TPP from an American perspective

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.