Committee meeting on Trade Legislation Markup,
TPP, TPA*, TAA & Customs
*TPA is the ability to fast-track future Trade Agreements under the
Trans-Pacific Partnership (TPP)
I HAVE SAID ALL ALONG THAT I THINK THIS AMENDMENT IS IMPORTANT ON
ITS OWN. IT WORKED OUT AN AGREEMENT WITH CHAIRMAN HATCH, FOR WHICH I
SEE THANK YOU, TO OFFER THIS AMENDMENT. BE ASKING FOR A VOTE -- WE
WILL NOT BE ASKING FOR A VOTE. I DISCUSSED IN RECENT WEEKS AND FOR
YEARS NOW I BELIEVE CURRENCY
MANIPULATION IS A MOST SIGNIFICANT EMERGING TRADE CHALLENGE THIS
ACCORDING TO THE PETERSON INSTITUTE FOR NATIONAL ECONOMICS, MORE
THAN 20 COUNTRIES HAVE INCREASED THEIR FOREIGN EXCHANGE RESERVES BY
AN ANNUAL AVERAGE OF $1 TRILLION IN RECENT YEARS. THE BUILDUP KEEPS
THE CURRENCY SIGNIFICANTLY
UNDERVALUED AND INCREASING THEIR TRADE SURPLUS. THAT HAS RESULTED IN
DEFICITS GOING UP FROM ABOUT 200 BILLION TO $500 BILLION A YEAR.
CORRESPONDING U.S. JOB LOSSES IN THE MILLIONS. WHEN CURRENCIES
MANIPULATED, IT HURTS BOTH EXPORTS, THEY ARE MORE EXPENSIVE
OVERSEAS, AND OUR PRODUCTS ARE UNDULY LOWER-PRICED HERE.
CHINA IS THE MOST -- THEY HAVE PERFECTED CURRENTLY MANIPULATION TO A
FINE ART. THEY ARE AT THE FRONT OF THE LINE WHEN IT COMES TO THIS
ACTIVITY. THIS ADMINISTRATION SEES IT AS A GEOPOLITICAL NECESSITY TO
ENSURE THAT THE UNITED STATES DOESN'T SEE GROUNDS FOR
CHINA IN THAT
REGION OF THE WORLD. IF THE GOAL IS TO LURE COUNTRIES AWAY, IT MAKES
PERFECT SENSE THAT AS PART OF THE OVERALL EFFORT, WE ALSO SHOULD
DEAL WITH CHINA HEAD ON TO SHOW THEM WE WILL NOT CONTINUE BUSINESS
AS USUAL IN OUR RELATIONS WITH THEM.
WHILE I'M SKEPTICAL OF IT AS A WHOLE, I DO NOT DISPUTE THAT IT WILL
GROW THE GDP OR CORPORATE PRODUCTS FOR MANY MULTINATIONALS. THE
TRADE AGREEMENT OF THE LOAN WILL NOT PROVIDE THE TOOLS WE NEED TO
COMBAT THE SPECIFIC CHALLENGE OF CURRENCY
MANIPULATION, WHICH HAS SUCH A TANGIBLE A DETRIMENTAL IMPACT ON
MIDDLE-CLASS JOBS AT HOME.
IF WE DO NOT DO IT NOW, WHEN? WE HAVE WAITED A LONG TIME. WE HAVE
BROAD BIPARTISAN SUPPORT. THIS BILL WILL RIDE ALONGSIDE IN NOT IN
IT. MANY OF YOU KNOW I HAVE LONG BEEN AN ADVOCATE ON THIS ISSUE AND
WORK TO FIND SOLUTIONS FROM MANY DIFFERENT ANGLES. I HAVE BEGGED AND
PLEADED WITH ADMINISTRATION AFTER ADMINISTRATION. I HAVE NEGOTIATED
WITH FIVE FOR DIFFERENT TREASURY SECRETARIES BEGINNING WITH
SECRETARY SNELL -- SNOW. IT IS NOT DIFFERENT. DO SOMETHING ON
CURRENCY. YOU HAVE TAKEN THE POSITION
THAT COUNTRY NEGOTIATIONS IS APPROPRIATE TO ON THE NOTHING GETS
OTHER COUNTRY JUST RESISTS CHINA PARTICULAR. THE IS
CURRENCY MANIPULATIONS AS A
DIPLOMATIC TOOL TO GET SOMETHING ELSE RATHER THAN FORCE EXISTING
LAWS TO PROTECT THE AMERICAN WORKERS, WHICH TO ME IS -- I'VE
COME TO THE EXCLUSION IF YOU WANT TO PROTECT AMERICAN WORKERS
FROM CHINA, DIFFERENT THAN THESE COUNTRIES, WE NEED TO PASS THIS
WHERE TO STRENGTHEN THE MECHANISM FOR THE TOOLS THAT ARE IN PLACE
BUT ARE NOT CURRENTLY GETTING USED. MANY OF YOU HAVE SUPPORTED IN
THE PAST AND ARE FAMILIAR WITH IT. OVER 60 VOTES ON THE FLOOR OF THE
SENATE SEVERAL YEARS AGO. OH IS BIPARTISAN.
