TPP is a good deal for the middle class

Now that the United States and 11 other Pacific Rim countries have reached agreement on the landmark Trans Pacific Partnership (TPP), all eyes turn to Congress for ratification. We can expect opponents to trot out old arguments falsely comparing this deal to NAFTA. There have been free trade deals with 17 countries since NAFTA, all of which are better than the North American trade bloc.    

The fact is that TPP includes key labor, environmental, and human rights provisions that make it the most progressive trade deal ever. Just as important, the deal is critical to create opportunity for the American middle class in a vastly new economic era. To be against this trade deal is to be stuck in the 1990s and unable to see how, with the global economy, modern trade agreements have changed.  

{mosads}The charged debate over the TPP begins with one unalterable fact: in today’s economy, there is no path to middle-class prosperity without putting more Made in the USA products on foreign shelves. When NAFTA entered into force in 1994, over 80 percent of the world’s output was produced by the advanced countries. But in 2013, the developing world surpassed the old guard, and within a decade these emerging economies will produce twice that of the developed economies.  

Meanwhile, the United States is failing to tap into these markets—putting future middle class jobs and wages at risk. Of the 40 largest world economies, the United States ranks 39th in exports as a share of gross domestic product. And in Asia, one of the fastest-growing regions in the world, we’re doing especially poorly. From 2000 to 2014, the Asian import market more than tripled, but U.S. market share fell by 46 percent, the biggest drop of any of the 25 largest exporters into Asia, except Japan. Had the United States kept its share, we would have had an additional $275 billion in exports to this region. And since exports contribute 18 percent more to manufacturing workers’ wages, that’s a serious loss for thousands of American workers. Instead, these exports, jobs, and wages went to other countries, like Brazil, Russia, India, and China. In other words, at a time when world markets are bursting, we’re failing to put our goods in play. 

However, hope is not lost. Modern free trade deals give U.S. firms, and the jobs they support, equal footing with foreign businesses. And post-NAFTA, that is what we have done. In the 17 countries in which the United States has concluded a trade deal since 2000, our goods trade balance with those nations went from a $3 billion deficit to a $31 billion surplus. In the five most significant of these 17 deals, U.S. exports increased in four out of five product categories by an average of 157 percent. In Maryland, that meant that BTE Technologies could increase sales to Korea by 134 percent after the US-Korea agreement in 2012.  

But these 17 trade deals were simply the undercard for the title fight that is TPP.  

TPP encompasses 40 percent of the world’s economic output. It rewrites the rules of commerce in our image, not in the image of state-run economies like China. It does what trade deals are supposed to do—lowering tariffs, eliminating quotas, and rewriting that arbitrary rules that keep our products from foreign shelves. It adds the difference-makers that deals of the past shunted aside, like the strongest environmental, labor, and human rights provisions of all time for a trade deal. It’ll make the world a better, cleaner, and fairer place. It allows us to finally rewrite NAFTA which left out some of the key ingredients that make trade deals work better for everyone. On top of it all, TPP makes sure American middle class jobs can compete and grow in the face of overwhelming foreign competition. 

Trade debates are always heated, but there has never been an agreement this good on so many levels.

But, as we found in the last 17 deals, when the standards go up, American products win, American companies win, and American workers win. For the future of the American middle class, Congress must now pass the Trans-Pacific Partnership.

Chittooran is an economic policy adviser for the centrist think tank Third Way.