New Evidence Trans-Pacific Trade Proposal Will Hurt Workers

Isaiah J. Poole

An analysis released today of the effects of the proposed Trans-Pacific Partnership trade agreement concludes that “most workers are likely to lose” as a result of the agreement, and that what the economy will gain as a whole “amounts to a rounding error.”

The study, by the Center for Economic and Policy Research, is the latest indictment of a trade pact now being negotiated between the United States and a number of countries on both sides of the Pacific, including Australia, New Zealand, Japan, South Korea and Singapore. The provisions are being forged in private between government negotiators and corporate interests, and when the agreement is presented to Congress, the Obama administration intends to ask for “fast-track” approval, which means an up-or-down vote without amendment or real debate.

According to Public Citizen, the TPP would lead to the offshoring of millions of jobs; weaken regulations governing banks and a host of other businesses, putting the economy and consumer safety at risk; and hamstring the United States’ ability to use its tax dollars to support American businesses or boost new industries, such as green energy.

The CEPR report affirms that there is no economic benefit in the deal worth these risks – except for those with “top incomes” in a position to benefit from the ways the TPP would enable multinational corporations to maximize their profits at the expense of workers and the environment.

The TPP is about to draw a lot more attention, and protests, in the coming weeks. Negotiators are planning a set of discussions in Washington next week, and progressive trade groups are planning actions to inform the public. Meanwhile, in Congress Reps. Rosa DeLauro, D-Conn., and George Miller, D-Calif., are collecting signatures on a “dear colleague” letter intended to signal opposition to having any TPP proposals “fast-tracked” through Congress without opportunity for debate and amendments.

The CEPR report notes an estimate that between now and 2025 the U.S. gross national product would increase by 0.13 percent, a figure that is “meaninglessly tiny in almost any reasonable context. … This amounts to a rounding error.”

The report notes an estimate that between now and 2025 the U.S. gross national product would increase by 0.13 percent, a figure that is “meaninglessly tiny in almost any reasonable context. … This amounts to a rounding error.”

The report goes on to point out that between 1990 and 2007, income inequality increased – the median wage fell 7.6 percent while wages at the 99th percentile (the 1 percent) increased 17.2 percent. This coincides with an increase in the percentage of economic activity due to trade of an average of 0.4 percentage points a year.

With the projected effects of the TPP, the CEPR report calculates that under a conservative estimate of the effect on wages, “the median wage would fall by 0.14 percent relative to the median.” That decline would be larger – 0.87 percent – with the addition of a proposed Free Trade Area of the Asia

Pacific pact also being contemplated.

“Labor’s share of net corporate income has fallen in recent years, so an estimate of the effect of such trade agreements on most workers’ wages that took into account the redistribution of income outside of wages would undoubtedly show a greater negative impact,” the report said.

If we really wanted to help American workers, the report concludes, we would be pushing policies that support full employment. If we took steps to ensure that the U.S. economy was operating at full capacity, we would have boosted GDP by almost $1 trillion – 6.5 percent – and would have dramatically lower unemployment. That would have a more positive effect on the economy than 25 Trans-Pacific Partnership agreements, and would have been better for workers. Persistent unemployment has been a major drag on the economy, and it would not be addressed by the TPP as it is currently written.

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