Politics

Half a Million U.S. Jobs Lost to TPP

Study projects slower GDP growth, fewer jobs and greater income inequality

The Trans-Pacific Partnership trade deal would cost almost half a million American jobs over the next decade, reduce gross domestic product growth by half a percentage point, and increase income inequality, according to a new highly critical study.

The authors of the study, published by the Global Development And Environment Institute at Tufts University, will discuss their findings at 1 p.m. Monday at the National Press Club in Washington, D.C.

Other studies project modest gains in GDP as a result of eliminating or reducing thousands of tariffs.

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“However, these projections are based on unrealistic assumptions such as full employment and constant income distribution,” the Tufts report states.

Employing what they regard as a more realistic model, the study’s authors paint a starkly negative picture of the impact of the agreement. The study concludes that the deal would restrain job growth in all 12 countries — a total of 771,000 fewer jobs by 2025 that would exist, otherwise, including 448,000 in the United States. GDP growth also would be 0.54 percent lower in the United States than it would without the agreement.

“These projections should help TPP signatory countries and others assess the full range of economic impacts of the agreement before ratifying it,” the report states.

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The Tufts study projects that Japan would be a big loser under the TPP as well, with job losses at 74,000 and GDP growth 0.12 percent less than it would be with no deal. While projecting slower GDP gains for Japan and the United States, the study forecasts modest improvement for the other participating nations. Those projections are in line with a study by the pro-trade Peterson Institute for International Economics, which forecast overall job gains in the United States, but losses in some sectors.

Source: Tufts Global Development And Environment Institute
Source: Tufts Global Development and Environment Institute

The Tufts study concludes that depressed employment would result from two factors. First, it would cause production for export — which is less labor-intensive and uses more imported parts — to partially replace production for domestic markets. In addition, according to the study, the trade accord would increase pressure on companies to reduce labor costs.

Those two factors would exacerbate income inequality. The projection for the United States is that the share of national income going to labor would decline by 1.31 percent by 2025. That, in turn, would reduce demand for goods and services. That would cause slower GDP growth.

The study rates the trade deal so poorly that it even hurts countries that are not participants. The 10-year projections include lower GDP growth of 3.77 percent among developed countries and 5.24 percent among developing economies. All countries not part of the pact would lose more than 5.3 million jobs.

“Depending on the policy choices in non-TPP countries, this may accelerate the global race to the bottom, increasing downward pressure on labor incomes in a quest for ever more elusive trade gains,” the report states.

Notwithstanding Obama’s signature, the United States cannot join the trading bloc without approval from Congress. Sen. Jeff Sessions, R-Ala., last week took to the Senate floor to denounce the pact.

“It cannot become law,” he said. “It’s detrimental to this economy. It’s detrimental to people who go to work every day.”

Sessions noted that the 5,554-page agreement — longer than the Holy Scriptures — cannot be altered by Congress. He pointed to a provision creating a multinational commission that would be empowered to change rules or write new ones as the years go by.

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“A living agreement is no agreement at all,” he said. “It can be changed.”

Sessions referenced several other studies that have projected job losses, wider trade deficits and other detrimental impacts. Noting his vote in favor of a free trade deal with South Korea, Sessions said the promises made by proponents simply have failed to materialize. Exports to the Asian nation have increased by only about $1.2 billion since 2010, while imports are up by more than $20 billion.

Sessions also pointed to Ford Motor Co.’s recent decision to pull out of the Japanese market, citing non-tariff trade barriers that make it impossible to maintain profitability.

“The truth is, Japan talks free trade, but like most of our Asian allies and trading competitors, they’re mercantilists,” he said. “And mercantilists believe that a successful economy is to export more and import less. This is the reality that we’re dealing with.”

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