Good-bye, TPP, and good riddance

It’s not often that politicians actually do what they promised to do before getting elected, but Trump seems to be that rare bird who will do what he said he would. The Trans-Pacific Partnership (TPP) was another bad trade deal that had little in it for U.S. manufacturing or labor.

Congress never formally approved the TPP, and some trade groups, including the Alliance for American Manufacturing (AAM), believed it was bad for business. In a blog I wrote last year about the 12-nation TPP, I noted that researchers from the Global Development and Economic Institute at Tufts University projected a “dire” outlook, “predicting that nearly 450,000 U.S. jobs would be lost due to the trade accord.” Tufts researchers at that time argued that the [TPP] agreement “will actually lead to further inequality ‘as measured by changes in the labor share of the national income.’ ”

Last year when I wrote about this topic, I noted that Robert E. Scott at the Economic Policy Institute (EPI), a friend of the AAM, “also predicts big job losses in part because the agreement doesn’t do anything concrete to address currency cheating.” The AAM projected that the TPP will lead to further inequality, noting that even if exports go up, it’s important to remember that imports also are likely to increase,” which will “displace jobs.” The AAM keeps track of manufacturing jobs and noted that more than five million manufacturing jobs were lost between 1997 and 2014, “most due to trade deficits with countries that have trade and investment deals with the United States.”

In a blog posted on Jan. 24, AAM notes that “while U.S. disengagement from the TPP could already be assumed (because it can’t pass Congress), Trump’s symbolic order signals he’ll follow through on the tough trade rhetoric of his campaign.” The AAM has been following the TPP negotiations for several years, and has consistently said that, unless this deal is improved to better protect American manufacturers by legislating against currency manipulation, restricting participation by state-owned enterprises (read, China), and enforcing stringent rules of origin, it might not be worth doing.

“This deal, as it stands, doesn’t sufficiently do those things. So we’re okay with President Trump’s order,” Said AAM President Scott Paul, “Withdrawing from the TPP is a first step in a long road toward reforming trade policy and we look forward to working with the administration on finding solutions to create trade deals that keep jobs here in America.”

Check out the blog I wrote on Oct. 2, 2015, where I outlined the countries involved, noting that two of them already have trade pacts with the United States: Mexico and Canada. The others, including the countries of Vietnam, Malaysia and our 121^st trading partner, Brunei, would seem to be countries that would export more t-shirts and underwear to the United States rather than buy a large amount of goods from us.         

The AAM’s blog noted that “The TPP wouldn’t have moved GDP very much. And the deal ultimately only would have added 128,000 American jobs over the next 15 years.”

To those who worry that we’ve just handed China an opportunity to develop its own trading deal with Southeast Asia, I say let them have it. Until they’ve taken care of their currency manipulation and intellection property theft problems, I doubt that any new deal with China will benefit its trade partners.