Ridicule Sightings – TPP (Trans-Pacific Partnership)
(Daily Life : Kwokmanation
, Trans-Pacific Partnership
Ridicule Sightings – TPP (Trans-Pacific Partnership)
28th December, 2016
What is TPP? We hear about it often, mostly in negative narratives, over the last two years. Most republicans oppose it. Some outspoken republicans, such as Kentucky Senator Rand Paul, are in favor of it. So what is it? The Trans-Pacific Partnership is a trade agreement negotiated among twelve of the nations along both sides of the Pacific Ocean. Notably, the twelve nations do not include China, even though it’s one of the dominant countries in this area. The twelve countries involved in this trade agreement are Singapore, Brunei, New Zealand, Chile, United States, Australia, Peru, Vietnam, Malaysia, Mexico, Canada and Japan. The Purpose of the TPP is to lay down the groundwork for these twelve countries to do businesses together. One may ask why we need the TPP, since the United States has already been trading with these foreign countries. It’s true that American products are already being sold to, and in some instances made in, these countries. However, Americans often complain about unfair trade practices of foreign countries, such as tariffs, cheap labors and government subsidies, etc. A multi-national trade agreement provides the unique opportunity to address these issues and allow different nations to trade on terms that are fair and acceptable to all parties.
Different countries have different priorities. Developed countries are generally more concerned about human rights, intellectual properties, labor standards, regulations, good governance and environmental protection than developing countries, but these concerns could become an economic burden and reduce their competitiveness relative to developing countries, which are more lax with these requirements. Some developing countries are also riddled with corruption, which makes it extremely difficult for foreign companies to operate in. TPP works to bring together decision makers of twelve countries and negotiate a set of rules to follow, so that each party will compete on the same terms. Larger partners, such as the United States and Canada, generally have a bigger influence on these trade deals. It’s an opportunity for the developed countries to ensure that their trading partners in developing countries address human rights and environmental issues and enforce fair trading practices. It’s not to say that every country will agree to convert to clean energy and establish minimum wages. These topics are controversial even in developed countries. Nonetheless, it’s hard to imagine that these deals would harm the biggest partners involved. In fact, multiple independent studies find that the TPP would strengthen the economy of the United States. The fact that China is left out of the TPP gives the United States a leg up over China in the Pacific region.
You may ask why the smaller partners would agree to negotiate with the bigger partners if the terms usually favor the bigger partners. Well, they need to trade and they need stability. Making a quick fortune on cheap labor may work at the moment but it’s not sustainable. Unpredictable and turbulent economies lead to social instability, which isn’t good for anyone. Moreover, the TPP benefits all the partners involved. The larger partners such as the United States would enjoy slight improvement in GDP and labor participation, while maintaining a foothold in the Pacific region, safeguarding their existing economy. For smaller countries, the improvement would be much greater in scale. It’s easy for Americans to dismiss the TPP when it seems the benefits for the United States seem minuscule in terms of percentage, but it’s important to note that the United States is a wealthy nation and it’s commendable to be able to not lose ground.
The World Bank Report and the U.S. International Trade Commission Estimate both predict that the TPP would have a small but positive effect on the GDP of the United States, to the tune of less than one percent by 2030. Unskilled and skilled real wages would also increase by less than one percent in the same period. These don’t seem much, but the current real wages have been decreasing when taking inflation into account. Not losing more ground would indeed be an accomplishment. Besides, trade deals such as the TPP increase trading activities and keep workers working. That’s very important for Americans even if wages don’t go up. Moreover, this is the positive effect of just a portion of the economy. There are other parts in the economy of the United States. If each part brings in a tiny improvement over time, Americans will fare pretty well.
Many politicians criticize everything they can find when the economy isn’t improving. When people are suffering, it’s much easier to find angry supporters than to propose remedies. It’s unfortunate that even remedies that could ease the pain are put aside and destroyed for political gains. These self-serving politicians put their own interests over the people of the country. They work to divide the people and put races against races, groups against groups. Ironically, the angry people flock over to them and willingly hand over their livelihood to these scaremongers. As such, TPP has fallen victim to politics and will never be implemented. It’ll be ironic if the other eleven countries, now seeing that the United States has opted out, solicit for the participation of China and shut the doors on the United States in the Pacific region.