A new report authored by David Rosnick of the Center on Economic Policy Research finds that the modest gains resulting from the Trans-Pacific Partnership (TPP), a proposed trade agreement between the US and 11 Pacific Rim countries, will not offset the damage done to US workers’ wages by the trade pact.
The report shows that “most US workers are likely to lose out from TPP,” said Mark Weisbort, CEPR co-director.
Rosnick arrived at his conclusion after reviewing a report by Peter Petri, Michael Plummer, and Fan Zhai that supports TPP. Petri, Plummer, and Zhai estimate that the cumulative increase to the US GDP resulting from TPP will be 0.13 percent over a ten-year period between 2015 and 2025.
The annual gain, according to Rosnick would be about 0.01 percent, which he describes as little more than a rounding error that will have little impact on annual economic growth, which Petri, Plummer, and Zhai estimate to be 2.4 percent with or without the TPP.
The small growth, according to Rosnick, will do little to offset the impact on wages of most workers, who if the “pact goes into effect, will face stiffer competition from lower wage workers abroad.”
The biggest losers will be middle-income earners who will face more competition from their lower paid counterparts in other countries.
On the other hand, some high-income earners will see a boost to their income resulting from the expansion of copyright, patent, and other protectionists policies in TPP.
The lowering of middle-income earners wages and the increase of income on the high-end will exacerbate the growing levels of income inequality in the US.
Rosnick’s paper concludes that “despite the very modest gains in expanded economic activity, wages will generally fall as a result of future trade agreements.”
Negotiations between the US and the eleven other TPP nations–Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam–are still underway and have been conducted in unprecedented secrecy.
As a result, the details of the proposed pact are not known, but people who have seen early drafts describe the general outline as similar to that of NAFTA.
The secrecy and TPP’s similarity to NAFTA has irked union, environmental, and consumer protection activists.
In August, opponents of TPP rallied and marched in Minneapolis to voice their opposition to TPP.
At the demonstration, Larry Cohen, president of CWA, criticized the White House for trying to deliver more NAFTA-like trade deals and the fact that the voice of the people has been excluded from the discussions at the TPP negotiating table.
“We have to say to the White House loud and clear: In 2008 and 2007, when you were in Iowa you told us no more NAFTA, you told us no more bad deals, that we would have good deals,” said Cohen at the Minneapolis demonstration. “We’re still waiting,”
“When do we get to have a say on these trade deals?” he added. “When do we get to see these trade deals? When do the people of this country get to speak up on trade, not just the State Department?”