WHY MR. TRUMP OPPOSES THE “TPP” TREATY

trans-pacific-partnership

Assuming that Mr. Trump means what he says — not a very solid bet — about the Trans-Pacific Partnership Treaty (“TPP”), which he claims to oppose, there is method to his misgivings. Let us examine these, but first, let’s look at the Treaty itself, summarized here https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/october/summary-trans-pacific-partnership by the U. S. Trade Representative at his website.

For those who may decline to read the entire summary, here’s the five key components of the Treaty that Mr. Trump says he opposes :

Five defining features make the Trans-Pacific Partnership a landmark 21st-century agreement, setting a new standard for global trade while taking up next-generation issues.  These features include:

  • Comprehensive market access.  The TPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services and covers the full spectrum of trade, including goods and services trade and investment, so as to create new opportunities and benefits for our businesses, workers, and consumers.
     
  • Regional approach to commitments.   The TPP facilitates the development of production and supply chains, and seamless trade, enhancing efficiency and supporting our goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets. 
     
  • Addressing new trade challenges.  The TPP promotes innovation, productivity, and competitiveness by addressing new issues, including the development of the digital economy, and the role of state-owned enterprises in the global economy.
  • Inclusive trade.  The TPP includes new elements that seek to ensure that economies at all levels of development and businesses of all sizes can benefit from trade.  It includes commitments to help small- and medium-sized businesses understand the Agreement, take advantage of its opportunities, and bring their unique challenges to the attention of the TPP governments.  It also includes specific commitments on development and trade capacity building, to ensure that all Parties are able to meet the commitments in the Agreement and take full advantage of its benefits. 
     
  • Platform for regional integration.  The TPP is intended as a platform for regional economic integration and designed to include additional economies across the Asia-Pacific region. 

As for what countries are to be treatied with, read this brief excerpt :

On October 4, 2015, Ministers of the 12 Trans-Pacific Partnership (TPP) countries – Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam – announced conclusion of their negotiations.

You will note which major countries are NOT on this list : China and Russia. They’re not on the list because it is they who the “TPP” Treaty is aligned against. The “TPP”‘s first purpose is to take macro-economic control of the entire Trans-Pacific area, twelve economies aggregating well over one billion people who together command almost 50 percent of the world’s gross economic output. It’s also a region in which the United States has long claimed a major role economically and as a national security interest. We have fought two major wars, and two lesser ones, within the region for precisely these reasons. In each of these wars, either China or Russia — occasionally both — have been our adversary, and both maintain an adversary position to us : Russia by force and espionage, China by economic manipulations.

Opposition to our agreeing the “TPP” arises from several directions, chiefest of which is a perception that because prior global trade treaties have resulted in accelerated loss of low value-added jobs, they are a detriment, not a benefit. This argument misreads the trade treaties it opposes. The jobs that went to low-wage countries on account of these treaties were not likely, in any case, to survive the enormous productivity innovations that have since come to market — innovations that have almost entirely remade our production economy; the trade treaties may have sped up these innovations, but they did not cause them. Meanwhile, prior trade treaties have dramatically lowered the USA prices of many consumer goods, enabling millions of buyers who previously could not buy — and, in the process, providing boom times to importers, distributors, salespeople, and budget retailers. Where would Costco, Wal-Mart, H & M, Forever XXI, Charlotte Russe, Madrag, and hundreds more low-price goods retailers — and all of their employees — be ?

Granted that almost all the jobs made feasible via trade treaties are service jobs, not manufacturing, but so what ? A job is a job. As long as the pay is fruitful — not by any means assured, although union organizing in the service sector is boosting workers’ pay — the important thing is the job itself. May I add that work in the service sector is usually far safer than in manufacturing ?

Trade treaties also have helped our exporters, of which Boeing is by far the largest; the world’s leading aircraft manufacturer accounts for almost one-third of our export dollar goods. as Boeing employs some 150,000 people, most of them very high wage, its prosperity is hardly a minor advantage for trade agreements involving us.