THE COMMERCE DEPARTMENT FINDS THAT SUBSIDIZED IMPORTS ARE CAUSING
ECONOMIC HARM TO AMERICAN MANUFACTURERS AND WORKERS, THE
MINISTRATION MOST IMPOSE DUTIES TO COUNTER BILL THE AND IF IT
INFERRED ON FOREIGN PRODUCERS AND EXPORTERS BY THE SUBSIDIES. RATHER
THAN ENFORCE EXISTING LAW, ADMINISTRATION AND THE PREVIOUS ONE,
PREFERRED TO USE THE THREAT OF CURRENT COMMUNICATION MEASURES AS A
DIPLOMATIC TOOL TO ACHIEVE OTHER NONECONOMIC GEOPOLITICAL GOALS. AS
A RESULT, THEY HAVE TO FIND WHAT QUALIFIES AS AN EXPORT SUBSIDY. THE
HAVE EXCLUDED CURRENCY MANIPULATION
EVEN THAT IT IS AS PLAIN AS THE NOSE ON YOUR FACE. THAT IS WHY IT IS
AMENDMENT WOULD REQUIRE THE COMMERCE DEPARTMENT TO INVESTIGATE
WHETHER CURRENCY UNDER EVALUATION BY
GOVERNMENT PROVIDES THE DOUBLE SUBSIDY IN THE U.S. REQUESTED SUCH AN
INVESTIGATION. IT DOES THIS BY PUTTING IN PLACE A NEW RULE IS SIMPLY
SAYS EXPORT SUBSIDY MAY EXIST THROUGH
CURRENCY MANIPULATION AND SHOULD BE INVESTIGATED. PERIOD.
WE HAVE WORKED LABORIOUSLY. IT IS
COMPLIANT. WE'RE USING EXISTING MECHANISMS AND MAKING SURE THAT THEY
APPLY TO CURRENCY, THE SAME MECHANISM
PEOPLE HAVE USED ON OTHER ISSUES . WE'RE MAKING SURE THAT HAPPENS
WITH CURRENCY. THIS IS THE
WE MUST SHOW CHINA WE'RE NOT MISSING AROUND AND GET SOMETHING DONE.
MEMBERS OF THIS COMMITTEE, I HOPE YOU FEEL AN OBLIGATION AS I DO,
ESPECIALLY OUR OVERSIGHT ROLE. WE HAVE AN OBLIGATION TO ENSURE TOOLS
ARE IN PLACE TO PROTECT AMERICAN WORKERS AND THAT THEY ARE
BEING USED APPROPRIATELY. TO MY CAUSE OF HISTORY WORK ON THIS ISSUE
AND SUPPORT FOR THIS PROPOSAL, THIS IS OUR BEST OPPORTUNITY FOR THE
MOST APPROPRIATE OPPORTUNITY TO SHOW THAT WE ARE SERIOUS ABOUT
COMBATING THE TRADE. YOU KEPT THIS BIPARTISAN.
THE ORIGINAL BILL WITH SENATOR GRAMS AND COLLINS AND SESSIONS AND
MYSELF. SENATOR GRASSLEY HAS BEEN A VOCAL COMPONENT OF THIS ISSUE IN
THE PAST. SENATOR ISAKSON AND CARVER HAVE VOTED AND ARE SUPPORTIVE
OF IMPROVEMENTS IN THIS SPACE. I KNOW I'M FORGETTING SOME OTHERS.
