Powerful decision: Is it time to move TPP forward or pass on the opportunity?

The choice to move forward or pass on this free-trade agreement will be one of the most powerful decisions the U.S. government will make this year.

June 17, 2016

9 Min Read
Powerful decision: Is it time to move TPP forward or pass on the opportunity?
<p>During the World Pork Expo, U.S. Trade Representative Ambassador Darci Vetter reminded pork producers that economic allies are also our political allies.</p>

Few documents from the past decade have garnered as much stigma and opposition from the public as the Trans-Pacific Partnership, with statements of strong TPP opposition spreading across the entire political spectrum. The global free-trade agreement is openly opposed by current presidential candidates Donald Trump, Hillary Clinton and Bernie Sanders, among others. A simple Google search will unveil a diverse collection of voices, representing a wide variety of American demographics, calling for a ban, a halt and an end to the TPP, and painting FTAs as the cause of so many issues facing the economy today.

Ask the opinions of producers working within the industries most directly affected by TPP, however, and the response is that of resounding, nearly universal support. The parade of protesters from consumers to academics has violently disapproved since the introduction of TPP.

The TPP is a free-trade agreement of its own caliber. The document will expand the market for U.S. exports in ways that have never been seen before and will open new doors with trading partners from 12 countries in some of the modern world’s fastest growing economies. It is an incredibly powerful document, and one that is often misunderstood. While it is nearly impossible to create a perfect trade document, supporters believe a vast majority of the opposition to TPP is rooted in rhetoric composed of misconceptions and false information.

Economic impact

In terms of economic impact, the TPP is 40% of global gross domestic product sitting around one table. The 12 countries included in the agreement — Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, Vietnam, Chile, Brunei, Singapore and New Zealand — represent 40% of the global economy, and this collaboration has created the highest standard free-trade agreement in history. TPP will give U.S. farmers unprecedented access to these nations, which are projected to host two-thirds of the world’s middle class by 2030.

Economic analysis shows trade agreements reduce the cost and the risk of doing business. By eliminating tariffs with the countries represented in TPP, the United States is expected to increase market share and volumes into those countries as well. The U.S. domestic market is already open to the world. TPP tears down barriers to other markets so that U.S. producers can compete on the global market and maximize the benefit to the American economy. TPP will facilitate 18,000 tax cuts on American-made exports. Michael Froman, U.S. Trade Representative, says TPP will strengthen the economy and erase the major disadvantages U.S. producers currently face in the global market.

“This really is historic for many reasons, and is an important part of both our trade agenda and our foreign policy agenda going forward in an area that is both economically and politically dynamic,” says Ambassador Darci Vetter, U.S. Trade Representative, who has helped negotiate and finalize the TPP, during a press conference at the World Pork Expo. “Remember that our economic allies are also our political allies. TPP offers the opportunity to expand our reach into the Asia-Pacific region that is so valuable, and allows us the ability to modernize and advance some of our existing free-trade agreements with trading partners that we have long-standing relationships with.”

Some of the greatest misconceptions surrounding the TPP claim that the agreement will have a significantly negative impact on the U.S. job market. U.S. Sen. Bernie Sanders has a web page dedicated to his opposition to TPP, with his first argument against it stating: “According to a study from the Economic Policy Institute, if the TPP is agreed to, the U.S. will lose more than 130,000 jobs to Vietnam and Japan alone.” Similar sentiments have been expressed by many of the current presidential candidates.

What is repeatedly left out of the discussion, however, is the job support that is offered through trade. American exports currently support 11.7 million U.S. jobs, and have led to an increase of 1.8 million new jobs over the last five years. TPP is projected to not only increase the number of jobs available in the United States, but also to support higher-paying jobs, because every billion dollars of exports supports 5,800 jobs, on average.

Pork industry benefits 

This is one of the priorities of Nick Giordano, vice president and counsel, global government affairs, for the National Pork Producers Council.

“We all benefit from trade, but a lot of what we’re hearing these days from far too many American citizens is that trade doesn’t work, and when you drill down to the root of it, I think the major concern people have is the loss of manufacturing jobs,” says Giordano. “Well, here’s the thing, manufacturing employment peaked in 1979, it’s been going down since then, and that’s before NAFTA (North American Free Trade Agreement) and any of the other free-trade deals. But regardless of the loss of manufacturing jobs, our manufacturing output is higher today than it has ever been before. There are more goods being made in America today than at any time in history, and all this is getting lost in the discussion. Why are we losing these jobs? Productivity. Technology has changed our economy.”

