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U.S. Presidential Candidates are Wrong on the TPP

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The historic Trans-Pacific Partnership (TPP), put together at the end of last year and signed at the beginning of last month, has not come into effect yet. Nonetheless, presidential candidates have spared no effort decrying it. What started off as a brainchild of the Bush administration in 2008, when the U.S. joined a 2005 trade pact between New Zealand, Brunei, Chile and Singapore, has quickly turned into a political piñata used by presidential hopefuls to score points.

While no trade agreement is ever perfect—and the TPP has its share of issues—the criticism and media attention focused on thrashing this pact is unprecedented.

Take, as any discussion on the candidacies must unfortunately include, the views of Donald Trump. The Republican front-runner has somehow decided that China would actually benefit more from the agreement than any other nation. During a November Republican debate, Trump falsely claimed the deal “was designed for China to come in, as they always do, through the back door and totally take advantage of everyone.” China bashing has a long history of being an easy Republican talking point. Mitt Romney had promised back in 2012 that on day one of his White House tenure he would label China a “currency manipulator.”

Ted Cruz, a notorious flip-flopper, went from writing bleeding heart op-eds in the Wall Street Journal pleading with Congress to give the White House the Trade Promotion Authority (TPA) and fast-track the signing of the TPP to seizing the populist wave sweeping the Republican field. Barely two months after the WSJ piece, Cruz backed down, criticized the TPP’s “backdoor dealings” and joined four other colleagues to vote against the TPA. As for Marco Rubio, his support was equally non-committal. In its latest statement on the topic, Rubio’s campaign abstained from clearly endorsing the trade pact, by saying that the candidate “has not decided whether to support TPP legislation.”

Sadly, the other side of the aisle is not faring any better. Hilary Clinton hasn’t really decided if she likes the deal or not. Much like same-sex marriage, Keystone XL and even her accent, she cannot really make up her mind until she decides what the Democratic base really thinks of it through focus groups. With the Democrat party largely wary of open trade commitments, especially following the trade deals Bill Clinton signed in the late 90s, Hilary has now decided that the TPP probably isn’t the best way forward.

The other candidate left in the Democratic race, Bernie Sanders has gone for the jugular. In typical populist fashion, Bernie Sanders berated the TPP as yet another win for large multinationals and banks. He blames deals like this for costing American jobs because of the track record previous agreements with low-wage economies like China and Mexico have had.

However, stripping the TPP of all political hogwash, a different picture emerges, one that contradicts all 2016 hopefuls. In fact, the trade pact’s text does have good elements buried deep in its 5,444 pages, elements that any progressive or Republican would agree with.

Unfortunately for the Donald, China is not actually a part of the agreement. What’s more, experts also believe that the TPP will negatively impact China due to the increased co-operation and trade convergence between the participating countries (especially the ASEAN nations of Vietnam and Malaysia). According to Gary Clyde Hufbauer of the Peterson Institute for International Economics, China is expected to register around $100 billion in lost trade during the TPP’s first decade.

The removal of trade tariffs is good for both the U.S. and its allies. The reduction and elimination of some taxes will mean lower costs for poultry, soybeans, dairy, sugar, rice, wine and seafood. This is beneficial for both major food-exporting countries (such as Australia and New Zealand) and Americans, who benefit from lower food costs. Americans traveling around these countries will also see lower roaming costs on their cell phone bills. What’s more, America is likely to considerably benefit from the deal, buoyed by an extra $131 billion in real incomes and a $357 billion boost to export by 2030.

Among signatories, Vietnam is likely to be the biggest winner. According to the same Peterson Institute, its GDP is expected to expand by about 10% by 2030 and its exports by a whopping 30.1% after tariffs are progressively lifted. Moreover, Hanoi is tipped to become the world’s most dynamic textile producer. Encouraged by the anticipated intra-bloc trade convergence, the country has already attracted investment pledges of $3.7 billion, 40% of which in the garment sector.

Malaysia is another big winner of the TPP. PriceWaterhouseCoopers, a consultancy, estimates that Kuala Lumpur will benefit from $200 billion of economic gains over nine years. Najib Razak, the country’s Prime Minister, expressed his pleasure with the agreement after he secured big concessions during the negotiation phase. Weathering the commodities slump, the oil-exporting country grew by 5.0% last year and hopes to use the TPP to achieve developed country status by 2020. Malaysia is also taking a regional leadership position, increasing its geopolitical clout by strengthening ties to the U.S. while also keeping good relations with China.

But the free trade part of the TPP is just an afterthought compared to the unprecedented regulatory framework the document contains. Labor rights will be upgraded across the TPP bloc, at breakneck pace. The text mandates the introduction of minimum wages, safety and health standards to prevent abuses such as overcrowding, overworking or exposure to fire hazards. For example, the treaty is likely to have a positive impact on communist Vietnam by pushing through additional safeguards on Internet freedom while also limiting wildlife trafficking and environmental abuses.

None of these elements seem to matter in the current race. For U.S. presidential hopefuls though, the TPP has sadly become shorthand either for the failed policies of the Obama administration or for corporate greed. Time is running out, and it would be damaging for an advantageous trade agreement that would secure American interests for years to come to be sacrificed at the altar of protectionism.

 

Author

James Nadeau
James Nadeau

Originally from Maryland, James Nadeau is a European affairs advisor and foreign policy analyst currently based in Brussels, Belgium. His writings have been featured in The Kyiv Post, The Hill and RealClearWorld.

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