Leland Teschler – Executive Editor
On Twitter @DW—LeeTeschler
Teschler on Topic
Here are some sobering statistics: Economists at M.I.T. and the University of California have found that imports from China have accounted for about one-quarter of the decline in U.S. manufacturing employment in recent years. Other economists at the U.S. Federal Reserve Bank have calculated that U.S. industries with the biggest exposure to imports tend to experience the biggest declines in payrolls.
Economists writing for the National Bureau of Economic Research think these effects are even worse than have been understood. They found that globalization tends to reduce wages for Americans simply because a lot of factory workers are forced out of higher-paying manufacturing jobs and into other lines of work that don’t pay as well — higher paying occupations simply vanish. Again, much of the loss comes from an offshoring of jobs to China and other parts of Asia.
Politicians are now claiming that a proposed trade agreement called the Trans-Pacific Partnership will help address such job losses. Officials that include the Secretary of State have claimed that the TPP would support 650,000 new jobs in the U.S. while creating $123 billion of exports.
Don’t believe it. There is ample evidence that such predictions are fantasy.
I have never read the TPP. In fact, even many of the legislators who will have to vote on this legislation aren’t being allowed to review the TPP documents in depth. That is because the U.S. trade representative’s office claims trade documents are “foreign government information.” The U.S. government has classified them as confidential. Consequently, legislators from both main parties are unable to study a document that they will ultimately have to vote on.
But never mind all this. You don’t have to read the TPP to realize that assertions about its ability to create U.S. jobs and exports are silly. Consider the trading partners involved: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Note that China is not part of this deal. Even if the TPP is wildly successful, it will not address jobs offshored to China.
Note also that we already have a trade agreement with Canada and Mexico. Since NAFTA (North American Free Trade Agreement ) has been in place, the U.S. has lost about 415,000 high-paying manufacturing jobs, according to the Economic Policy Institute.
Now consider the size of the economies involved. Several of them are insignificant. Brunei, for example, has a gross domestic product about half that of Vermont. Trading with Peru and Chile is like trading with Alabama and Louisiana. Economically, Vietnam is a slightly smaller version of Kentucky.
The biggest economy in the TPP after the U.S. is that of Japan. It is roughly equivalent to two Californias in terms of economic clout. The U.S. imported $73 billion more from Japan than it exported there in 2013.
And this brings us to a single question that serves as a litmus test for whether or not the TPP makes sense: Do you really think Japan will significantly boost the amount of manufactured goods it imports from the U.S. if the TPP is in place?
At this point I should probably pause until readers who have tried to export U.S. goods to Japan stop laughing.
That laughter, in a nutshell, sums up why the TPP is likely to be bad for anyone who works in U.S. manufacturing industries.
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