CHINA'S TRADE ECONOMIC POLICY OF UNDERMINING THE GLOBAL MARKET PLACE
WHICH MAJOR CEOS QUIETLY ADMIT TO EVERYONE OF US THEY CANNOT SAY IT
PUBLICLY, BUT THEY KNOW WHAT IS GOING ON.
THE APPROPRIATE TIME IS NOW. I URGE MY COLLEAGUES TO SUPPORT THIS
14TH AMENDMENT. >>
THANK YOU. I UNDERSTAND HIS SEAL HERE -- ZEAL HERE. DETERMINE
WHETHER SOME CURRENCY MISALIGNMENT IS
EFFECTIVELY A SUBSIDY EITHER DIRECTLY OR INDIRECTLY TO A COUNTRY'S
EXPORTS. IF SO, THE SANCTIONS CAN FOLLOW. I ACTUALLY ASKED MY
COLLEAGUES TO VOTE AGAINST THIS AMENDMENT. IT COULD BE BASED ON
PRESUMPTIONS WITHOUT SUPPORT.
CURRENCY FUNDAMENTALS. AN AMENDMENT
WOULD ALLOW SO MANY FREEDOMS AND ARRIVING AT A DETERMINATION
INCLUDING INDIRECT SUBSIDIES RAISED ON SOME MEASURE OF UNDER
EVALUATION THAT IT WOULD PROVE ENTIRELY INEFFECTIVE . AT LEAST THAT
IS MY VIEW. EITHER IT COULD OR WOULD NOT BE MADE. IT COULD LEAD TO
TRADE DISPUTES. I'M CONCERNED ABOUT IT. I UNDERSTAND MY COLLEAGUES
SINCERITY ON THIS. WITH THAT, ANYONE ELSE CARE TO COMMENT? >>
SOMEBODY ELSE & OTHERS
I WANT TO COMMEND SENATOR SHUMAN FOR ADVANCING THIS SOLUTION TO THE
ISSUE OF CURRENCY MANIPULATION. I
THINK IT IS PRETTY CLEAR. THERE IS NO ISSUE THAT HAS CONSUMED MORE
TIME THAN THESE DEBATES IN CURRENCY
MANIPULATION . IT IS A SENSITIVE ISSUE. A GHOST OF THE HOW -- HEART
OF -- IT GOES TO THE HEART OF HOW WE GROW AND PROTECT AMERICAN JOBS.
IT REFLECTS DISCUSSION WITH RESPECT OF HOW THIS IS GOING TO AFFECT
FEDERAL RESERVE PRACTICES AND THE LIKE. I THINK SENATOR SCHUMER HAS
FIGURED OUT HOW TO INGEST THE KEY QUESTION, WHICH IS TO DEAL WITH
CHINA, WHICH CLEARLY MANIPULATED IN PAST AND GETS AN UNFAIR
ADVANTAGE. THIS LEVELED THE PLAYING
FIELD FOR AMERICAN INDUSTRY AND A PRACTICAL FACTION. I HOPE
MY COLLEAGUES WILL SUPPORT THE AMENDMENT. I APPRECIATE MY SEATMATE
ALL THESE YEARS WORKING WITH SO MANY OF YOU ON BOTH SIDES OF THE
AISLE TO COME UP WITH A PRACTICAL APPROACH AT THIS POINT. >> ANY
FURTHER COMMENTS? >>
CAN TO OFFER AN AMENDMENT THAN THE TRADE PROMOTION AUTHORITY TO THE.
THIS'LL BE NARROWLY TARGETED TOWARD ANY OBJECTIVE. I'M A COSPONSOR.
