Trump is Correct: TPP isn’t a Fair or Free Trade Agreement

Since the democratic and republican primaries, trade has become a central issue mainly due to the rhetoric of Bernie Sanders and Donald Trump.  Although Hillary Clinton jumped on the bandwagon, her insincerity did not add to much credibility to her position or even inform others on her position to international trade deals in particular the TPP (Trans-Pacific Partnership) and TTIP (Transatlantic Trade and Investment Partnership), given her documented back and forth between supporting and being against the agreements.

I learned of the TPP years ago but only read of its details when portions of the massive 12 nation trade deal was released by WikiLeaks.  This was verified by a release of the document by member signee New Zeland some few months later. For some reason, it is considered a good deal and represents all associated with “free trade.” Unfortunately, TPP is never discussed in nuance – in respect to free trade versus fair trade. Many feel that since President Elect Donald Trump has vowed to scrap TPP and readdress previous deals such as NAFTA that free trade will take a major hit and will strike a strong blow against US economic prosperity and the average citizen.  However in my simple view, this is and will not be the case.

The market the TPP addressed represented 40 percent of the global economy and from reading it, one can reasonably question two pertinent points of order: 1) does it place foreign interest over US interest and 2] does it place global international corporate interest before US corporate interest? In addition, no one seems to ask if the TPP portends significant economic benefits and/or whom are these benefits for? I ask this because now, both Elizabeth Warren and Bernie Sanders and other democrats have reversed course and are saying it would be bad to renegotiate it since Trump plans to table the deal.

For starters in the US, the TPP if implemented will lead to the creation of only a small amountof jobs. In reading the text, it is clear that there are no parameters that mandate or even suggest that the other eleven signees invest in the US but rather that the US and other nations invest in all nations in exclusion of the US. For example, not including the main body of the TPP agreement, it also includes 58 side agreements of which Japan alone enjoys 14 of these.  These specifically lay out distinctive conditions for Japan’s participation in the TPP for targeted economic sectors they feel are essential for their domestic economic advantage. Is this free trade? Is this fair trade? If it isn’t, it supports the contention of what one of the writers of a blog I regularly read when he stated: “free trade is an unwise policy that has a cascade of negative consequences” and that as a policy “inevitably produces poverty and economic instability, not prosperity.”

Thus from this purview, this Trans-Pacific Partnership will do nothing in reality to address the dwindling US middle class or increase stagnant wages experienced by the majority of US workers and most likely make their economic condition even worse. To begin with, the nations involved in this deal are not equal and vary in many respects.  National wealth, standards of living, wage differences and even currency valuation. In fact most of the TPP doesn’t even address trade but rather investment. The most significant parts of the TPP pertain to investment provisions that make it easier and beneficial for US corporations to put more loot in these nations in the form out sourcing jobs and production to these eleven nations more than serving to increase wages for US workers and job growth.

With most of the 25,000 plus categories of exported good, the US exported basically nothing to TPP nations over the past few years which mean US exporters and producers will remain at a virtual disadvantage to the other eleven participant nations.

Then there are wages. Macro and micro economic theory historically has documented that wages are a major part in the cost of producing goods. Karl Marx even wrote a book on this concept. Thus US corporate interest can only reap large profits via an overall decrease in wages by having these products produced in nations in which wages are substantially lower than they are in the US. This means if this is the definition of free trade, it only means a massive transfer of wealth from US workers to nations outside of the US. Thus meaning that the real and only winners being US transnational corporations and Wall Street. This is even without the consideration of currency manipulation. Since presently the dollar is freely traded in markets as the world’s reserve currency, it will never be in a position to compete with member TPP nations since most engage in some form of currency manipulation that give their products an inherent competitive advantage over US goods.

One doesn’t have to take my word for it. The Peterson Institute , Economic Research Service report and the World Bank show limited if any benefits from the TPP and indicate that gains (if any) to the US economy will be negligible in regards to GDP.  This is even supported by economists at Tufts University, which predict a net GDP loss for the US via TPP. Another study reports that increases in imports from these countries will result in significant job dislocations and wage declines in the U.S. which means US workers will have to settle forlower-quality jobs.

TPP from my analysis will only mean unequal growth for the US economy compared to the other member nations. Sure, the macroeconomic benefits of the deal are unquestioned, but from my point of view the issue should be the microeconomic impact in the US. If I remained honest, the TPP clearly is more about China than trade or economic development in the US the way in which President Obama describes it. For it will only impoverish the US working class even more, resulting in an even more downward trend on wages, meaning US workers would not even be in an economic condition to by these products. To put it as plainly as possible, the more we import, the more US jobs are displaced (see 2012 US–Korea free trade agreement. 

What proponents of the TPP (Obama Administration, IMF, World Bank, transnational corporations & Wall Street) forget is that you can’t have true free/fair trade without addressing at a minimum currency manipulation and Value Added Taxes (VATs) applied to American exports at the port of entry. But this makes too much sense and common sense in modern economic policy since the Clinton administration has long been thrown out of the window to benefit the top 1% instead of the average US family.