Democrat Schism on Trans-Pacific Partnership
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Despite broad support from mainstream economists, the Trans-Pacific Partnership deal is losing political support in America.
President Barack Obama has doubled down on the deal, announcing his intentions to pass the legislation and his hopes that both the Senate and U.S. House of Representatives will support the deal. However, some 80% of Democrats in the Congress have announced they will not support the deal.
Despite broad support from mainstream economists, the Trans-Pacific Partnership deal is losing political support in America.
President Barack Obama has doubled down on the deal, announcing his intentions to pass the legislation and his hopes that both the Senate and U.S. House of Representatives will support the deal. However, some 80% of Democrats in the Congress have announced they will not support the deal.
The plan is extremely unpopular throughout the United States, with critics arguing that it will increase imports without increasing exports, much as free-trade agreements between the U.S. and South Korea, Japan, and other Asian countries have failed to create demand for U.S. products in those countries. However, proponents of the pact say that it will cause a rising tide for both sides of the pacific, allowing each nation to become more competitive by lowering barriers to international trade and making markets more efficient.
TPP’s Streamlined Trade
The TPP was to allow for more streamlined and efficient trade, with sacrifices made on both sides of the agreement. The agreement stems from a 2005 agreement between Singapore, New Zealand, Chile, and Brunei, with the U.S., Peru, Vietnam, and Australia joining in 2008. Since then, six nations have either joined or announced interest, with Taiwan and South Korea hinting that they will join the agreement eventually.
The agreement benefits small and medium-sized businesses by lowering trade barriers across nations. Additionally, it argues the liberalization of markets, streamlining regulations so that they are in harmony across national borders, and increasing competitiveness and boosting jobs both in the U.S. and abroad. It also mandates a limited level of intellectual property protection in an effort to curb trademark breaches and ignoring of patent protections across Asia and the U.S.
Controversial Agreements
The agreement, which has received minimal news coverage in the U.S., has remained a hotly debated topic amongst politicians and analysts, with Senator Elizabeth Warren and Representative Alan Grayson criticizing the pact for being of limited value to American workers. Warren and others have also criticized the secrecy of the negotiations, in addition to worries about the pact’s elimination of tariffs and avoidance of currency manipulation issues, which could make the U.S. more disadvantaged in the long term.
Additionally, some economists such as Joseph Stiglitz have argued that the TPP may be beneficial to holders of capital and investors, but it could cause acceleration in the decline of real income growth amongst non-managerial workers in the U.S.
FTA Legacy
Several economists have attacked the agreement as being the recent in a string of free trade agreements that have failed to boost U.S. exports abroad. Recently, enactment of a free-trade agreement between the U.S. and South Korea in 2010 has failed to boost total exports from the U.S. to South Korea. Some analysts have argued a new TPP will have the same effect as the FTA with South Korea, only on a much larger and more damaging scale.
Other analysts point to NAFTA as a historical precedent for the TPP. After NAFTA came into effect in 1994, the U.S. trade balance with NAFTA partners fell from slightly below zero to over $150 billion in 2008. The trade balance has slightly recovered to about $100 billion with NAFTA partners since then.
