//Behind the breakdown of the Trans-Pacific Partnership

Behind the breakdown of the Trans-Pacific Partnership

by Shom Seh

6-15-2015

A policewoman removes a man protesting the Trans-Pacific Partnership (TPP) as U.S. Trade Representative Michael Froman (R) testifies before a Senate Finance Committee hearing on “President Obama’s 2015 Trade Policy Agenda” Photograph by Kevin Lamarque — Reuters

As the Obama administration this week tries to save the deal and get some Democrats to reconsider, it’s worth bearing in mind that policymakers shouldn’t always be so quick to blame free trade for job losses.
President Barack Obama suffered a big setback Friday in his bid to complete a Pacific trade deal, as opponents derailed a fast-track bill that would have paved the way for support of the Trans-Pacific Partnership. Although this is said to be the president’s signature trade deal, it’s not surprising that his own party went against his vision. Freer trade always seems to evoke ambivalent feelings.
Although 58% of Americans surveyed by Pew in May felt that free trade is good for the country, with few partisan differences, nearly 46% also believe that they lead to job losses and lower wages in the U.S. Early on, support was hard to come by. Many House Democrats felt that manufacturing jobs had taken a hit due to agreements, such as the North American Free Trade Agreement (NAFTA); they wished to build in added protections into future agreements. Senate Democrats raised a number of concerns about creation of the Trade Promotion Authority, which would have helped fast-tracked legislation for the massive trade deal involving 40% of the world’s economy, including the U.S., Japan, Australia, Canada and Mexico.
One concern had to do with currency manipulation, which is of particular concern for the auto industry. Debbie Stabenow (D-MI) noted during the Senate debate that currency manipulation can give foreign automakers a $6,000-$11,000 profit advantage per vehicle over U.S. ones.
Democrats also worried about potential job losses to countries such as Vietnam, Malaysia and Mexico, as was clear from the letter sent by 153 House Democrats to the U.S. Trade Representative on May 29.
Reportedly, 5 million manufacturing jobs have been lost in the U.S. since 2000, and some believe that job losses are due to pacts such as NAFTA. But what has been the real impact of the NAFTA agreement? As the Obama administration this week tries to save the deal and get some Democrats to reconsider, it’s worth bearing in mind that policymakers shouldn’t always be so quick to blame free trade for job losses.
Source: Forbes
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