Let the TPP Trade Wars Begin

Washington, DC (PanAm) – The final votes came in Wednesday at 5:30 p.m. The Senate passed the Trade Promotion Authority (TPA) bill after two previous attempts and a cliffhanging session when the motion to close the debate garnered the minimum necessary votes.

Photo Credit Fight For the Future

Photo Credit Fight For the Future

In Congress, the TPA will now set a time limit of 90 days after the president presents the bill to reach a decision on whether or not to adopt the agreement. By taking away the legislature’s ability to amend individual provisions, the fast-track bill also places the final negotiating responsibilities on the president. Yet, should Congress vote nay on the final draft of the TPP, the time frame could extend to various three-month cycles.The decade of negotiations on the Trans-Pacific Partnership (TPP), the trade agreement between the United States and 11 Pacific Rim countries, can finally come to an end.

“Some people say it will be a matter of weeks after the TPA is passed that the TPP negotiations could conclude fairly quickly, and I think that’s credible,” Bill Watson, trade policy analyst at the Cato Institute, told the PanAm Post.

Activists have held protests against different aspects of the TPP throughout the years spanning the negotiations. The TPA vote reignited groups such as “Flush the TPP” to organize events across the country protesting the “job killing act,” and others like Occupy Miami gathered to halt the fast-track bill, saying “workers, the environment, and our public health” will suffer as a result of increasing trade with signatory countries.

US workers will shift to more productive activities that make more money but cheap labor is not the only thing companies are looking for, Watson explained. There will be some that want to be closer to the US consumer market and a stable rule of law, leading them to invest in manufacturing in the United States, he said.“The fear of outsourcing and trading with countries that have cheap labor is a really simplistic approach,” Watson said, adding that industries protected by current trade barriers will see changes in investment and some will “shift away from domestic production and will be importing more — but that’s a good thing.”

Overrated Benefits

For the Electronic Freedom Foundation (EFF), a San Francisco-based nonprofit that defends civil liberties in the digital realm, the agreement’s main problems are the provisions in the chapter on intellectual property.

“It would result in bringing copyright laws around the Pacific Rim into line with US law — the bad aspects of US law but without replicating the good aspects,” EFF senior global policy analyst Jeremy Malcolm told the PanAm Post. More than half of the countries in the treaty, including Canada and Japan, would have to increase their copyright terms by 20 years without receiving fair use protection in exchange.

It is a “bad agreement,” said Malcolm, “if there are going to be new rules on behind the border issues, IP and data flows, and environment, then that should be done through an open, participatory democratic process where its fully transparent to the public.”

Supporters of the Pact believe in the benefits brought about for both consumers and manufacturers by trade liberalization. The non-profit Peterson Institute for International Economics (PIIE) published “The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment,” a study estimating the economic benefits of the TPP ahead of the official report from the US International Trade Commission.

The results show that the treaty would generate additional US exports of US$124 billion and real incomes of $77 billion by 2025, with similar annual increases thereafter.

The EFF, however, is cautious about such calculations, saying that they are historically exaggerated: “you just have to look at the history of this sort of agreements,” Malcolm said, “it has always been inflated estimates of how much this is going to contribute to the economy, and looking back it never lives up to the promise.”

Yet coauthor of the study Peter Petri notes that benefits would increases significantly “if the TPP template were adopted more widely, with other trading partners,” less like-minded than the current members.

“To the extent that the TPP liberalizes trade between the United States and the other countries involved, that would be good for the US economy,” said Cato’s Bill Watson. Using the example of the 25 percent tariff for trucks, he explained that lower tariffs would translate to more variety and lower prices for consumers.

Late yesterday, the House passed the Trade Adjustment Assistance (TAA), a bill imposing labor and health regulations on the TPP, which could add to disagreements over the effect on trade liberalization. “The TTP is bound to include caveats, exceptions, restrictions, that limit its economic impact,” Watson said, “so at the end of the day we need to see the agreement to know how much of an impact it will have.”

Negotiations could therefore get sticky when the finalized text is revealed, 60 days before being put to a vote in congress. This will give ample time for free traders and protectionists looking for a net benefit in the final agreement to voice their concerns.

Sound the trumpets; the trade wars have only just begun.

Written by Helena Ball for the PanAm Post.