I VOTED FOR IT IN 2011. SCF THE SINGLE ONE OF THE COMMITTEE
MEETINGS. HE HAD MORE HAIR THANEN. HE ASKED ABOUT
CURRENCY MANIPULATION. I THINK IT
AFFECTS TRADE. FRANKLY, IT WAS SOMETHING THE OFFICE TYPICALLY
HANDLES. IT IS SOMETHING DONE BY TREASURY. IT SHOULD AND CAN BE
ADDRESSED. IT IS A NARROW OBJECTIVE. WE'RE TALKING ABOUT
INTERVENTION. SOME OF YOU FOLLOW THEIR WORK. INCREASE U.S. TRADE
DEFICIT EACH YEAR. THE DEAL TRADE IS TO BE -- WE SELL PRODUCTS TO
OTHER COUNTRIES. THE HOPE IS WE USE THAT MONEY TO BUY THEIR PRODUCT
AND VICE VERSA . THAT IS BALANCED TRADE. WHEN A COUNTRY IS AN
EXAMPLE AND ENCOURAGES THE DEPRECIATION OF THEIR
CURRENCY, YOU HAVE THIS IMBALANCE. WE
SEE THIS IN TERMS OF THE TRADE DEFICIT. IT IS DRIVEN BY ENERGY AND
CHINA. A LOT OF THIS GOES TO THE MANIPULATION WE HAD SEEN. GOT TO
ADDRESS IT AND DO IT IN A THOUGHTFUL WAY AND DO IT IN A WAY TO AVOID
DISPUTES THAT THE CHAIRMAN TALKED ABOUT. I CAN TO SUPPORT THAT
I UNDERSTAND THE SENATOR'S POSITION. >> WE HAVE APPLIED DIPLOMATIC
PRESSURE. DIALOGUE AFTER DIALOGUE. OFTEN CHINA TAKES ONE STEP
FORWARD AND TWO STEPS BACKWARD. IF THEY PETITIONER REQUEST AN
INVESTIGATION, IT DOESN'T PRESUPPOSE AN OUTCOME. I THINK IT IS
CONTRIBUTED BEST CURRENCY IS
CONTRIBUTED TO SOMETHING ALMOST UNKNOWN A GENERATION AGO. PUTTING
TOGETHER THEIR BUSINESS PLAN AND SHUTTING DOWN PRODUCTION IN DAYTON,
OHIO OR ASHEVILLE, NORTH CAROLINA AND MOVING IT OVERSEAS.
CURRENCY CONTRIBUTES TO THAT
STRUCTURE AND BUSINESS PLAN. THIS IS A CHANCE TO TAKE AWAY ONE OF
THOSE INCENTIVES FOR COMPANIES TO FOLLOW THAT ROUTE. >> MR.
WANT TO SPEAK IN FAVOR VERY BRIEFLY. >> SURE. >> AS THE SENATOR
KNOWS BECAUSE HE WAS TRADE REPRESENTATIVE, THERE'S A BILL TO
ILLUMINATE THE U.S. TRADE REPRESENTATIVE. HE LEARNED THAT ONE DAY
WHEN IN THE OFFICE OF THE TRADE REPRESENTATIVE. YOU DO NOT GET A
TRADE DEAL -- YOU FAILED. THE INCENTIVE IS TO GET A DEAL AT ANY
COST. NO DEAL IS PERFECT. IT REQUIRES CONGRESS TO GO BACK AND TAKE
WHAT WE HAVE LEARNED AND TO OCCASIONALLY MODIFIED WHAT THE AGREEMENT
WAS. THERE'S ONE THING I THINK WE ALL KNOW HERE -- THE CHINESE
MANIPULATE CURRENCY. THE QUESTION IS,
ARE WE GOING TO DO SOMETHING ABOUT IT? ARE WE GOING TO CHANGE? IF
YOU THINK THIS APPROACH IS FAIR, THEN SUPPORTED. THIS IS NOT THE
ONLY THING THAT WE COULD LOOK AT. THIS IS WHAT WE NEGOTIATED. NOW WE
KNOW THIS, THEREFORE WE SHOULD CHANGE THAT. LET'S CHANGE THAT. I
ENCOURAGE MEMBERS TO SUPPORT IT. >>
