Trade Pact Rising From the Ashes?

Only a few weeks ago, it appeared the Trans Pacific Partnership (TPP) trade pact was doomed to failure and mostly because U.S. President Barack Obama was unable to rally sufficient support from his own party. It appears that after seven years, this massive free trade agreement (FTA) might now actually come to fruition.

The TPP would register as the biggest trade deal agreed to in decades and cover some 40% of global trade. The pact was supposed to be the centerpiece of Obama’s shift towards Asia and has been stalled by domestic opposition as well as, to some degree, its low popularity in Japan.

Democrats in the U.S. Senate and House have been far from convinced regarding the TPP’s potential positives. Many chose to actively oppose the president in public, asserting that trade in general is not in the interests of the unions and the middle class in the U.S. They base that assertion on that notion that jobs have left the country as companies seek cheaper locations to produce and pointed out that goods from these low-cost nations will have an advantage when they are imported into the US. The counter argument is that the U.S. also exports and needs these markets to compete. The question is: Are there as many jobs added by foreign trade as there are jobs lost? It depends on whom one asks and what measures are used.

The position that the Obama White House has taken is that gains outweigh losses, as many of the negative aspects of global production will take place with or without the TPP. Companies seeking low-cost production will not be in the U.S. under any circumstances unless the U.S. simply becomes highly protective. The real issue is how the U.S. can find a way to gain as much from globalization as it potentially loses. That may very well be within reach via the TPP and pacts like it.

- Chris Kuehl, PhD, NACM economist and cofounder of Armada Corporate Intelligence

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