One of the major purported selling points for the Trans-Pacific Partnership (TPP) is a supposed increase in new jobs as a result of the controversial trade deal. The deal involves 12 nations, including the U.S., Australia, Canada, New Zealand, Japan, Malaysia and more. However, two recent economic reports have contradicted the claims that jobs will increase. They have shown that, more than likely, the deal will lead to a loss of jobs.
First there was a World Bank report that predicted that TPP would produce negligible boosts to the economies of the U.S., Australia, and Canada. TechDirt writes:
So according to the World Bank’s figures, the U.S. will gain an extra 0.04% GDP per year on average, as a result of TPP; Australia an extra 0.07% annually, and Canada a boost of 0.12% per year.
This study was followed up by a review from Jerome Capaldo and Alex Izurieta at Tufts University. In a study titled “Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement,” Capaldo and Izurieta claim their study uses a more realistic model than past analyses. Specifically, the researchers state that their model incorporates effects on employment that were previously excluded from TPP calculations.
Their study found that economic growth is likely to be limited — and negative — for some countries, including the United States. The researchers also found the TPP would probably lead to increased unemployment and inequality. Capaldo and Izurieta explained:
The standard model assumes full employment and invariant income distribution, ruling out the main risks of trade and financial liberalization. Subject to these assumptions, it finds positive effects on growth. An important question, therefore, is how this conclusion changes if those assumptions are dropped.
In the paper, the two researchers state that changes in GDP growth are “mostly projected to be negligible.” After using two sets of growth figures, ten-year measurements, and annual averages, they concluded the TPP “appears to only marginally change competitiveness among participating countries. Most gains are therefore obtained at the expense of non-TPP countries.”
The fact that any gains — however negligible — will come at the cost of non-TPP countries should be a warning to all nations of the world, especially those who do not stand to benefit from the agreement. Concerning predictions of actual job losses or gains, the researchers write, “TPP would lead to employment losses in all countries, with a total of 771,000 lost jobs. The United States would be the hardest hit, with a loss of 448,000 jobs.”
Finally, the researchers draw harrowing conclusions about the end result of the TPP.
Globally, the TPP favors competition on labor costs and remuneration of capital. 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.
This latest analysis of TPP job claims is even more dismal than a February 2015 analysis by theWashington Post, which revealed the U.S. government’s numbers on expected job increases from the TPP are not factually correct. The Post’s Fact Checker examined several quotes from government officials, including Secretary of State John Kerry and Secretary of Agriculture Tom Vilsack. Both Kerry and Vilsack claimed the international trade agreement would create 650,000 new jobs. However, these numbers do not take into account income gains and changing wages. According to the government’s own sources, imports and exports would increase by the same amount — resulting in a net number of zero new jobs.
The TPP has faced criticism for several years, not least because it has been negotiated in secret with overwhelming influence from multinational corporations. In late June 2015, President Obama signed into law the so-called “fast-track” bill, which set the stage for approval of the TPP. “Fast-track” limits Congress’ ability to alter the provisions of the trade deal, and only allows a vote of yes or no. The final terms of the deal were agreed upon in October 2015, and the full text of the agreement was released in November. The earliest Obama can sign the deal is February 4, 2016.
Following the release of the text of the TPP, journalist James Corbett released an excellent report examining the effects of the proposal. Corbett concludes that the most egregious portions relate to the Investor-State Dispute Settlement (ISDS) Mechanism, intellectual property, and food safety standards.
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