I STRONGLY SUPPORT THIS AMENDMENT, I THINK. I THINK IT IS VERY CLEAR
WHEN YOU HAVE -- WE'RE TALKING ABOUT A LEVEL PLAYING FIELD. IT IS
ONE THING TO HAVE MONETARY POLICY. IT IS ANOTHER TOP GOVERNMENTAL
POLICY TO MAKE YOUR CURRENCY SO YOU
GET A COMPETITIVE ADVANTAGE. IT GIVES YOU A 20% ADVANTAGE OVER
MANUFACTURERS OR FARMERS. THAT IS NOT A LEVEL PLAYING FIELD. WHAT
THEY'RE AMENDMENT DOES IS ALLOW US TO BE ABLE TO DETERMINE IF THAT
IS WHAT THE CURRENCY POLICY IS DOING
IN ORDER TO GET THAT 10 OR 15 OR 20% ADVANTAGE. AS SENATOR PORTMAN
SAID, WE ARE FOR A LEVEL PLAYING FIELD. WHEN YOU FIX YOUR
CURRENCY VALUE SO THAT YOUR
MANUFACTURERS AND PRODUCERS AND FARMERS HAVE AN ADVANTAGE, THAT IS
WRONG. I THANK YOU FOR BRINGING IT FORWARD. >>
I WILL BE BRIEF. I KNOW WE HAVE A LOT TO DO. I WOULD TO JOIN IN
SUPPORT OF THE AMENDMENT. AND AN WANT TO SIMPLY EXPRESSED
FRUSTRATION. I THINK IT IS EVIDENT WHAT HAS HAPPENED OVER A LONG
PERIOD OF TIME ON A WHOLE RANGE OF FACT THIS IS THAT CHINA, FOR
EXAMPLE, IS ENGAGED IN. WHEN CHINA CHEATS, WE LOSE JOBS. VERY
SIMPLE. WHEN THEY CHEAT ON CURRENCY,
PURPOSELY UNDERVALUE IT AS A PERNICIOUS AND DESTRUCTIVE IMPACT, I
REMEMBER SITTING WITH SECRETARY GEITHNER IN MY OFFICE AND RAISING
THIS ISSUE. IT SEEMS THAT OVER THE OVER, ADMINISTRATION HAS SAID
THAT THEY UNDERSTAND THE PROBLEM. THE WANT TO DO SOMETHING ABOUT THE
PROBLEM. I APPRECIATE THAT. I THINK THE TIME FOR RAISING IT AND
PUSHING IT AND TAKING IT IN SMALLER STEPS IS OVER. I THINK WE NEED
TO TAKE A MORE DECISIVE AND DETERMINED ACTION TO GET THE RESULT
WHICH AMERICANS EXPECT AS TO. THEY DO NOT EXPECT US TO CREATE SOME
MAGIC WAND. THEY DO EXPECT US TO TAKE EFFECTIVE STEPS TO REMOVE A
PROBLEM. I THINK THIS IS HURTING OUR WORKERS AND LITERALLY
COSTING US JOBS. >>
DON'T DISAGREE THIS IS A PROBLEM. I JUST DO NOT THINK THIS IS THE
RIGHT SOLUTION. WE HAVE YOUR VIEWPOINT ON THIS. >> THANK YOU. >> WE SHARE THE
CONCERNS OF MANY IN CONGRESS REGARDING
CURRENCY PRACTICES. WE HEAR YOUR CONCERNS ABOUT THE
CURRENCY PRACTICES. UNFAIR
CURRENCY PRACTICES HURT OUR
WORKERS AND OUR FIRM. THAT IS WHY THIS ADMINISTRATION HAS TAKEN
GREAT LENGTHS AND MEASURES IN TERMS OF ENGAGING WITH PARTNERS AND A
NUMBER OF OTHERS, INCLUDING THE G7 AND IMF, TO PRESS THIS ISSUE.
BEEN REAL PROGRESS WHICH AFFECT
CURRENCY. IT HAS DEPRECIATED BY OVER 30% ON A REAL EFFECTIVE
BASIS SINCE 2010. JAPAN HAS NOT INTERVENED SINCE 2011. THERE HAS
BEEN MEASURABLE PROGRESS.
