Domestic Manufacturers Call Full Text of Trans-Pacific Partnership (TPP) Agreement a “Very Bad Deal for America.”

November 06, 2015


Washington, DC.  With the text of the Trans-Pacific Partnership (TPP) free trade agreement finally made public today, advocates for domestic U.S. manufacturing are calling the agreement a very bad deal for America.

American Economic Alert | November 5, 2015

U.S. Business & Industry Council President Kevin L. Kearns says that the the full agreement, which runs to 1,121 pages and 30 chapters, is full of special deals for various U.S. trading partners, foreign corporations, and multinational U.S. businesses, with little to promote domestic job growth in the United States.

Said Kearns, “The TPP is anything but the free trade agreement it purports to be.  The use of the term ‘free trade’ is simply a codeword designed to attract the support of Congressional Republicans who lurch zombie-like to support anything so labeled, without examining the fine print.”

Kearns added, “A real free-trade deal could be written on a single sheet of paper, with commitments to remove all tariffs and non-tariff barriers of any kind.”

Kearns says there are some key failings in the final TPP deal:

1. Lax rules on importation of foreign-made autos and auto parts into the United States.  TPP lowers the already too low NAFTA parts content standard, and permits Toyota and other Japanese automakers to export vehicles to the United States that contain a large percentage of parts produced in non-TPP countries. And so, other Asian countries such as China, who are not even TPP partners are beneficiaries.

Kearns commented: “Apparently, one of America’s biggest economic problems is that Toyota does not sell enough cars and trucks here, and thus does not displace enough American jobs. The TPP deal allows Toyota and other Japanese automakers a special concession to keep their global supply chains intact.”

2. False expectations for labor and environmental enforcement among trading partners.  The TPP contains labor and environmental chapters hailed by President Obama as the “most progressive ever.”  

Kearns commented: “The president is deceiving us.  These chapters are completely unenforceable. Are we really going to have a fleet of labor rights and environmental inspectors cruising around Vietnam, checking to make sure that every last factory is being fair to its workers and not polluting?  Or tramping through the jungles of Malaysia to make sure that the government has put an end to the human trafficking and forced labor camps? No, it’s just not humanly possible.”

3. A failure to address Value Added Taxes (VAT).  All of the other TPP countries except Brunei utilize a VAT taxation system.  This is a major trade barrier that imposes a direct tax on U.S. exports, but it is completely unaddressed in the TPP.

Kearns commented: “Mr. Froman claims to have cut 18,000 tariffs in the TPP, but he has completely neglected the most significant tariff of all — foreign VAT taxation.”

4. A complete disregard by President Obama of bipartisan Congres-sional instructions to address currency manipulation on the part of America’s trading partners.  While the dollar is the world’s reserve cur-rency and is freely traded in markets throughout the world, a significant number of TPP countries manipulate their currencies to give their goods a competitive advantage over American products.  

Kearns commented: “In the TPP, there are only side agreements to discuss currency manipulation via reporting requirements and consultative mechanisms.  What these side deals mean is that a country can continue to intervene in currency markets, and then the U.S. can discuss the matter — without the ability to do anything about it. More chit-chat currency diplomacy.”

5. The TPP offers no real benefit for the U.S. economy.  A Peterson Institute study shows a minimal 0.4 percent gain for the American economy by 2025. That’s hardly enough to start reducing America’s immense and growing $18 trillion national debt. And two U.S. Department of Agriculture studies show no net gain whatsoever in agriculture from the TPP.

Kearns commented, “Why sign the agreement if it doesn't expand the American economy and help reduce the national debt? Two words: Special Interests.”

6. The TPP’s complex series of rules and regulations serve to benefit each country’s ‘national champion' companies and industries, with the big winners in the U.S. being the major Wall Street banks, insurance companies, and multinational manufacturer-outsourcers.  The TPP has, in addition to 30 main chapters, a total of 58 side agreements (called “side letters.”) And Japan alone possesses 14 of these side letters, with each one laying out special conditions for Japanese participation and special deals for Japanese economic sectors.  

Kearns commented: “Free trade? Hardly.  Congress should vote a re-sounding ‘no’ on this poorly negotiated deal.”

The U.S. Business & Industry Council (USBIC), a national business organization advocating for domestic U.S. manufacturers since 1933.

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