If I can only choose two things that will determine America’s future in 2016, it will be the presidential election and the passage of the Trans-Pacific Partnership (TPP). Whoever becomes the next leader of the free world – and arguably the most powerful person on Earth – is an important matter. But equally important is the TPP Free Trade Agreement, which, if to be described, is the Pacific-Rim version of a stricter World Trade Organization (WTO) that encompasses 40 percent of the world’s GDP.
The GOP field is divided on this issue. Non-establishment candidates with no Washington background (Carson, Fiorina, Trump) are anti-TPP. Establishment candidates are mainly pro-TPP (Bush, Cruz, Rubio). But due to strong anti-establishment sentiment fueled over the summer, pro-TPP hopefuls are labeled by an increasing number of conservatives as RINOs (Republican-In-Name-Only) – disloyal to the conservative and middle class causes by being “pro-Obama-trade.”
This should not be happening. At a time when our nation needs to revamp its defective economic globalization policies and strengthen its Pacific presence in the face of stiffening competition from China, conservatives should unite behind TPP because it aligns with our beliefs of a strong American presence in Asia and a strong domestic economic renewal, particularly for the middle class.
In terms of strengthening our Pacific authority, the TPP will provide the United States a strategic “first-step” to cut off and recover from the huge damage wrought by our current Permanent Normal Trade Relations (PNTR) with China. According to U.S. trade data, the September 2015 trade deficit with China reached an all-time high of $34.9 billion. Analysts say that about 3.2 million American jobs have been displaced from 2001 to 2013 as a result of PNTR. As such, the TPP’s trade goals and exclusion of China, at least for now, is part of the foreseeable reversal of America’s currently troubled economic status under PNTR.
Moreover, the TPP will provide us with a more coherent long-term global economic strategy than will the sole repeal of China PNTR. Even if we do not repeal PNTR, there still needs to be a corresponding response that will maintain American economic predominance in the large, fast-developing Asian economic region. If we do not have a strong presence, Asian trade integration and other economic partnerships will continue to grow on an increasing scale under China’s increasing influence. If this occurs, America will lose out on the massive economic potential in Asia and will have to recover against a headwind from this self-created political/economic vacuum. We already see hints of this with the passage of ASEAN Plus Three in 2012 and Beijing’s founding of the Asian Infrastructure Investment Bank in 2014. As China continues to flex its global economic capacity as it adjusts its economic model, the United States needs an adequate solution to maintain its own political-economic leverage for the success of American livelihoods. President Obama’s TPP provides us with such a golden opportunity.
The TPP initiative is also a big chance to jumpstart America’s economic and middle-class recovery after 15 years of unhelpful globalization policy, counting from the approval of China PNTR. As much as TPP detractors disagree, the TPP has strong pro-middle class and pro-SME (small and medium-sized enterprises) provisions. First, as in any sound free trade agreement, it dictates and firmly enforces a level playing-field through reducing/eliminating import tariffs and barriers across the board. The enforcement of this condition is vital; the failure of the U.S.-China PNTR to do so, combined with China’s repeated violations of WTO tariff procedures, led to the permeation of this negative cycle: mass corporate outsourcing, increased foreign investments, and hyper-competitively priced Chinese manufacturing that domestic SMEs and the middle-class could not compete with. Fortunately (and finally), the TPP’s more stringent, uniform barrier reductions can begin to curb U.S. outsourcing, since there is no longer a substantial advantage to invest abroad for profits in foreign markets. Additionally, the TPP’s regulations on labor, environment and other aspects will be on a uniform, high standard – this will help protect domestic labor from the unsustainable and unethical “race-to-the-bottom” situations that arose from the China PNTR. With this, the amount of U.S. service and manufacturing exports from businesses of all sizes can grow dramatically. Such a chain reaction will in turn stimulate U.S. trade surplus, increase workers’ wages and foster middle class recovery.
From here, the benefits arising from these provisions can be fortified with additional domestic legislation from Congress, such as expanding pro-“Made in America” expensing policies, improving Trade Adjustment Assistance programs, and establishing substantial incentives and assistance for businesses returning to the domestic labor market. All these mechanisms can stimulate the recovery and growth of the American middle class together with TPP.
But before the TPP can be seen in action, it must weather resistance from Congress and the public. As for this situation, I hope anti-TPP conservatives can realize that no deal – including the TPP – can be perfect. Yes, there will still be some SMEs and low skill-level occupations impacted. Yes, there will still be concerns about pharmaceutical inflation. Yes, there will still be worry over the ISDS’s (a neutral, international forum to resolve investor-state disputes) capability to honor domestic protectionary measures and legislation. But U.S. TPP negotiators and their foreign colleagues have attempted to address these issues through negotiating additional protectionist measures, such as reduced pharmaceutical patent periods five to seven years instead of 12, powers of expedited review in ISDS arbitrations for respondent nations, and other policies that will enforce fair trading practices.
So for the pro-TPP GOP hopefuls of 2016, their challenge is to justify and consolidate support for this momentous deal, which will shape not only their own economic policy proposals, but the economic future of this nation. Simultaneously, the growing anti-TPP portion of the conservative populace needs to quickly realize that the TPP will be not only a victory for American economic geopolitics, but a necessity for middle class livelihoods in a future married to globalization.
Photo courtesy of Berkeley College