WITH RESPECT TO THE AMENDMENT, WE ARE
OPPOSED TO THE LEGISLATION. FIRST OF ALL, IT RAISES QUESTIONS OF A
CONSISTENCY WITH OUR INTERNATIONAL OBLIGATIONS. I THINK THERE ARE
OTHER COUNTRIES THAT COULD MIMIC OUR PROVISIONS, BUT AT THE SAME
TIME, TARGET OUR COMPANIES AND WORKERS. THAT WOULD PRESENT A
REAL CONCERN. THEY COULD DESIGN PROVISIONS THAT USE A DIFFERENT
STANDARD. THERE'S NO SINGLE UNIVERSAL STANDARD THAT APPLIES TO
CURRENCY VALUATION. UNILATERAL
MEASURES WILL BE PERCEIVED AS BEING
COUNTERPRODUCTIVE AND ALL THE PROGRESS WE HAVE MADE. IT WILL IMPEDE
AND IMPAIR OUR MULTILATERAL AND BILATERAL EFFORTS. WE ARE CONCERNED
THAT UNILATERAL MEASURES WILL IMPAIR OUR ABILITY TO MAKE PROGRESS IN
THE CONTEXT OF -- A CURRENCY
OBJECTIVE. I THINK OUR PARTNERS WILL BE CONCERNED ABOUT NEGOTIATING
SOME SORT OF CURRENCY PROVISION GIVEN
THAT THEY MAY SEE UNILATERAL MEASURES AS WELL. >>
THANK YOU SO MUCH FOR YOUR OPINION. >> I WANT TO SAY THANK YOU TO
SENATOR SHUMER FOR HIS LEADERSHIP. WE HAVE HEARD OVER AND OVER AGAIN
ABOUT CHINA TAKING BABY STEPS. WE'RE AT A POINT NOW WHERE WE ARE
FULLY ENGAGED IN A GLOBAL ECONOMY. IT IS JUST NOT ENOUGH. WITH ALL
DUE RESPECT ON WHAT IS COMING. WE WANT OUR TRADING PARTNERS. WE WANT
JAPAN TO KNOW THAT IT IS NOT OK TO MANIPULATE CURRENCIES. PEOPLE
LOOK AT CHINESE PRODUCTS AND SEE A LOWER PRICE AND DO NOT UNDERSTAND
A GOOD CHUNK OF THAT IS BECAUSE THEY CHEAT. THIS IS ANOTHER TO
INTEGRATE A WAY TO DO SOMETHING ABOUT IT. I THINK IT IS LONG
OVERDUE. I URGE A STRONG BIPARTISAN VOTE. >>
ALL DUE RESPECT, WE HAVE TRIED THE DIPLOMATIC ROUTE OVER AND OVER
AGAIN FOR 10 YEARS. WE TOOK A TRIP TO CHINA ALONG WITH SENATOR
COBURN 10 YEARS AGO AN EFFORT TO GET SOMETHING DONE. THIS HAVE TO DO
SOMETHING THAT MIGHT ACTUALLY SOLVE THIS PROBLEM. I HAVE LOST FAITH
IN THE DIPLOMATIC BACK AND FORTH.
I ASKED FOR THE A'S IN EA'S -- AYES
AND NAYS. [ROLL CALL VOTE] >> AYE. >> NO. >> NO BY PROXY. >> AYE. >>
NO. >> NO. >> AYE. >> AYE. >> AYE. >> AYE. >> NO. >> AYE. >> AYE. >>
AYE BY PROXY. >> AYE. >> AYE. >> AYE BY PROXY. >> NO. >> MR.
CHAIRMAN, I'D LIKE TO -- >> I MEANT TO GO NO. TALLY UP THE VOTE.
18 AYES, 8 NAYS. >>
YOU KNOW HOW TO SMOTHER ME. [LAUGHTER] >> Schumer: WITH LOVE,
MR. CHAIRMAN. >> IS THAT THE NEW YORK TYPE OF LOVE? [LAUGHTER]
Made-up job gains from the Trans-Pacific Partnership
The study used to "justify" the Trans
Pacific Partnership is
Peterson Institute for International Economics
Nowhere in this book does it says 650,000 jobs would be created.
Petri of the Institute says: "it’s completely
misleading to suggest there would be both a gain
in income and a gain in jobs." -- "mainstream
economists do not believe that the number of jobs is significantly
affected by trade policy".
Expect strong support from Republicans
for the TPP, though many
Democrats remain skeptical or hostile.
gain of $77 billion in income, by 2025, amounts to just a 0.4 percent increase in
the pre-trade-deal baseline for the United States’ $20-trillion gross
domestic product. You read that right—0.4 percent.
The correct number of jobs created is zero, not
650,000, according to the very study used to calculate this number.
But it is our contention that this will
outsource more jobs from the US, as Corporations find it easier to open
foreign Pacific subsidiaries, -- reducing the number of US jobs available.
2 years after NAFTA -- a financial meltdown in Mexico and collapse of the peso
evaporated any job gains from NAFTA.
The Peterson economist who generated the
forecasts famously said he would stay away from job forecasting in the
PUBLIC CITIZEN: Trans-Pacific Partnership (TPP): Job Loss, Lower
Wages and Higher Drug Prices
--- NAFTA cost U.S. workers almost 700,000 jobs.
