January 27, 2016 | By

Guest Commentary — TPP for Dummies

A farm activist walks with his alpaca during a protest of the TPP (Trans-Pacific Partnership) held outside the Office of the US Trade Representative in Washington, November 2015. REUTERS/Kevin Lamarque

How do we know whether or not the Trans-Pacific Partnership reflects American interests? The text of the deal has been available for public scrutiny since November, but who has the time or wherewithal to sift through over 5,000 pages of trade legalese?

Fortunately, there’s a shortcut. The Bipartisan Congressional Trade Priorities and Accountability Act of 2015—better known as Trade Promotion Authority—requires the president to seek advice from a number of trade “Advisory Committees,” representing everyone from big labor unions and environmental groups to farmers and financial service providers. These committees were comprised of nearly 700 cleared advisers, and were obligated to issue reports no later than 30 days after the president notified Congress of his intent to sign the deal.

Well, last month, these reports were finally released, and they provide perhaps the clearest view of what the deal will mean for a broad variety of US interests. So if, for instance, you’re curious about what the deal does for ecommerce, or if you want to know what The Boeing Company thinks about the TPP, I’d steer you to the reports here. In the meantime, I’ve picked out some highlights that show what select sectors really think:

US Agriculture

According to the Agricultural Policy Advisory Committee, the US agricultural sector will be among the biggest beneficiaries of the TPP. Immediately upon implementation, 70 percent of agricultural tariff lines will go to zero in TPP countries. It’s important to note that the eleven markets of the TPP represent 82 percent of US food and farm exports. Notwithstanding these gains, the US agriculture sector was disappointed in market access for products in Japan (rice and dairy) and Canada (dairy and poultry).

US Labor

The TPP’s Labor Advisory Committee argues in the strongest possible terms to reject the TPP, citing its view that the deal will skew benefits to the economic elites while placing undue burdens on workers. The labor committee is especially concerned with TPP rules they say will enhance the power of global corporations, such as investor-state-dispute settlement, monopoly rights for pharmaceutical products, and further deregulation of financial services.  

US Technology Industry

The tech industry is supportive of the TPP, according to the Advisory Committee for Information and Communications Technologies, Services, and Electronic Commerce. This is largely because the TPP is the first trade agreement to incorporate provisions that assure the free flow of digital trade, while safeguarding privacy, cybersecurity, and intellectual property protections.

US Textiles and Apparel Industry

For the Advisory Committee on Textiles and Clothing, the TPP is seen as a mixed bag. On one hand, TPP will reduce all tariffs on the first day of implementation. It also applies a rule of origin known as “yarn forward” which, with few exceptions, prevents producers from tapping into global supply chains outside the TPP. On the other hand, the remaining tariffs on the most significant apparel trade do have long phase-outs of 10-12 years. As a result, the Advisory Committee on Textiles and Clothing neither supports nor opposes the TPP.

US Environmental Groups

According to the Environmental Policy Advisory Committee, the TPP mostly did what Congress asked on the environment. Indeed, according to the report, the deal contains the most comprehensive environmental regulations of any international trade accord. A few examples include provisions on sustainable fisheries management, obligations regarding the taking and trading of wildlife, fishing, and logging, and commitments to conservation programs.
 
Obviously, these reports offer only a few snapshot perspectives, and more people and more industries will be affected by the TPP than those who had their say in these advisory committees. Nevertheless, they help to illuminate some central obstacles and opportunities within the TPP, and convey the complex nature of modern trade deals.

About

Phil Levy is senior fellow on the global economy at The Chicago Council on Global Affairs. Previously he was associate professor of business administration at the University of Virginia’s Darden School of Business. He was formerly a resident scholar at the American Enterprise Institute and taught at Columbia University’s School of International and Public Affairs. From 2003 to 2006, he served first as senior economist for trade for President Bush’s Council of Economic Advisers and then as a member of Secretary of State Rice’s Policy Planning Staff, covering international economic matters. Before working in government, he was a faculty member of Yale University’s Department of Economics for nine years and spent one of those as academic director of Yale’s Center for the Study of Globalization.

His academic writings have appeared in such outlets as The American Economic ReviewEconomic Journal, and theJournal of International Economics. He is a regular contributor to Foreign Policy magazine’s online Shadow Government section and writes on topics including trade policy, economic relations with China, and the European economic crisis. Dr. Levy has testified before the House Committee on Foreign Affairs, the Joint Economic Committee, the House Committee on Ways and Mean, and the US-China Economic and Security Review Commission. He received his PhD in Economics from Stanford University in 1994 and his AB in Economics from the University of Michigan in Ann Arbor in 1988.

Archive


Why are Trade Deals Complicated?

Why not embrace the one-sentence free trade agreement? Consider three examples of the complications that have arisen over the years.

Just a Flesh Wound?

At the end of July, negotiators for the 12 Trans-Pacific Partnership countries failed to conclude a trade agreement. Was the failure just a flesh wound, or was it something more serious?

It’s all Greek to Me

As the Greek suffering mounts and they careen towards Sunday’s referendum, Senior Fellow Phil Levy has two additional questions surrounding the Greek crisis.

Previously, on Game of Trade…

It is traditional, in intricate ongoing dramatic sagas, to begin a new episode with a recap. If you are just tuning in to trade policy prospects in the US Congress, Senior Fellow Phil Levy breaks it down in his latest post on the World of Cents blog.
 

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After the President’s trade policy was blocked in the US Senate yesterday, there was a divide among analysts over just how serious a setback the vote was. But it is difficult to see how the trade agenda could now advance, and the sensitive timing of trade talks means that a delay could be fatal.

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China Joins the Monetary Party

This week China took an unusually strong measure to goose its economy. It lowered the amount of money that Chinese banks needed to hold in reserve. In theory, this should allow the banks to take those sequestered funds and use them for new loans, thereby stimulating the Chinese economy.

International Ramifications of the Jobs Report

The big news of the morning was that the US economy created 295,000 jobs in February, pushing the unemployment rate down to 5.5 percent. Both numbers were better than expected, which seemed to paint a picture of an economy returning to normal after a long, chilly period of slow growth and painful joblessness.


An Economic Question about the President’s Immigration Action

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Trade impasses between the United States and Japan are eminently predictable. They will continue until the Obama administration shows it has achieved domestic agreement on trade. 

New Deficit Numbers in Perspective

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Are EU Sanctions Working?

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Phantom French Austerity

The New York Times is reporting a brewing political crisis in France. The Prime Minister is planning to dissolve the government in a battle over budgetary belt-tightening.