All of this was indicative of America itself as well: Nation of big shoulders. The United States was a brawny country that would intervene to help win World War I and later quickly retool factories to serve as munitions mills to win World War II. Now, though, as America’s tool makers and freight car builders are furloughed, their factories shuttered and offshored, America is wasting. Ill-conceived free trade deals are reducing it to a nation of stooped shoulders.
The newest proposed deal, the Trans-Pacific Partnership (TPP), signed in New Zealand last week by representatives of its 12 member states, would further enfeeble American manufacturing. The first of the ilk, the North American Free Trade Agreement (NAFTA), devastated U.S. manufacturing. Allowing China into the World Trade Organization and the bad trade deals that followed NAFTA all pummeled American manufacturing when it was already down.
From cookies to car parts, factories fled America for places like China and Mexico. There, corporations pay workers a pittance and pollute virtually penalty-free. CEOs and shareholders roll in the resulting royal-sized profits. Meanwhile, formerly middle-class American workers and their families suffer. Communities bereft of sustaining mills collapse. And the United States atrophies, losing more and more of those once-bulky industrial shoulders.
A group of economists studying the Trans Pacific Partnership (TPP) have concluded that the sweeping trade agreement will have a net negative impact on the US economy.
Economic researchers with Tufts University’s Global Development and Environment Institute said Monday that widely cited projections claiming the TPP will boost economic activity in the US are “based on unrealistic assumptions.”
Instead, the economists noted, the 12-nation Pacific Rim trade deal will likely lead to the loss of 448,000 jobs from the US workforce, while lowering GDP by more than a half-percentage point over the next decade.
The report also estimates that TPP will cause labor’s share of income to decline by 1.3 percent, increasing inequality in the United States.
It noted, however, that this would not be unique to the US – that new income going to workers in all TPP signatories is expected to drop as a result of the deal, according to the analysis, widening the gap between the global rich and poor.
The Tufts researchers also found that while the US job market is projected to take the biggest hit, the TPP would lead to 771,000 job aggregate losses over the next ten years in all member nations.
“[B]usinesses in participating countries would strive to become more competitive by cutting labor costs, thereby seeking higher short-term profits while undermining efficiency and productivity in the long-term,” they said.
And of the few countries that would experience economic gains from the agreement, the boost would only be “negligible.” The report projects GDP gains from less than one percent to less than 3 percent for Australia, New Zealand, Mexico, Peru, Chile, Brunei, Vietnam, and Singapore – all occurring over the course of the next decade.
NAFTA crushed 300 decent middle class workers in Grand Rapids, Mich., last week. They make automated conveyor systems for a company called Dematic. Represented by the United Auto Workers (UAW) union, they earn between $11.55 and $24.26 an hour. That means the best paid among them receive the median wage for a U.S. worker.
Soon, however, they’ll have no wages. That’s because they can’t compete with the $1.50 to $1.70 per hour paid to workers in Monterrey, Mexico. Several weeks ago, Dematic told the workers it would move the factory to Mexico unless the UAW came up with a better offer. It’s illegal in the United States for workers to labor for $1.50 an hour. So a company, founded in Grand Rapids in 1939, will sever its American roots, shed its American workers and squat in Mexico.
The Coalition for a Prosperous America (CPA) today raised concerns about the reliability of a recent advocacy document released by the American Farm Bureau Federation (AFBF) purporting to show increased farm income if the Trans-Pacific Partnership is adopted. The highlight of the release is that US farm income will increase by a meager $4.4 billion by some future date if the TPP is adopted. Following are ten concerns CPA has about the AFBF analysis’ credibility:
1. Past AFBF Projects Were Wrong: Farm Bureau has been overly optimistic when projecting trade deal results for US agriculture. For the Korea-US trade agreement, AFBF claimedthat US agriculture would be a “net gainer” in agricultural commodity trade with that country. However, the opposite resulted. The US net export performance substantially worsened between 2011 (the year before the implementation of the Korea-US pact) and 2015.
2. Undisclosed methods: The economic model used is not revealed and is thus not replicable. From what is discernible, the same methods that produced inaccurate Korea-US trade agreement results were used in this report.
3. Undisclosed authors: The authors of the underlying study, giving rise to the AFBF advocacy document, are not revealed. We do not know their level of competence.
4. Undisclosed data: The data sets relied upon for the AFBF advocacy document have not been revealed. We do not know if those data sets are reliable or were interpreted and applied properly.
5. Unreasonable meat demand assumptions: The report assumes, without proof, that future TPP country population growth will translate into increase demand for US beef and pork rather than domestic sources. TPP country Vietnam, for example, consumes fish protein and is a major exporter of fish sold in the US. Non-TPP country China has a food self-sufficiency objective.
6. Failure to consider Japan pork subsidies: The AFBF document assumes increased US pork market share in Japan. It fails to consider that Japan’s pork tariff cuts will, combined with its subsidy program, continue to keep foreign pork penetration from its domestic market. Japan’s controversial program has been highlighted in a recent, high-profile letter from 28 pro-Fast Track House members at the request of multinational pork packers.
7. Unreasonable assumptions of disproportionate US meat export market share: The report assumes that the US will benefit from any increased TPP country demand, without properly considering products from competing major agricultural countries like Canada, Australia, Mexico or non-TPP countries that could fill that demand.
8. Failure to consider causes of agricultural price levels: The AFBF report does not include consideration of the primary causes of price levels for farm and ranch products. Those primary causes include, for example: the cattle cycle, weather, disease, ethanol, currency values, and energy prices. Each of these factors has a far larger impact on pricing than any TPP provision.
9. Omitted US import considerations: The report fails to examine imports from other TPP countries. Any model that only examines exports is per se wrong. Agricultural imports to the US from TPP countries reduce US market share in the domestic market and thus lower farm and ranch prices.
10. Failure to consider global crop pricing and demand facts: The AFBF document assumes that increased TPP country demand for oilseeds, rice and other crops would substantially be met by US products. However, other agricultural countries like Brazil and Argentina consistently export crops at slightly under the US price, whatever the US price may be. The US is and has been a residual supplier for this reason. The TPP will not change that global pricing dynamic.
Congress and the public need reliable data and analysis when determining whether the TPP will harm or benefit the US economy. Without clarifying the above mentioned concerns, the AFBF report should not be relied upon when considering the TPP impact on agriculture, farmers and ranchers.
The Coalition for a Prosperous America is a nonprofit organization representing the interests of 2.7 million households through our agricultural, manufacturing and labor members.