2016 On the Issues – Why TPP is a non-factor for me

[GitRDun]

In my continued interest to use facts to inform my choices for the upcoming election, I’ve done some research on US trade that has me thinking the TPP can be ignored as an important issue for choosing my candidates. Feel free to comment and convince me otherwise. What follows is my support.

Trade Agreements Are not Major Contributors to US Trade Imbalances

The US has trade agreements with 20 countries. These are Australia, Bahrain, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Morocco, Nicaragua, Oman, Panama, Peru, Singapore, Canada, Mexico, and South Korea. As a group, these 20 countries represent only 13.71% of the US $416 billion 2015 trade deficit (thru July).

The TPP partners include 11 countries, but only five countries where we don’t already have an agreement in place; Brunei Darussalam, Japan, Malaysia, New Zealand, and Vietnam. Including numbers from these countries, only 16.94% of the US 2015 trade deficit comes from countries where we have a trade agreement.

Of the 20 countries where trade agreements exist, we have a positive trade balance with 15 of them in 2015. The negative balances are with Israel, Nicaragua, Canada, Mexico and South Korea. While we have negative trade balances with 4 of the 5 new countries brought in by the TPP, there’s no reason to think TPP will make them worse.

Then Why the Big Trade Deficits?

The 13 largest trade deficits thru July 2015 add up to more than the entire $416 billion US trade deficit:

China $202 billion
Germany $42 billion
Japan $40 billion
Mexico $31 billion
Vietnam $17 billion
Korea, South $17 billion
Ireland $16 billion
Italy $16 billion
India $14 billion
Malaysia $12 billion
Thailand $10 billion
France $9 billion
Taiwan $9 billion

Lacks environmental laws: Yale University does an annual scoring of nations' environmental performance indexes (EPI). 8 of these 13 large deficit partners (China, Mexico, Vietnam, South Korea, India, Malaysia, Thailand, Taiwan) scored an average of 16.83 points lower in the study than the US (67.52 EPI for 2014). China (24.52), India (36.29), and Vietnam (29.35) were the largest.

Low Wages: A group called The Conference Board did a 2013 study comparing wage levels around the world. 9 of these 13 large deficit partners (China, Japan, Mexico, Vietnam, South Korea, India, Malaysia, Thailand, Taiwan) scored an average of $27.56 per manufacturing employee hour lower in the study than the US ($36.34/hr in 2013).

Cheap Facility Costs: Cushman Wakefield did a study in 2014 ranking, in part various countries on the basis of costs for manufacturing facilities. The US finished 13th. 8 of these 13 large deficit partners (China, Mexico, Vietnam, South Korea, India, Malaysia, Thailand, Taiwan) were ranked higher than the US, e.g., it was cheaper to build there.

IMO, no trade agreement will make any country change its environmental laws, force higher wages, or make US manufacturing facility costs more competitive. It’s far better to challenge the candidates on how they will reduce trade deficits than to worry about what their opinion is on any treaty. The jobs will go to lower cost regions regardless of treaties, that’s how big business works.

I have a lot more data for those who want it. Feel free to offer opinions or ask questions. The more we know the better. Please also accept my sincere statement that I have no candidate of choice as yet and that I do not care what the candidates’ positions are on TPP. I feel they should be re-directed to a discussion about what to do about large US trade deficits.

https://www.census.gov/foreign-trade/statistics/highlights/topcurmon.html
https://ustr.gov/trade-agreements/free-trade-agreements
https://ustr.gov/tpp/overview-of-the-TPP
http://epi.yale.edu/epi/country-rankings
http://epi.yale.edu/our-methods
https://www.conference-board.org/ilcprogram/index.cfm?id=28277
http://www.china-briefing.com/news/2014/06/03/china-asean-wage-comparisons-70-production-capacity-benchmark.html
http://www.cushmanwakefield.com/~/media/global-reports/ManufacturingIndex2014_NT_MReilly.pdf