OPINION: Everything You Need to Know About the Trans-Pacific Partnership

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Created: 19 Oct, 2015
Updated: 18 Oct, 2022
4 min read

Much effort has been put into making the Trans-Pacific Partnership (TPP) deal into the largest trade agreement in the history of the United States. It is that expansiveness and the president’s imprint of the rule-making process that has some Republicans calling it “Obamatrade.”

Ironically, it did not begin with Obama nor did it even originate in the U.S; rather it began with three much smaller Pacific nations -- Brunei, New Zealand, and Singapore -- and rapidly expanded to nine more countries.

Interestingly enough, the two leading Democratic presidential candidates are against the TPP, proving that both parties could support something even if it is just saying something is bad. The good news is that nothing has passed yet and the public is learning more and more about what is in the final version of the 12-nation trade pact.

Starting with the government agency promoting the legislation, the Office of the United States Trade Representative (USTR), this deal would encompass new rules to help American workers, from the auto industry to farmers. Michael Froman, the U.S. Trade Representative, points out that there are 18,000 tax cuts in the form of tariffs that will jumpstart hiring in exporting companies and improve wages.

In short, the “Made in America” brand will benefit from TPP.

For TPP deriders who point to the North American Free Trade Agreement as a very flawed contract, TPP “upgrades” NAFTA by incorporating Canada and Mexico and strengthening labor standards such as forming unions and protecting employees who lose their jobs due to outsourcing.

There are other reasons why this deal is far from signed, including currency manipulation and the potential that the TPP will not do what Obama and the other heads of state propose it will do -- raise wages and grow the economy.

Hillary Clinton cited the lack of currency manipulation regulation in the final deal as to why she no longer supports it. The former secretary of state called the TPP the “gold standard” in trade deals, referencing worker rights and environmental protections. That was three years ago and while the deal was still being negotiated.

The final draft was completed in Atlanta earlier this month.

Currency manipulation is when one country buys another’s reserves thereby devaluing their own. For example, China buys the dollar to artificially devalue the yuan. The upside is for the American consumer whose dollars gets to buy cheaper Chinese-made products. The downside is for the American businesses exporting goods. American steel loses ground to Chinese steel so American workers could lose their jobs.

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To gain an international perspective on this worldwide issue, the Australian media is also wary of the TPP. To Aussie opponents, the greatest import America will get is their trade partner’s economic sovereignty.

Australia signed its own trade pact with the U.S. ten years ago, which resulted in decreased trade between Australia and the rest of the world. This constrictive interpretation also shows that wage growth is mostly nominal for the U.S. If ratified, the TPP will lead to a minuscule 0.4% wage growth over the first decade.

Republicans had a chance to make it harder for the president, but by passing the fast-track Trade Promotion Authority (TPA) earlier this year, they at least created a more transparent situation for the final TPP draft. U.S. Sen. Orrin Hatch (R-UT) and Rep. Paul Ryan (R-WI) had concerns, but opted to pass the TPA so Congress could debate on the trade deal’s final draft.

The TPA bill passed the Senate 60-37 with Florida Sen. Marco Rubio voting for and Texas Sen. Ted Cruz against. Ohio Governor John Kasich is also supportive of free trade as long as American workers don’t get “shafted.”

Florida, Texas, and Ohio are among the most impacted states by export standards. Half of the exports from Texas and Ohio, from beef and poultry to leather boots and car parts, go to TPP nations. Florida produced orange juice is taxed 43.1%. That will go away.

The TPP epitomizes President Obama’s foreign policy pivot away from the Middle East and toward Asia. Despite what opponents have to say, the Trans-Pacific Partnership puts the United States at the table when negotiating labor, environmental rules, and intellectual property laws with the fastest and largest growing region in terms of GDP.

If passed, it will impact manufacturers and farmers, working class families and small businesses alike. China is not yet on board, but could join in the future, making the trade agreement even more potent and leaving an even more indelible mark on the president’s legacy. It will come down to Congress to ratify.

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