Technology has indeed changed several aspects of the economy, and has even altered the way that business is run and managed in the past decade.

“We have had our NAFTA partners for over 20 years now, and think about how much global commerce has changed in that time. For the first time in a free-trade agreement, there is a chapter in TPP on a free and open internet,” says Vetter. “Much of the ag economy, let alone the rest of our economy, occurs through e-commerce, but we didn’t have an internet when we negotiated NAFTA, so this has allowed us to update the agreements we do have and forge new ones with countries that we don’t have existing free-trade agreements with.”

Another claim from Sanders’ anti-TPP website states that TPP would reward authoritarian regimes like Vietnam that systematically violate human rights. The State Department, the U.S. Department of Labor, Human Rights Watch and Amnesty International have all documented Vietnam’s widespread violations of basic international standards for human rights.

Opponents believe the TPP would reward this bad behavior by giving countries like Vietnam duty-free access to the U.S. market. But according to a report from the Office of the U.S. Trade Representatives, TPP offers a solution to help improve the current conditions on the ground in TPP countries on issues related to human rights, animal welfare, food safety and the environment.

TPP includes the strongest worker protections of any trade agreement in history, and the language of the agreement helps ensure that the global economy reflects the interests and values of the United States by requiring other countries to play by fair wage, safe workplace and strong environmental rules, according to USTR.

TPP includes provisions that work to protect the freedom to form unions and bargain collectively; eliminate exploitative child labor and forced labor; protect against employment discrimination; require laws on acceptable conditions of work related to minimum wages, hours of work, and occupational safety and health; prevent the degradation of labor protections in export processing zones; and combat trade in goods made by forced labor in countries inside and outside TPP.

“For the first time in free-trade agreements, we have new commitments on labor rights and the environment. Those commitments reflect U.S. practice and do not require us to change or adopt new laws, but they do require that all countries have in place some basic protections for workers and some basic environmental standards that help to level the playing field. We should be creating an incentive to do trade with others who are willing to reflect those things that we value as our country but that others may sometimes use to get ahead, and this is a way to bring everyone to at least those minimum standards and work together on a similar playing field,” says Vetter.

The opposition to TPP is often stated through the idea that the agreement holds the power to destroy the U.S. economy, with current presidential candidate Donald Trump calling it a “betrayal created by politicians that have sold out to American workers.”

As active participants in the TTP negotiations, pork leaders have noted that there is little discussion of what the United States stands to lose from not adopting the TPP, or of the impact that passing on the deal may have for the country’s market share and political reputation.

The Peterson Institute for International Economics, a nonpartisan think tank, has looked across the economy and projected that delaying TPP by one year will result in a deprivation of $94 billion to the U.S. economy, which equates to an impact of $700 per U.S. family. In the absence of TPP, the ITC noted that $7.2 billion would be lost to the U.S. economy each year, and those numbers do not take into account the impact from the rest of the world continuing to globalize while the United States chooses to pass on the opportunity.

“Every day that TPP does not pass, we’re going to lose market share, because the world is not going to stand still while we sit and wait,” says Giordano. “We will lose market share in the Asia-Pacific region, we will not sell as many food and agricultural products, and we will not sell as many manufactured products, because we will lose out to competitors who are moving forward and who are negotiating and implementing trade deals. The European Union, which is not part of the TPP, is negotiating with Japan and with other countries, and the Canadian Pork Council has said that if the U.S. doesn’t move TPP through by the end of the year, they will push their government to negotiate separately with Japan, and you can’t say you blame them.”

Move forward or give up

The choice to move forward or pass on this free-trade agreement will be one of the most powerful decisions the U.S. government will make this year, and the consequences of the decision will affect the nation’s economy, reputation and its status as a world leader, say pork leaders.

“Separate and apart from the very important commercial considerations here is that the United States is driving the bus on this 12-nation free-trade agreement. We’re the leaders here,” says Giordano. “Are we going to just pull over on the side of the road and throw the keys on the side of the road? That choice would have not only commercial implications, but geopolitical implications, and our leadership in the world is going to take a huge hit if we do that, and we cannot do that.”

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