By lowering trade barriers among the United States and 11 nations scattered around the Pacific Rim from Japan to Chile, the pact is intended to help countries specialize in producing and exporting whatever goods and services they can make most efficiently, while importing the rest. In the long run, that could help decrease some of the prices consumers see in stores.
.. In the auto industry, for example, 45 percent of the value of each car or light truck will need to be produced in a Trans-Pacific Partnership member country for the vehicle to be charged little or no duty by customs officials. By comparison, the North American Free Trade Agreement used a different methodology that effectively required 53 percent to 55 percent of the components by net cost to be produced in North America. So the new agreement has the effect of allowing slightly more components to come from outside the trade region, most likely from China.
.. The Obama administration has promoted it as a way to strengthen trade relationships with American allies as tensions have increased with China. At the same time, American trade officials have also suggested that it could be a model for an eventual free-trade pact with China itself.
The Trans-Pacific Partnership Trade Accord Explained
The Pacific trade pact to address a number of issues that have arisen since previous agreements were negotiated. One is that countries agree not to block cross-border transfers of data over the Internet, and not require that servers be located in the country in order to conduct business in that country. This proposal has drawn concerns from some countries, Australia among them, that it could conflict with privacy laws and regulations against personal data stored offshore.
.. China has never expressed interest in joining the negotiations, but in the past has viewed the pact with concern, seeing a potential threat as the United States tries to tighten its relationship with Asian trading partners. But lately, as the talks have accelerated, senior Chinese officials have sounded more accepting of the potential deal, and have even hinted that they might want to participate at some point.
How Capital Crushed Labor: Pat Buchanan
Does the cost of production here in America alone explain the decline in manufacturing and stagnation of workers’ wages?
No. For since the Revolution, America has had a standard of living that has been the envy of the world. From the Civil War through the 1920s, as we became the greatest manufacturing power the world had ever seen, our workers enjoyed pay and benefits that were unmatched anywhere.
Yet our exports in those decades were double our imports, and our trade surpluses annually added 4 percent to the gross national product. How did we do it?
We taxed the products of foreign factories and workers and used the revenue to finance the government. We imposed tariffs of up to 40 percent on foreign goods entering our market and used the tariff money to keep taxes low in the United States.
.. What happened to this idea that made America a self-sufficient republic, producing almost all it consumed, a nation that could stay out of the world wars as long as she wished and crush the greatest powers in Europe and Asia in less than four years after she went in?
Whose Party Is It Anyway?
Reducing trade barriers allows each to specialize in what they do more efficiently, and this specialization generally leads to national-level gains for both countries — that is, increased efficiency, worldwide production and total consumption. This is essentially chapter one in trade textbooks. However, a later chapter in the textbook points out that, when the United States exports financial services and aircraft while importing apparel and electronics, it is implicitly exchanging the services of capital for labor. This exchange bids up capital’s price — profits and high-end salaries — and bids down wages for the broad working and middle class, leading to rising inequality and wage pressure for many Americans.
According to Bivens, the downside is immense:
Even if trade flows begin to balance and there is less job loss in the future, the integration of the U.S. economy with those of its low-wage trading partners will pull down wages for many American workers, and will contribute to the ever rising inequality of incomes in the U.S. economy.
.. Bera’s dilemma is that while he has given strong support to labor historically, with an 86 percent lifetime rating from the A.F.L.-C.I.O., in 2014 he received substantially more money from such pro-trade interests as electronics, finance and agribusiness, according to the Center for Responsive Politics.
.. Trade always implies job destruction — this is the whole point of trade, namely to destroy jobs in import competing sectors to create them in exporting sectors, thus allowing for reallocation to sectors with comparative advantage, leading to an increased efficiency, the basis for the gains from trade.
.. The amount of money contributed to the Democratic National, Congressional and Senatorial Committees by organized labor is pocket change — $5.4 million in 2013-14 — compared with the $42.7 million from the pro-trade computer and electronics industry; $62.8 million from finance and securities; and over $11 million from other pro-trade interests, according to the Center for Responsive Politics.
.. While the left is ascendant, the likely scenario for a resolution of the intraparty disagreement over trade is as follows: Until she secures the nomination, Hillary Clinton will voice the level of criticism of the TPP necessary to prevent the issue from serving as a mobilization tool for her rivals.
.. The real question, then, is how long will left and right within the Democratic coalition tolerate an inherently unstable posture on such a core issue as how this country does business abroad, and how it provides a livelihood for its citizens.