Many supporters of the proposed Trans-Pacific Partnership, or TPP, trade agreement are arguing that its fate rests on President Barack Obama’s bilateral talks with Japanese Prime Minister Shinzo Abe in Japan this week. If Japan and the US can sort out market access issues for agriculture and automobiles, the wisdom goes, this huge deal—in effect, a North American Free Trade Agreement (NAFTA) on steroids—can at last be concluded.
But this view obscures the many seemingly intractable problems TPP negotiators are grappling with. There are other unresolved issues—such as intellectual property concerns that could limit access to affordable medicines—that have deadlocked the 12-nation pact.
And for every issue that is being intensely discussed, there are others that are being swept under the rug. For instance, bipartisan majorities in Congress have demanded rules in TPP against currency cheating, but the Obama administration has refused to include them.
But foremost among all these issues is the devastating effect the agreement would have on jobs and the American middle class. Americans were promised 20 years ago that NAFTA would bring an unprecedented economic boom and 200,000 jobs in the first year. The data on NAFTA’s outcomes make clear that the concerns critics had were warranted.
In 1993, before NAFTA, the US had a $2.5-billion trade surplus with Mexico and a $29-billion deficit with Canada. By 2012, that had exploded into a combined NAFTA trade deficit of $181 billion. Since NAFTA, more than 845,000 US workers in the manufacturing sector—and this is likely an undercount—have been certified under just one narrow program for trade adjustment assistance. They qualified because they lost their jobs from the increased imports from Canada and Mexico, or the relocation of factories to those nations.
Even worse, NAFTA has been used as a model for additional agreements, and its deeply flawed approach has resulted in the outsourcing of jobs, downward pressure on wages, and a meteoric rise in income inequality.
For example, to sell the NAFTA-style US agreement with South Korea passed in 2011, Obama said it would support “70,000 American jobs from increased goods exports alone.” In reality, US monthly exports to South Korea fell 11 percent in the pact’s first two years, imports rose and the US trade deficit exploded by 47 percent. This led to a net loss of tens of thousands of US jobs in this pact’s first two years.
Now we are hearing that the TPP, as we were promised with other pacts, will mean prosperity around the corner.
US workers vs. Asia
But this agreement would force Americans to compete against workers from nations such as Vietnam, where the minimum wage is $2.75 a day. It threatens to roll back financial regulation, environmental standards and US laws that protect the safety of drugs Americans take, food Americans eat and toys given to children in the US. It would create binding policies on countless subjects, so that Congress and state legislatures would be thwarted from mitigating the pact’s damage.
Therefore, it is all the more disturbing that the administration has asked for “fast-track” trade promotion authority. Under fast track, the president could sign the TPP before Congress votes on it, with a guarantee that Congress—after limited debate and with all amendments forbidden—would vote to ratify it within 90 days.
Despite Congress’ exclusive constitutional authority over the substance of US trade policy, it would be left powerless to alter the pact, however destructive it might be for workers and families, and could only vote yay or nay on the document.
According to a poll this year, nearly two-thirds of Americans oppose the granting of such fast-track authority. Last year, nearly 200 House members, from both parties, declared their opposition to it. The chorus swelled this year when legislation to establish fast-track was introduced; the bill failed to attract a single House Democratic sponsor. This makes the administration’s push to conclude the TPP on the president’s trip to Japan even more questionable.
Meanwhile, the arguments made by Vice President Joe Biden and others that the deal is crucial to demonstrating the US commitment to the region or to uniting with allies to counter a rising power—in this case, China—are tired claims that repeatedly have proved false when raised to sell past pacts.
There are many things Americans can do to enhance the US’ competitiveness with China and in the global economy.
The US can invest in its own infrastructure, manufacturing and job training. It can work harder to address issues like currency manipulation, unfair subsidies for state-owned enterprises in other nations and global labor protections. The US can enter deals that increase its exports while doing right by American workers and their priorities, and Americans can address the real foreign policy challenges in Asia with appropriate policies instead of through a commercial agreement that could weaken the United States and its allies.
What the US should not do is blindly endorse any more unfair NAFTA-style trade agreements, negotiated behind closed doors, that threaten to sell out American workers, offshore US manufacturing sector and accelerate the downward spiral of wages and benefits.