I hear about TPP.  Anyway, Adam Davidson, who pretty much always has a good take on things related to the economy and trade:

Both proponents and detractors exaggerated the effects of the T.P.P., the impact of which was always going to be modest in measurable economic terms. The Peterson Institute for International Economics, a reputable but strongly pro-T.P.P. research organization, for instance, estimated that U.S. national income would grow by a hundred and thirty-one billion dollars a year by 2030 under the trade deal, a number that many T.P.P. advocates repeat as evidence of its magnitude. But, even if the estimate turned out to be right, it would represent just half a per cent of the over-all U.S. economy—outweighed by even slight changes in, say, the average price of oil or the Federal Reserve’s key interest rate—and would have essentially no measurable impact on almost anybody’s life. In other words, it could easily be seen as somewhere between worthless and barely measurable in economic terms…

Why did the Obama Administration fight so hard for T.P.P.? The trade agreement was central to long-term U.S. interests around the world. It was the first step in engineering a single interlocking trade system to span North America, a significant portion of South America, and a decent chunk of Southeast Asia, as well as Japan. Modern products—from cheaper goods such as clothes to expensive and durable products such as computers, cars, and medical devices—are no longer made in one country. They require stable, predictable international supply chains, and the T.P.P. would have encouraged C.E.O.s, logistics managers, and others to place their bets on the world’s single largest trading zone, one that would have been dominated by the U.S., the largest and most developed economy in it…

By imposing a single legal regime on trade throughout its area, the T.P.P. would have offered incentives to firms to partner with others in the region. As the dominant party in the pact, the U.S. would have controlled future access to that zone. Labor and environmental activists in America had already won major victories, insuring that the T.P.P. would force a new set of standards on trading partners. For the poorer countries, especially Vietnam, these would have meant real advances for workers and the environment. After passage, other countries in the Pacific and in South America would have been anxious to join this large and growing trading zone and would have wanted to make sure they stayed on the good side of the United States. The zone would have all but surrounded China, which was not part of the pact, and would have served to pressure that country to change its own practices…

President Trump, like many others, is right to be concerned about people losing factory jobs, particularly in the Rust Belt, which delivered his victory. The T.P.P. probably would have killed some jobs there, and it surely would have created some others. Estimates suggest that it would have been a wash. But, over all, it wouldn’t have had much direct impact on blue-collar workers. The global shift away from tariffs and other trade barriers began in 1964 and was, largely, complete by the mid-two-thousands. There are a few real fights left, particularly over trade involving finance, entertainment, and pharmaceuticals, but, for American manufacturing companies and their workers, there just aren’t that many high trade barriers left. No deal is likely to have a significant impact on the number of jobs or on the wages workers receive. Jobs ultimately follow economic activity. Where are the customers? Where does it make the most sense to produce the goods those customers want?

Short version: not horrible, but certainly a move in the wrong direction.

And just to be gratuitous…

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

One Response to Are you down with TPP? Yeah you know me.

  1. R. Jenrette says:

    I was against TPP but I think repeal and replace fits in this case. The basic idea was to tie so many Asian countries into a trading system with the U.S. and not China.
    The Chinese are no doubt working on their own version, wrapping those countries into a China focused trading partnership now. The U.S. is proving to be too erratic to be dependable these days, from their prospective.

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