Question

Opening Case: The Trans Pacific Partnership QUESTION 1: Do you agree with the characterizations of the TPP as ""a terrible deal"" and ""disastrous""? Discuss the pros and cons for the United States of enacting the trade agreement? QUESTION 2: What are the differences across the studies focusing on the TPP’s impact on the United States economy? What is your assessment of the trade deal’s influence on United States workers?

Answer 1

ANSWER 1) No, I disagree with TPP's descriptions as a terrible and catastrophic deal. This is not a catastrophic thing, as some have said, because the TPP removes or lowers some 18 000 duties, taxes and non-tariff barriers, such as export limits among the 12 Member States. Catastrophic is thus not the right thing to say, because catastrophe means something that will have very bad effect, but it is not like this contract, and it can not be said as a catastrophic and devastating deal.

Pros of TPP deal in U.S

The TPP will abolish import tariffs of up to 40% for US agricultural goods and fruit and 35 percent in soybeans, all of which have a comparative advantage on the US in production. U.S. agriculture will benefit from this economic arrangement.

The tariff on imports of US machinery to TPP countries is to be eliminated as high as 59%.

Technological firms would benefit as import taxes on the export of ICT to some other TPP countries would be reduced to a point of 35%.

Cons of TPP in U.S

Industries like Ford protested that the compromise would phase out a 2.5% tariff on Japanese car imports into the United States, and a 25% tariff on light truck imports, although the arrangement would phase both tariffs over a period of 30 years. Companies like Ford opposed the proposal.

The labor unions opposed the deal by saying that further job losses in the U.S. production and lower wages would occur.

When suing foreign governments for anti-tobacco measures restricting the use of logos and brands by tobacco companies, they would be prevented from using tobacco products.

Big drug firms are also affected because they only have for five years, rather than the 12 years before, covered emerging biotechnology drugs from generic competition.

ANSWER 2) The discrepancies in the research focused on the effect of the TPP on the US economy can be seen through the data of the World Bank, the IIE and Tuft's University. Both the World Bank and IIE agreed, in 2030 the TPP would boost US incomes marginally more than it would have been without agreement by generating more foreign demand for American goods and services. The report IIE projected a USD 357 billion or 9% rise of the TPP's annual exports by 2030. In the IIE report, too, the gross loss of jobs in the United States has been estimated. While some industries saw job losses, IIE suggested they would otherwise be compensated by employment gains. The most pessimistic study by Tuft's University estimated that the deal in the United States would result in 450,000 job losses for 10 years.

In view of the lowering of the rate of tariffs, more competition will be made for goods in other countries; and as a result of that business, more workers will need to conduct these duties and studies carried out by the IIE and the World Bank indicate, as well, that annual exports will grow by $357 billion, and that will increase. I will therefore assume that the trade agreement would open up new opportunities for American workers.