Business Associations Urge Congress to Avoid Lame Duck Vote on Trade Deal

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For Immediate Release

October 5, 2016
CPA Contact: Paola Masman, 202-688-5145 ext 2, paola@prosperousamerica.org
ASBC Contact: Bob Keener, 617-610-6766, bkeener@asbcouncil.org

Business Associations Urge Congress to Avoid Lame Duck Vote on Trade Deal

Washington ~ The Coalition for a Prosperous American (CPA) and the American Sustainable Business Council (ASBC) released a letter to Congressional leadership today urging against holding a vote on the Trans-Pacific Partnership trade agreement after the November elections. ASBC and CPA collectively represent over 250,000 American businesses across the country, including farms and ranches. CPA also includes labor organization members.

The letter states in part:

American voters’ trust in national leaders has been ebbing. Both major party presidential candidates oppose the TPP. A lame duck session vote on the TPP would further erode citizen’s trust in government. Legislators who have been defeated or are retiring would vote, but are no longer accountable to voters.

President Obama seeks a legacy, but that legacy is not supported by either of his potential successors. A President Clinton or a President Trump deserves the opportunity to re-examine trade policy with a new analysis to determine what works and what does not.

“We are pro-trade generally, but we do not support the Trans-Pacific Partnership (TPP),” said David Levine, President CEO of ASBC. “Instead, ASBC and CPA are working to improve future trade policy with a stronger focus on America’s businesses and workers.”

“Any lame-duck session should be reserved for congressional business that is absolutely necessary for government to function,” said Michael Stumo, CEO of CPA. “The TPP does not fit that criteria. Rather it would enact wide-ranging, permanent international rules governing trade, food safety, the financial industry, international dispute resolution and many other domestic policies. We think that is a bad way to run a democracy.”

In explaining the rationale for opposing the TPP, the ASBC/CPA letter points to the US International Trade Commission report from May 18, 2016, which found that under the TPP, the large and persistent US trade deficit will worsen, manufacturing will decline, and trade performance in the services industry will worsen.

“Our members are supportive of policies that help them to grow sales domestically and internationally,” said Levine. “But when a deal like the TPP would give up domestic market share and that loss is not outweighed by export sales, it’s a bad deal for most U.S, businesses.”

“We know from past trade deals that tariff cuts have little, if any, correlation with better US trade performance,” said Stumo. “The next congress and the next president need a strategy to build and reclaim diverse and high quality array of business and industrial supply chains to win the international competition for good paying jobs.”

The full text of the letter to Congressional leadership may be found here and below.

The Coalition for a Prosperous America is a nonpartisan, nonprofit organization representing the interests of over three million households through our agricultural, manufacturing and labor organization members.

The American Sustainable Business Council advocates for policy change and informs business owners and the public about the need and opportunities for building a vibrant, sustainable economy. Through its national member network it represents more than 200,000 business owners, executives and investors from a wide range of industries. www.asbcouncil.org

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October 4, 2016

Dear Majority Leader McConnell, Minority Leader Reid, Speaker Ryan and Minority Leader Pelosi:

As we approach the end of the 114th Congress, the end of President Obama’s term of office, and the 2016 national elections, we urge you to not schedule a vote on the Trans-Pacific Partnership (TPP) in the so-called “lame duck” session.  Instead, we ask that you make it clear that there will be no vote so Congressional energies can be focused upon bills that are absolutely necessary for government to function as the next president takes over.

Our organizations represent over 250,000 American businesses in many sectors across the country. They are primarily small and medium sized businesses.  We appreciate the renewed debate about how to change our nation’s trade policy to benefit American producers and consumers.

American voters’ trust in national leaders has been ebbing. Both major party presidential candidates oppose the TPP. A lame duck session vote on the TPP would further erode citizen’s trust in government. Legislators who have been defeated or are retiring would vote, but are no longer accountable to voters.

President Obama seeks a legacy, but that legacy is not supported by either of his potential successors. A President Clinton or a President Trump deserves the opportunity to re-examine trade policy with a new analysis to determine what works and what does not.

Our organizations oppose the TPP on the merits because it will not benefit, and will likely harm, American businesses and our economy overall. We have experience with past trade agreements and the results have been lacking. Our national trade deficit is large and persistent. The domestic market share of American businesses here at home continues to erode in many sectors. And, the much vaunted “export opportunities” promised have not materialized to provide a net gain for American companies.

The TPP has failed to address modern national government strategies that often game the trading system for their industries’ benefit. For example, effective currency misalignment standards were omitted. Restrictions on government influenced industries are easily avoided. The replacement of tariffs with increased consumption taxes applied to US exports was ignored.

The labor and environmental standards are insufficient because they are not subject to direct enforcement, in stark contrast to investor rights. Further, income inequality will worsen as US workers are competing directly with foreign workers being paid a fraction of our wages. The seventy percent of US workers who do not have a college degree will suffer the most wage deterioration. Thus, the middle class will further erode. Lower environmental standards in the TPP harm US businesses that internalize environment costs but face foreign competitors that are allowed to externalize those same costs.

The Obama’s Administration’s own study, released by the US International Trade Commission last May, confirms that there is no economic benefit for the US.  Our trade deficit with the world will worsen by $21.7B over the next 15 years as compared to the no-TPP baseline.  US annual real income growth and GDP growth will be nearly zero.

Our current poor manufacturing trade performance will worsen by $24 billion per year and manufacturing output and employment will shrink. All manufacturing sectors studied by the Commission will decline. None will improve.

While the Commission found that our food and agriculture trade performance could modestly gain, several important sectors (sugar, rice, wheat, corn and seafood) will experience worse trade performance. Farmers and ranchers, who supply raw material to the supply chain, will likely suffer from import displacement even if finished goods are exported based upon those imports.

The Commission’s findings, bleak as they are, were too optimistic because they unrealistically assumed constant full employment for 15 years. Further, they did not account for foreign tariff replacement strategies such as currency misalignment, increased consumption taxes, state subsidies, and other aggressive industrial policy tactics.

We are not persuaded by the national security argument in favor of the TPP. None of the 30 Chapters touches national security. We already have substantial trade volume with these countries. We have a network of collective defense treaties with Australia, New Zealand, and Japan as well as other non-TPP countries in Asia. We already participate in multilateral trade and economic agreements and organizations with most of these countries including the World Trade Organization (WTO), the Asia-Pacific Economic Cooperation (APEC) forum, and the International Monetary Fund (IMF). We already have trade agreements with Australia, Canada, Chile, Mexico, Peru and Singapore.

The national security argument was made in favor of the contentious vote for Permanent Normalized Trade Relations (PNTR) with China and Russia. However, their ultimate WTO membership did not deter Chinese military adventurism in the South China Sea and the East China Sea. And did not deter Russian military adventurism in Ukraine, Crimea and Syria.

We are further unpersuaded by the argument that the US must write the rules of trade in Asia. The US, in fact, does not do a particularly good job of writing the rules. Instead, it too often makes concessions to persuade the other nations to agree. Past bilateral and plurilateral trade agreements have not performed well for the US economy. Indeed, the “writing the rules” argument was made in favor of PNTR with China resulting in the worst import and offshoring surge in US history.

Thank you for considering our request to not allow a lame duck vote on the TPP. The 115th Congress and the new president deserve a chance to re-examine trade policy in light of economic realities, voter wishes and the needs of so many American businesses for a better trade agreement that builds the US economy.

Respectfully,

David Levine, President and CEO                                         Michael C. Stumo, CEO
American Sustainable Business Council                                Coalition for a Prosperous America                                        

 

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