Trans-Pacific Partnership agreement finally reached: Should the U.S. be in or out?
After over 10 years of negotiations spanning changes in leaders and administrations across multiple countries, the Trans-Pacific Partnership (TPP) was agreed upon in Atlanta, Georgia earlier this month. The partnership encompasses 12 countries, which account for nearly 40 percent of world trade and have a combined population of approximately 800 million people.
The member countries include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. A notable omission from the list of participating countries is China.
The TPP will, in theory, eliminate tariffs on goods and services between the member countries, as well as address contentious issues such as intellectual property and labor laws.
— Fortune (@FortuneMagazine) October 20, 2015
The deal is considered a huge foreign policy victory for the Obama administration but has been received with mixed reviews by politicians from both parties. Two front runners for the 2016 presidential election, Hillary Clinton and Donald Trump, both oppose the deal. Clinton told PBS NewsHour that, “What I know about it as of today, I am not in favor of what I have learned about it. I’ve tried to learn as much as I can about the agreement, but I’m worried.” Trump was more outgoing when expressing his opinion on the partnership: “The incompetence of our current administration is beyond comprehension. TPP is a terrible deal.”
According to a Gallup opinion poll, the American public is split on the issue as well. Of the participants, 16 percent of Americans believe that removing the United States from the agreement would be very effective for improving the economy, while 24 percent do not think it would be effective at all. The rest fell somewhere in the middle, with 15 percent not having an opinion.
While the TPP will open up new economic opportunities, free trade agreements can have negative impacts on certain industries. Removing protective tariffs and barriers from certain industries can pull jobs away from the United States and create an imbalance in exports versus imports. After the North American Free Trade Agreement was signed in 1994, many manufacturing jobs in the United States were lost to Mexico, and trade deficits with both Mexico and Canada increased significantly. Many worry that the TPP will push American manufacturing jobs in the auto and aerospace industries to countries that can pay cheaper wages, such as Vietnam or Malaysia.
Although the partnership has been agreed on by negotiators, it still has a long way to go before it becomes reality. It must get through an incredibly fractured Congress before the deal is ready to be signed by the president.
Can a trade agreement focused on nations in the Pacific be effective without Chinese involvement? Will a free trade agreement benefit corporate earnings at the expense of American jobs? Feel free to leave a comment or find me on Twitter @Andrew_Morse4