The Trans-Pacific Partnership: Vital to America's Economic Interests
Trade is all too often blamed for the economic challenges our country faces. This is especially the case in this campaign season where America’s engagement globally is under assault. In an increasingly interconnected world, however, no country, least of all the United States, can or should revert to isolation. With tens of millions of U.S. jobs dependent upon trade, and foreign consumer markets opening like never before, erecting new barriers to commerce will only damage our economic prospects.
This is why we must ratify the Trans-Pacific Partnership (TPP)—an agreement between the United States and eleven Pacific Rim nations that represents a major economic and strategic breakthrough for the United States. TPP will not only cement America’s role in authoring this century’s global trade rules, it will also reinforce U.S. strategic leadership in the Asia-Pacific region, which is critical to our prosperity in the twenty-first century.
Failure to pass TPP in the U.S. Congress will send a message of weakness, retreat and unreliability to our Asian and Latin American friends. In Asia, the agreement is viewed as the economic centerpiece of the U.S. commitment to the region.
Trade issues—particularly the TPP—have become the villain in the U.S. presidential campaign. Candidates from both parties are blaming trade for the stagnation of middle-class wages. While trade has affected most industries, without sufficient job training and retraining opportunities, it is all too often used as a scapegoat to mask trends in technology, advanced manufacturing and market-driven supply chains that account for the bulk of the problem of displacement. Trade is driven by markets, not trade agreements, which are essentially enacted as an effort to create a more level playing field.
While expanding trade is a net plus for the United States, there are losers as well as winners. There should be ample resources to help those who have lost jobs due to trade or technological change. But funding for trade adjustment assistance has been declining. The proper remedy for job insecurity is not protectionism, but stronger support for vocational training and education vouchers, portable healthcare insurance, and wage insurance.
Boosters and detractors tend to exaggerate the effects of trade. Increasingly so, passion replaces facts in campaign rhetoric—some candidates proclaim China an unfair trader and threaten retaliatory measures. The problem with that approach is it would only generate an equally forceful response from China toward U.S. exporters. A better approach would be to raise standards for trade in the region that those like China might aspire to, or risk losing market share.
The TPP agreement would set the rules in the Asia-Pacific region with U.S. leadership, and would build on the U.S. trade deals already in place with the six nations in TPP. These include Mexico and Canada, two of our largest trade partners. But the twenty-year-old North American Free Trade Agreement (NAFTA) is outdated, as it fails to take into account many of the bedrock issues confronting today’s digital economy. The TPP agreement addresses many of these concerns, and upgrades NAFTA to better benefit U.S. businesses, workers and consumers.
TPP is not a perfect deal. It does, however, reaffirm our rebalance to Asia and bolsters our economy. The agreement promises to lower and eventually eliminate tariffs on American exports, while also raising standards on issues including labor rights and environmental protection. It further cements trading relationships with our partners in Latin America—a region that has become the fastest-growing trade partner to the United States over the past decade. The Peterson Institute projects that TPP would increase real incomes in the United States by $131 billion annually by 2030.
Perhaps the deal’s most noteworthy attribute, however, is its victory for America’s future in the Asia-Pacific region. Already, South Korea, Indonesia and the Philippines have expressed interest in joining TPP. It provides an opportunity to redirect China—thus far excluded from the TPP agreement—and to encourage it to play by a common set of tougher rules. China, which conducts large volumes of trade with TPP countries, namely Japan, Malaysia and Vietnam, will have little choice but to abide by the higher standards imposed by TPP if it wants to maintain key trade partners in the region. The TPP will energize China’s current reform process and potentially even pave the way for broader regional cooperation in the future.
After eight years of negotiations, it is time for the American people to put the interests of our country ahead of partisan politics and judge this historic deal on the basis of its content. The TPP presents us with an opening to secure our strategic interests at a time when much of the world around us is in turmoil, and to shape the future of global trade. Failure to do so would come at great cost to the U.S. economy and U.S. leadership. There is a tight window to approve this deal, and it must not be squandered.
Governor Jon M. Huntsman, Jr. is Chairman of the Atlantic Council and served as Ambassador to China from 2009–11. Gary Locke served as Ambassador to China from 2011–14.
Image: Close-up of a ten-dollar bill. Flickr/@frankieleon