A test of U.S. commitment to international system of trade and investment

In my role as President of the Emergency Committee for American Trade, I meet often with foreign government officials and foreign business leaders. They are increasingly worried about the prospects for passage of the Trans-Pacific Partnership (TPP). They see passage as a test of U.S. commitment to the robust international system of trade and investment rules built in the 70 years since the end of World War II. They are acutely aware that, it will likely be years, if ever, before the United States will ratify the TPP.

The costs of delay, in terms of export dollars lost, are substantial. The Peterson Institute finds that delaying the TPP for even one year would cost the U.S. economy $94 billion in total gains, in net present value. The costs of abandoning the agreement, when assessed by considering the loss of international prestige, are almost incalculable.

{mosads}It would make for a series of failures – failure to secure lowered tariffs and market access for American farmers and manufacturers, failure to secure binding commitments against protectionist policies that would harm the growth of Internet commerce, failure to protect American innovation in the form of intellectual property rights.

Individually, each of these failures represents a missed opportunity. In aggregate, the totality of these failures will derail opportunities for U.S. economic growth for years to come, while other nations seize the field and pass us by. 

Furthermore, while much of the discussion has been focused on what would be lost in Asia if TPP is not passed by Congress, there are hemispheric trends that should be of equal concern. The loss of opportunities and prestige that comes with a failure to pass TPP will not only harm our relationships with our Asian TPP partners but also those with TPP partners in our own hemisphere.

Passage of TPP would allow the United States to strengthen our economic ties with hemispheric allies who share our interest in a rules-based trading system and will provide a hedge against the strong protectionist sentiment in a number of Latin America’s largest economies. Of particular importance, with TPP, the United States has the ability to improve the integration of North American supply chains and explore new markets for goods produced by those supply chains.

The world is watching and even our closest allies, many of whom are TPP partners, will not wait for us. They will do what nations with a clear vision for their future do – they will make other plans which will advantage their home-grown companies and disadvantage ours. 

Calman J. Cohen, PhD is president of the Emergency Committee for American Trade

The views expressed by authors are their own and not the views of The Hill.