TPP: A new high

In his oped in The Hill yesterday, Richard Trumka, the president of the AFL-CIO, called the Trans-Pacific Partnership (TPP) a “new low,” suggesting that it would be bad for working Americans. That is simply wrong. The data clearly show that modern trade deals work, and our trade deals are being negotiated with higher and higher standards.

Just look at all of the trade deals that have gone into effect since the turn of the century. Since 2000, the United States has entered into trade agreements with 17 countries. Why do we look at these modern deals? Because they are vastly different than deals of the past, including NAFTA. Just as you wouldn’t judge the safety of new automobiles by looking at your grandfather’s station wagon, which didn’t have airbags or anti-lock brakes, deals in the 21st century have been negotiated with higher standards.

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Using only publicly available data, our analysis shows that modern trade deals have improved our trade balance in goods—that is, we now make and ship more stuff to our trading partners than we bring in. In fact, the U.S. went from a $2.8 billion deficit with these 17 countries to a $30.9 billion surplus. And that’s because after implementing a free trade agreement, we boosted Made in the USA goods at double the rate than imports (52 percent vs. 26 percent). And that doesn’t even include our services trade—America’s strength—which would paint an even rosier picture of the powerful positive effect these agreements have had.

Modern trade deals work. And TPP is set to continue that trend. Recently published analysis from the Peterson Institute suggests that TPP will raise U.S. real incomes by $131 billion annually, exports by $357 billion, and support nearly 800,000 jobs.

These modern trade deals are also doing more than just getting more American goods in the hands of foreign consumers—they are working to increase standards and regulations. Trumka says TPP’s labor standards fall “woefully short”, but the fact is labor standards in modern U.S. trade deals have become stronger with each successive deal. And, thanks to extensive consultations the White House has had with labor groups, provisions in TPP are the strongest yet.

TPP works to eliminate exploitative labor practices and protects against all forms of employment discrimination. It mandates that all workers have the right to unionize and collectively bargain. And, for the first time in any trade deal, it creates a commitment for minimum acceptable work standards, including minimum wage, workplace safety requirements, and limits on hours of work. And it makes these provisions fully enforceable with violators subject to fines and sanctions.

It’s not just labor. ISDS, the legal mechanism aimed at settling investment disputes between investors and countries, has been retooled. It now ensures that U.S. companies get a fair shake abroad, but it does so in a way that doesn’t weaken or change U.S. laws. And TPP increases transparency and clearly confirms that each country can create their own laws aimed at protecting their health, safety, and environment. It even includes a specific provision that recognizes that countries can adopt tobacco control measures in order to protect public health, without facing ISDS suits.

Trumka points out that trade rules need to lift people up. We agree. And at a time when the global economy is expected to increase by a whopping $50 trillion over the next decade and a half, we need to lift American goods and services into the hands of those foreign consumers. We want them buying American tech, American beef, and American machinery. But right now, we’re at a severe disadvantage. According to the World Economic Forum, American manufacturers face some of the steepest trade barriers for exports in the world. In 2014, almost 70 percent of U.S. imports crossed into our borders duty-free, with our average tariff rate at 1.4 percent. Comparatively, U.S. exporters deal with an average tariff rate of 6.8 percent, making it harder for American companies to compete.

Let’s lift up Made in the USA products. Let’s get more of our workers sending American products overseas. Modern trade deals work, and TPP is the most modern deal yet.

Chittooran is a policy adviser and Horwitz is vice president for the Economic Program at Third Way, a moderate Democratic think tank located in Washington, D.C.

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