There has been much said and to be certain, there will be much more said in the coming weeks about the Trans-Pacific Partnership (TPP for short).
We don’t lack any shortages of opinions on the merits and flaws of the proposed trade agreement, ranging from the candidates themselves, to many members of Congress, trade unions, and the general public. I think that just a few economic facts may be of help sorting through the many allegations being made.
Many, not all, of those who are opposed to the TPP use the NAFTA agreement as exhibit one for their opposition. The short argument is that TPP will do even greater harm to the American economy and in particular, the American workforce than NAFTA did, alleging that NAFTA was bad for American workers.
Look at how many Americans lost their jobs because of NAFTA! These were jobs that were moved to other countries to reduce labor costs in order to be more competitive.
There is some truth to this because jobs were lost and many of those jobs were moved overseas, first to Latin American, and ultimately, to the Pacific Rim. When the garment industry left El Paso for Latin America, our unemployment was north of 14 percent. Today the number is hovering just north of 4 percent.
An important fact that is left out of the conversation, is that these jobs were destined to leave our shores with or without NAFTA. Economic pressures demanded that American companies reduce their costs of production in order to compete in a global economy.
Yes, I said global economy. That is the driving force behind most of the world’s economic leaders including the United States, Mexico, Canada, most of the Pacific Rim countries, and Europe, like it or not.
Today, nearly half of U.S. states count Mexico as their first or second export market, and it represents a top five market for 37 states. Six million U.S. jobs, union and non-union, rely on trade with Mexico.
Texas and California are the clear leaders in exports with each state trading many billions of dollars in products to Mexico. They also have the most jobs that depend on trade with Mexico (California with 692,000, and Texas with 463,000).
South Dakota, New Hampshire and Nebraska send more than 20 percent of their exports to Mexico.
Nationwide, one in every 24 workers depends on U.S.-Mexico trade for employment.
Unfortunately, many legislators from the Midwest, South and East Coast, don’t fully understand how much their own states’ economies rely on trade with Mexico. It is far too easy to make bold and blanket statements inferring that global trade agreements are bad for the United States.
As of this writing, the likelihood of the TPP receiving congressional approval is a coin toss at best. That is unfortunate, if you consider that the other 12 countries already involved in the TPP will proceed with or without the United States.
How will U.S. companies competing in those markets be able to sell competitively when their customers will be required to pay duty (tariffs) that are in many cases 40 percent more than the companies competing from TPP countries?
The Transpacific Partnership agreement has many flaws. It is far from perfect, but in my view, it creates a good starting point on which to build and improve. Improving human rights and treatment of workers, child labor and numerous other areas of concern is and should remain at the top of our priorities in dealing with countries whose records are poor in these areas.
Perhaps we can encourage improvements if we are working within the TPP. One thing is reasonably certain: TPP will proceed with or without the United States. How may U.S. jobs will be lost if we are not a partner?