--- Since the Korea–U.S. Free Trade Agreement, America's trade deficit
with Korea has grown more than 80 percent, the equivalent of a loss of
more than 70,000 additional U.S. jobs.
--- Since China’s admission to the World Trade Organization, the U.S.
goods trade deficit with China increased $23.9 billion (7.5 percent) to
$342.6 billion and millions of jobs Outsourced.
Trade deals that fail to include Chinese currency manipulation or labor
• minimum wage,
• workers comp. ,
• EPA environmental standards,
• legal recourse
are really about corporate profits at the
expense of American workers.
Tell your representatives - "no fast-track of the Trans Pacific
About the only way now, to create jobs here, is to impose big
TARIFFS on these imported goods.
LETS GET OUR OWN MANUFACTURING BACK by making an EVEN PLAYING FIELD.
Expect strong support from Republicans for the TPP, though many Democrats
THE ORIGINAL ARTICLE
(Glenn Kessler, Washington Post):
Secretary of State John F. Kerry:
“Estimates are that the TPP [Trans-Pacific Partnership] could provide $77
billion a year in real income and support 650,000 new jobs in the U.S.
alone.” –, in
an opinion article titled “Alliances for Peace,” Jan. 14, 2015
Secretary of Agriculture Tom Vilsack:
“Completing the Trans-Pacific Partnership provides the opportunity to open
up markets, lower tariffs and, according to the Peterson Institute,
increase U.S. exports by $123 billion and help support an additional
650,000 jobs.” – , in
an interview with the Greater Baton Rouge Business Report, Jan. 26,
The Fact Checker frequently warns readers to be wary of claims by
politicians that various policy initiatives will yield tens of thousands
of jobs. Such claims are often based on studies that rely on a variety of
assumptions, any of which can be called into question. So we were
interested when we received a call from a reader who wondered how the
administration calculated that a proposed international trade agreement,
known as the Trans-Pacific Partnership, would support some 650,000 jobs.
The Obama administration is on a full-court press to complete
the trade pact, involving 12 Pacific Rim nations, and also win from
Congress the authority for an up-or-down vote from lawmakers, which
officials say is necessary to close the deal. The TPP is one of the few
areas in which the White House can expect strong support from Republicans,
though many Democrats remain skeptical or hostile.
The Fact Checker of course takes no position on whether the proposed
trade deal is good or bad. But we were curious about how this number was
Notice that Vilsack referred to the
Peterson Institute for International Economics, which is a
well-regarded centrist think tank that focuses on international economic
policy. The Peterson Institute advocates for free-trade agreements but
also for programs that aid people who may be hurt by globalization.
The Peterson Institute in 2012 published
book titled “The Trans-Pacific Partnership and Asia-Pacific
Integration: A Quantitative Assessment,” by
Peter A. Petri, Michael G. Plummer and Fan Zhai. The book does include
an estimate that, by 2025, the United States would experience a gain of
$77 billion in income from TPP, as well as a $124 billion increase in
exports. (More on those numbers, which are expressed in 2007 dollars,
below.) But nowhere in the book does it says 650,000 jobs would be
Asked about the statistic on 650,000 jobs, the White House referred us
to the Office of the U.S. Trade Representative. USTR spokesman Matthew
McAlvanah directed us to
page 58 of the book. “They do not provide an estimate on jobs,” he
acknowledged. “However they do provide a methodology that one could use.”
Essentially, the book suggests that an income gain of $121,000 would be
“roughly equivalent to creating an extra job.” So the Obama administration
took the figure of $77 billion and divided it by $121,000, which yields
636,000. Rounded up, that becomes 650,000.
There’s just one problem: Petri says this is the incorrect way to use
his research, especially when officials such as Kerry combine the jobs
figure in the same sentence as the income prediction: “The TPP could
provide $77 billion a year in real income and support 650,000 new jobs in
the US alone.”
That’s because the calculation on jobs can only be done if one assumes
that wages have been frozen and there is no income gain, Petri said. So
it’s completely misleading to suggest there would be both a gain
in income and a gain in jobs.
Petri said that his book did not discuss job gains because
economists do not believe that the number of jobs is significantly
affected by trade policy.
“The reason we don’t project employment is that, like most trade
economists, we don’t believe that trade agreements change the labor force
in the long run. The consequential factors are demography, immigration,
retirement benefits, etc.,” he said. “Rather, trade agreements affect how
people are employed, and ideally substitute more productive jobs for less
productive ones and thus raise real incomes.”
