TPP from an Amer­i­can per­spec­tive

The Pak Banker - - 4EDITORIAL - Dr Ka­mal Mon­noo

Ihave been reg­u­larly writ­ing about the need for pru­dence in strik­ing trade agree­ments. Good trade agree­ments can be the key to a coun­try's global con­nec­tiv­ity, its growth, job cre­ation en­deav­ors and for achiev­ing do­mes­tic cor­po­rate ex­cel­lence, whereas, poorly thought through agree­ments can end up de­stroy­ing the very na­tional in­dus­trial base whose strength­en­ing should be the un­der­ly­ing ob­jec­tive when ne­go­ti­at­ing trade agree­ments in the first place. Then of course there are some col­lec­tive global is­sues that can only be re­solved or made progress upon through wider un­der­stand­ing and co­op­er­a­tion. For ex­am­ple, cli­mate change - an all-im­por- tant is­sue which can­not be con­fronted ef­fec­tively un­less all ma­jor na­tions jointly par­tic­i­pate in the ef­fort. Let's take last year's Paris agree­ment: Now how would Pak­istan show for it­self as a na­tion if it was not to be a part of this global con­sen­sus or was to re­nege on its com­mit­ments? And it is in light of these broader as­pects that the Trans Pa­cific Partnership (TPP) should be eval­u­ated - a deal ne­go­ti­ated by the Obama ad­min­is­tra­tion but yet to be ap­proved by the US Congress.

Like any trade deal, the TPP may not be per­fect, but cer­tainly does not de­serve the kind of crit­i­cism be­ing lobbed its way not only by the Repub­li­cans but also from within the Demo­cratic Party (i.e. by Hil­lary Clin­ton and Bernie San­ders). Let's try and eval­u­ate that what the TPP ac­tu­ally en­com­passes and does it work to­wards achiev­ing the broader Amer­i­can goals vis- à-vis global trade or oth­er­wise? First, a good start­ing point­ing is al­ways to look at the ground re­al­i­ties as they stand today. Cur­rently about 80 per­cent of the goods from the 11 TPP part­ners al­ready come into the USA duty-free while ma­jor­ity of the US goods at­tract sig­nif­i­cant duty tar­iffs in all of these coun­tries. So from the US per­spec­tive, if it were to elim­i­nate tar­iffs on fur­ther 18,000 items with a rec­i­proc­ity on tar­iff re­moval to match the 'en­tire' ze­ro­tar­iff list of the US, it could turn-out to be a great ad­van­tage for the Amer­i­can man­u­fac­tur­ers who presently com­pete with duty-free im­ported goods, but will then also have duty-free ac­cess for their goods to 11 new mar­kets. On av­er­age the ap­plied tar­iff in the US is only 1.50 per­cent, whereas, these Pa­cific coun­tries have high im­port du­ties, for ex­am­ple Viet­nam charges over 50 per­cent on cars and ma­chines as im­port taxes. Get­ting them to abol­ish such high im­port du­ties can only be in the in­ter­est of US ex­porters. Sec­ond, for any one ne­go­ti­at­ing trade deals on be­half of the US, it is im­por­tant to keep in mind that Amer­ica's to­tal man­u­fac­tur­ing out­put today is near­ing an all-time high (as re­ported by the US In­dus­trial data bureau in De­cem­ber 2015) and it is im­per­a­tive for the Amer­i­can in­dus­trial con­fi­dence and for the much de­sired em­ploy­ment gen­er­a­tion that it does not fal­ter at this junc­ture. True that a size­able chunk of this in­crease in in­dus­trial out­put has come about by de­ploy­ing more ro­bots and fewer peo­ple, but still the econ­omy has cre­ated nearly 900,000 man­u­fac­tur­ing jobs since 2010, be­cause the gov­ern­ment has ably sup­ported the in­dus­try through cheap en­ergy, in­vest­ing in skill devel­op­ment and en­sur­ing friendly la­bor-man­age­ment re­la­tions, and this needs to be main­tained go­ing for­ward. In strik­ing this deal the Obama ad­min­is­tra­tion has pri­mar­ily tried to sus­tain this mo­men­tum. It has put its faith in the av­er­age Amer­i­can worker that given a level play­ing field, he has the abil­ity to com­pete glob­ally.

Third, there is an eth­i­cal and moral vic­tory in putting the TPP to­gether, be­cause the deal ex­plic­itly looks af­ter the in­ter­ests of the blue-col­lar work­ers. For all mem­bers' coun­tries, it en­sures free­dom for work­ers to form in­de­pen­dent trade unions, to elect their own la­bor lead­ers, to col­lec­tively bar­gain and to elim­i­nate all child and forced la­bor prac­tices. Also, it en­tails laws on min­i­mum wages, hours of work and oc­cu­pa­tional safety and health. Fourth, specif­i­cally to the ad­van­tage of the US, the deal pro­hibits all cus­toms du­ties for dig­i­tal prod­ucts, en­sures that US com­pa­nies do not have to share their source codes and that there ex­ists free ac­cess for all cloud com­put­ing ser­vices in all 12 coun­tries - all these be­ing ar­eas of grow­ing US strength. Fifth, it tack­les cer­tain larger global con­cerns that have been con­sis­tently raised by ma­jor­ity of coun­tries at the United Na­tions plat­form. The deal re­quires all sig­na­to­ries - es­pe­cially Malaysia - to take real steps to halt hu­man traf­fick­ing from such coun­tries as Thai­land, Myan­mar and Bangladesh and asks of each sig­na­tory to im­prove ac­cess for hu­man rights groups to as­sist vic­tims of traf­fick­ing. In ad­di­tion, it re­quires that all sig­na­to­ries com­bat traf­fick­ing in en­dan­gered wildlife parts, like ele­phant tusks and rhino horns, and end all their sub­si­dies that stim­u­late over-fish­ing.

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