“TPP” would expand the export factor by eliminating tariffs between the 12 agreeing nations, setting rules for currency arbitrage, instituting workplace rules common to the treaty signers, and enabling movement (for job purposes and otherwise) among the signers’ citizenry, a huge boost to their future prosperity, and giving them all an advantage over the economies of Russia and China and their populations. (Of course nations as large as Russia and China aren’t going to be disabled by exclusion from the “TPP,” but surely their citizens would certainly prefer to have more economic options than fewer.)

Mr. Trump opposes this cross-border movement of peoples, economically and culturally (although his insult to other nations may be his way of persuading people to oppose economic choices without realizing that its’ the economics of them that truly move him.). Why does he oppose ? His plan looks quite comprehensive to me :

First : he proposes that America become an entirely self-contained economic zone. No immigrants coming here to work in it, no cheap foreign goods coming here to under-price goods made in the USA.

Second : he would cut corporate taxes way back, enough so that low taxes would allow manufacturers to retain more money than sharply higher US wages would cost them, thus offering manufacturers an economic inducement to bring operations back from overseas.

Third : he intends to increase the customer base — and the wage heft — for repatriated manufactures by launching a one trillion dollar infrastructure program that would require hundreds of thousands of new hires in the highly-paid building trades sector. (This, if it could be done, is a major priority for building trades’ workers even in Boston, where the building boom has meant boon times for hard hats.)

Fourth : cutting taxes and appropriating a trillion Federal dollars for infrastructure would increase Federal debt by at least that amount, but with interest rates barely above zero, Mr,. Trump can borrow the money almost for nothing.

Fifth : rather than compete economically with Russia and China, Mr. Trump seems to propose allowing them to take the risks — as he sees them — of global trade, offering them friendship in exchange for their non-interference with a self-contained American economy.

Mr. Trump’s vision, if he means it, is not impossible. The Constitution, when agreed to, was itself a kind of economic trade union between independent states. One of its express purposes was to promote trade between the agreeing states; and this purpose has worked so well that today we do not see that America still is, at bottom, a common market, a trade treaty trade zone. Furthermore, we are a large enough trade zone to be able, perhaps, to prosper entirely within ourselves, given appropriate trade and profit rules. If Mr. Trump’s recommendations for disallowing immigration, disadvantaging foreign trade, and creating the largest Federal jobs program since the 1930s could work, the risks he assumes might be worth taking.

Yet again, what I said about exporters being benefited by trade treaties, and consumers being enabled by low prices for imported consumers goods, applies to Mr. Trump’s common market vision of America. His market would make export all but impossible (this too has happened before, President Jefferson’s embargo order of 1808 being a most discouraging example); would eliminate low-price import clothing and durables; and would deny our economy the perspective of immigrants, thereby disabling much of the innovation that makes our big cities such  dynamic business zones.

Nor is there any guarantee that manufacturers bringing production back to America would pay the much higher wages needed to make an exclusively American common market work. As long as stock speculators control share prices in search of quick-hit arbitrage profits — as long as high-speed hedge fund traders control the workplace decisions of corporate managers — employees will be treated as cost items to be reduced, not as asset items to be enhanced. So far I have seen not one word from Mr. Trump about the vital need to change how traded corporations account for employees. I have suggested that they be carried as an asset item on SEC reports, not as an asset item, and i have called for a new GAAP rule that would require such employee attribution. Without such a rule, or something approximate, Mr. Trump’s hermetic common market America offers workers and their families no sort of improvement over what the TPP proposes.

NEXT : the unavoidable internationality of oil & gas trade.

—- Mike Freedberg / Here and Sphere

 

Author: hereandsphere

Here and Sphere is an online journal of news, opinion, reviews, advice, & bits n' pieces of everything else - from HERE to SPHERE...... Co-founded by Michael Freedberg, a long-time Boston Phoenix journalist, and Heather Cornell, a South Coast Massachusetts columnist and editor.

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