The same dynamic exists with the claim that the trade bill would
increase exports by $124 billion by 2025. The Commerce Department
that about 5,500 jobs are supported by every $1 billion in
exports, so in theory that also would yield about 650,000 jobs. But that
calculation would ignore the fact that the Petri book found that
would increase by virtually the same amount as exports, meaning the net
number of new jobs is zero.
The mix of jobs would change, however. “Employment could be negatively
affected by the adjustment implications of a trade agreement,” Petri said.
“We estimate ‘job shifts’—employment moving from one sector to another—and
in difficult labor markets such shifts can lead to transitional
unemployment, retirement or wage cuts.” But, he added, “in the case of
the TPP such shifts will be small and slow, dwarfed by routine job
separations and new hires in the economy. So adjustments and costs should
be covered many times by gains. This makes possible strong transitional
assistance for workers and communities that are adversely affected.”
Finally, let’s put these numbers in context. Petri’s book says that
gain of $77 billion in income amounts to just a 0.4 percent increase in
the pre-trade-deal baseline for the United States’ $20-trillion gross
domestic product. You read that right—0.4 percent.
Indeed, a gain of 650,000 jobs would also be just 0.4 percent of
projected employment of 168 million people, Petri said. “The percentage
change is small,” Petri acknowledged, which he said is what one would
expect from a large and efficient economy such as the United States.
(Vietnam, by contrast, would see a gain of nearly 14 percent in income
according to Petri’s model.)
There is, of course, a long history of presidential administrations
touting imaginary job gains from trade deals. “I believe that NAFTA will
create 200,000 American jobs in the first two years of its effect,”
then-President Bill Clinton
said in 1993, when he signed supplemental agreements to the North
American Free Trade Agreement. “I believe that NAFTA will create a million
jobs in the first 5 years of its impact.”
Clinton was relying in part on analyses generated by the Peterson
Institute. Two years later, after a financial meltdown in Mexico and
collapse of the peso evaporated any job gains from NAFTA, the economist
who generated the forecasts famously said he would stay away from job
forecasting in the future.
In 2012, C. Fred Bergsten, the founder of the Peterson Institute,
conceded the Institute had “big internal debates” over whether to
calculate job numbers. “Congress always wants to know how many jobs
they’re going to create,” Bergsten said. “As good economists, we all take
the view I think that trade agreement does not
unbalance, create, or
destroy jobs, it alters the composition of the workforce.”
McAlvanah provided the following response:
“The Peterson Institute study provides a variety of different
analytical pathways to estimate the job supporting potential of TPP.
Peterson provides estimates of both the increase to U.S. income and to
U.S. exports as a result of TPP. The methodology laid out in the
Peterson study for calculating potential employment gains based on their
projected increase in income suggests a jobs number just below 650,000.
A different approach is to use the sectoral value added estimates from
the Peterson study. This approach was used by the U.S. Chamber of
Commerce to estimate approximately 700,000 jobs. Another approach is to
map the incremental increase in national economic output to a
proportional increase in employment. The Peterson study estimates an
increase of 0.4 percent of GDP attributable to TPP. Based on a 2025
working population of 168 million cited by Peterson, a 0.4 percent
increase would be approximately 672,000 jobs. It is also possible to
estimate jobs supported by new exports by multiplying estimates of jobs
per billion exports by the 124 billion dollars of increased exports
projected in the Peterson study.”
We note his statement did not address the fact that the study itself
did not offer these calculations — or that effects of one action, such as
more exports, are canceled out by another action, such as imports.
The Pinocchio Test
Clearly, with the Peterson Institute refusing to play the game this
time and cough up a jobs number, the administration decided to concoct its
own. But, as we have shown, one cannot at the same time claim both a gain
of $77 billion in income and a gain of 650,000 jobs; the same effects
simply cannot happen at the same time.
Moreover, these are big numbers with virtually no context. It is pretty
lame to use such huge numbers to tout what, in the context of the U.S.
economy, amounts to minuscule changes in income —10 years from now.
Our advice remains: be wary whenever a politician claims a policy will
yield bountiful jobs. In this case, the correct number is zero, not
650,000, according to the very study used to calculate this number.
Administration officials earn Four Pinocchios for their fishy math.