If you watch the Democratic convention, you saw the red signs saying “no” to the TPP. The TPP stands for the Trans Pacific Partnership agreement.

President Obama supports it. Bernie Sanders and Donald Trump are against it.  Hillary was, but now is not, for it..

Those who love and support our nation’s leader, are somewhat puzzled why he of all people would support it…. What’s good about it?

Basically it involves 12 countries:  Japan, Malaysia, Singapore, Brunei, Australia, New Zealand, Vietnam, Canada, Mexico, Chili, Peru, and the US…

It desires to deepen economic ties between these nations by lowering tariffs and to increase growth via trade.

Member countries are also hoping to foster a closer relationship on economic policies and regulation.

The agreement could create a new single market something like that of the EU.  (The EU was very good for increasing the quality of European citizenry life, something the Brits are belatedly realizing as with each new day, a new Brexit crises emerges….) which could counter the influence of China’s mega economy.
Not all tariffs – which are taxes on imports – are going to be removed and some will take longer than others. But in all, 18,000 tariffs will be affected.

These particularly pertain to agricultural products and industrial goods.

Tariffs on US manufactured goods and almost all US farm products will disappear almost immediately once the deal is ratified, which would make our products cheaper (than they appear today) in foreign markets.

Below are some of the winners:

Carmakers

  • Some of the world’s biggest car firms based in Japan, such as Toyota and Honda, would benefit from getting cheaper access to the US, which is its biggest export market
  • Japanese carmakers may be able to manufacture US-bound cars with parts bought from elsewhere in Asia, as the deal enforces minimums for locally sourced materials
  • Meanwhile, US vehicle exports would also grow if car tariffs as high as 70% in growing emerging markets such as Vietnam are removed

Farmers

  • Farmers and companies behind foods such as US poultry, which are currently taxed up to 40% in some cases, will benefit if those taxes are cut or eliminated. This will benefit Lower Delaware.
  • US soybeans, for example, can be taxed as much as 35%
  • Beef farmers are also set to gain on the reduction or elimination of tariffs on the meat into Japan, Mexico and Canada over 10 years
  • Other foods that would see 98% of the taxes eliminated include dairy, sugar, wine, rice and seafood
  • Big food exporting countries such as Australia and New Zealand will benefit from the move

    And the losers:

Local job markets

  • Labor groups are worried it would result in jobs leaving developed economies such as the US and being sent to countries with lower wages and less strict labor laws.
  • The deal  intensifies competition between these countries’ workforces.
  • Vietnam is considered among the big winners, as analysts predict the deal would boost its growth by 11% in the next 10 years as firms move factories to the low-wage country.
  • But for less developed economies, it will also mean they have to abide by international labor laws, such as introducing a minimum wage.

Drugmakers

  • The deal gives pharmaceutical companies up to eight years of protection for new biotech drugs (expensive medicines produced in living cells), rather than 12 years of protection pushed by the US
  • Activists argue that blocking rivals from making copies of the drugs will drive up the prices of prescription drugs and make them more expensive for people in poorer countries
  • It could also strain national healthcare budgets and keep life-saving medicines from patients who cannot afford them

Tech firms

  • Tech giants such as Google and Uber will see restrictions removed on sales in foreign markets, along with requirements that they establish local infrastructure
  • The countries also vowed to lower global roaming charges through regulation, which could result in increasing competition among telecoms giants.

 

In synopsis the benefit of the TPP would be that a group of Asian trading countries would develop across the Pacific similar to the EU, which would jell before China got out from their own borders and did the same thing.  This is one valid argument for supporting the TPP…  it protects the American economy for a longer period of time against being slaughtered in the future.

If instead of us, China had signed a similar deal and America was the one shut out, we would be paying higher tariffs to import our goods across and into the Pacific Rim than would China..

What this means for our economy is that a business instead of having 40 orders a year, could now possibly get international business and increase that to 60 orders a year, which would require more hours, more purchases of equipment, more manufacturing, which would all boost the actual economy.

The reason for the anti TPP movement comes behind the real effects of NAFTA.  Many firms went to Mexico because labor was cheaper.  Most American auto parts are made in Mexico now, believe it or not… That means though you assume your Ford, Chrysler, or GM car is American, it was sort of created through foreign labor.  We lost jobs through NAFTA. But we got cheaper cars, cheaper products, cheaper produce, and cheaper drugs…

So it becomes a trade-off one cannot predict.  Does the benefit of having one’s dollar stretch further balance the loss of one’s job?  Obviously that depends who what happens to you individually.  Sadly, we can’t determine until it happens where that line will fall… If we lose more jobs than we gain in stretching our dollars further, then it will be bad over all.  If the reverse is true, it will be good… and it may be a wash… It is too complicated of a process to predict…

It would be wise to reflect there was (and still is) much fear in the EU over its formation and implementation… As Brexit proved, it is still a divisive and controversial topic.  But as someone who knew the Europe of before and compares it to the Europe of today, there is no question that joining the EU has been beneficial to all nations involved… So much so that new nations line up to ask to be included.

The prime negative is that this agreement benefits corporate trade which can now move freely between nations, while penalizing labor which must stay rooted where they live.

It is that valid concern, one that directly affects people, as in real human beings, that has caused the controversy now surrounding the TPP.  It would be nice to have an agreement across the Pacific as has Europe among itself, but one with the labor protections that Europe built in, as opposed to absolutely none on which the Asians insist…

That is the stumbling block.

 

 

 

 

Advertisements