The deal we don’t know about

Sercan Oktay, Contributing Writer

On Feb. 4, the Trans-Pacific Partnership (TPP) trade deal was signed in New Zealand by representatives from 12 Pacific Rim countries. Members of the partnership include the United States, Japan, Canada, Australia, and Mexico, along with other major economies. This is one of the biggest trade deals ever signed with participants comprising almost 40 percent of the entire world economy.

The TPP’s main purpose is to promote free trade between member countries by removing trade tariffs on more than 18,000 products, placing stricter protection laws on intellectual property, and setting better labor and environmental standards. In theory, these incentives will stimulate countries to trade with each other on a larger scale without being confined by high taxes or restrictions. The inclusion of labor and environmental protection clauses will shelter these assets against the vast expansion of markets among the 12 countries.

So far, the TPP sounds like a win-win deal: increase in trade leads to expansion in the economies of member countries, while labor and the environment are protected against negative consequences. So why have we seen barely any coverage on a deal which is estimated to add $100 billion income annually to the U.S. economy alone? Similarly, why hasn’t there been more discussion within Congress about a deal which the Office of the United States Trade Representative (USTR) claims will change the rules of global trade in ways “that will help increase Made-in-America exports, grow the American economy, support well-paying American jobs, and strengthen the American middle class?”

The full text of the deal, which has been under negotiations for the past seven years, was made public only three months prior to the meeting in New Zealand, leaving little room for debate in or out of Congress. To make matters worse, President Barack Obama obtained “fast-track authority,” giving him the ability to expedite the TPP negotiations and quickly present it as a bill to Congress. These developments confirm criticisms about the TPP not being transparent enough and rightfully bring into question whether this deal is all that it is thought to be. A closer look into what the TPP will entail shows that these criticisms are well-founded.

While lower tariffs increase trade and imports, this will not translate into widespread benefits for the general population. With average wages in the United States being higher than all other TPP members, it will be more profitable for U.S. firms to outsource a wide variety of jobs overseas. Combining the outsourcing with little to no taxes being imposed on imported goods will allow firms to produce goods outside the United States for a much lower cost. This will have the exact opposite effect of what the USTR claims; more goods will be be produced out of the United States and jobs will be transferred outside the country. The other member countries with lower wages will see them lowered even further due to increased competition.

We must also keep in mind that tariffs are not merely ways for the government to increase revenue; many industries depend on protective tariffs in order to stay in business. This deal will put these industries at risk by making them vulnerable to outside competition. The TPP puts businesses at even greater risk by including numerous clauses which give firms deregulated abilities to conduct business in member countries as they see fit and, in some instances, even grant exemption from adhering to domestic laws related to trade.

The TPP is a detrimental deal. Whether it is the way that this deal will take advantage of the negative effects of globalization, or the way that it further deregulates trade involving large businesses, it will cause more harm than good for anybody other than large firms who have the capacity to exploit this system of global trade.

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