The Trans-Pacific Partnership trade agreement was signed yesterday in Auckland, New Zealand. The administration claims it will boost America’s economy, but many are skeptical. Senator Jeff Sessions released a statement that said, in part:
7,000 miles away, the President’s trade representative just quietly signed a massive, 5,544 page trade deal, with little fanfare from its supporters. Only months ago Congress voted to “fast-track” this deal, despite not knowing its contents. Even today, questions to the Administration about what the deal would mean for our trade deficits, jobs, and wages, are met with silence. The Administration continues to leave the American people in the dark.
Early analyses suggest the TPP would cause real economic harm to America. A Tufts University Study found that it would cost nearly 450,000 American jobs by 2025. Even the pro-trade Peterson Institute says that by 2030, the TPP would cut American manufacturing growth by 20 percent, resulting in 121,000 fewer jobs.
The deal further fails to meaningfully address harmful foreign currency manipulation that has been hammering critically needed American manufacturing and closing mills and factories all around the country. …
Alarmingly, the TPP also has a “living agreement” provision, guaranteeing that once implemented, Congress will have ceded its Constitutional authority to negotiate trade deals, permitting the negotiated TPP to be changed by a new international commission in which the United States’ vote counts no more than the Sultan of Brunei’s. This commission could change the agreement with respect to areas such as membership, immigration, and environmental policy For example, as Secretary of State Kerry has acknowledged, China could be added as a member, and Congress would be powerless to stop it. A living agreement is thus no agreement at all.
…While I’ve always supported trade, trade is not a religion. In many ways, trade has not been serving Americans well lately, and it’s time to be honest about that.
Proponents of the Trans-Pacific Partnership agreement (TPP), the trade and investment treaty recently agreed by the United States and eleven Pacific Rim nations, emphasize the prospective economic benefits, with economic growth increasing due to rising trade and investment. Widely cited projections suggest GDP gains for all countries after ten years, varying from less than half a percentage point in the United States to 13 percent in Vietnam.
In this GDAE Working Paper, the authors employ a more realistic model that incorporates effects on employment excluded from prior TPP modeling.
The Tufts study uses the United Nations Global Policy Model. The model used by proponents of TPP assumes that the agreement will have zero effect on employment or income distribution:
[T]he CGE model used excludes, by assumption, TPP effects on employment and income distribution, thereby ruling out the major risks of trade liberalization.
The Tufts study, using the U.N. Global Policy Model, concludes that TPP would have seriously adverse effects on several economies, including that of the United States:
* TPP would generate net losses of GDP in the United States and Japan. For the United States, they project that GDP would be 0.54 percent lower than it would be without TPP, 10 years after the treaty enters into force. Japan’s GDP is projected to decrease 0.12 percent.
* TPP would lead to employment losses in all countries, with a total of 771,000 lost jobs. The United States would be the hardest hit, with a loss of 448,000 jobs.
* TPP would lead to higher inequality, as measured by changes in the labor share of national income.
Congress has already voted to fast track TPP, but the agreement itself has yet to be voted on. At a bare minimum, it should be subjected to intense scrutiny and debate.