Washington — The sweeping Pacific Rim trade deal now being debated would cover everything from Vietnamese labor unions to copyright protections to trade in sockeye salmon. With the details having been released Thursday, a furious dispute is expected in the United States and some of the 11 other countries that negotiated it.
Supporters say the Trans Pacific Partnership would promote economic growth and provide protections for workers on both sides of the Pacific.
Critics say it contains giveaways to drug manufacturers and other multinational companies and exposes American workers to unfair competition with low-wage labor in countries like Vietnam.
U.S. Trade Representative Mike Froman says the Trans-Pacific Partnership will allow U.S. automakers new opportunities — giving them tools to sell more vehicles in Japan.
“By opening these markets, by creating these binding enforceable rules with Japan, by being sensitive on the import side — both in terms of autos and auto parts in terms of the tariff (phase out) — I think it is a very good package. We have confidence that the American worker can compete globally,” Froman said.
Some questions and answers:
What is the TPP?
It’s an ambitious and labyrinth trade agreement involving the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Those countries account for nearly 40 percent of global economic output.
The pact would erase most tariffs and other trade barriers between the countries, whose trade ministers agreed to the deal a month ago. And it would clarify and standardize trade rules, making it easier to sell goods and services across the Pacific Rim.
China isn’t mentioned; why?
China, the world’s No. 2 economy, is conspicuously missing. In fact, the deal was designed in part to counter China’s influence in the Pacific Rim. U.S. Trade Rep. Michael Froman says it was critical for the United States, not China, to write “the rules of the road for trade in the Asia-Pacific region. ... After all, this isn’t everyone’s approach to trade. Other countries, such as China, are already moving forward with deals that don’t reflect our interests and our values.”
Still, China could eventually join the TPP.
How does this deal compare with others, like NAFTA?
The Pacific deal was negotiated in the shadow of 1994’s North American Free Trade Agreement. That deal, among the United States, Mexico and Canada, failed to deliver the big job gains its supporters predicted and was blamed by critics for wiping out many U.S. factory jobs.
In statement Thursday, President Barack Obama conceded “that past trade agreements haven’t always lived up to the hype.”
But the president added that “the TPP includes the strongest labor standards in history, from requiring a minimum wage and worker safety regulations to prohibiting child labor and forced labor.”
The TPP would require even authoritarian Vietnam to allow independent labor unions.
What’s the case against it?
Critics are unconvinced of the labor standards Obama was eager to tout.
Vietnam, for instance, will get five years to update its labor policies. John Sifton, Asia advocacy director for Human Rights Watch, told reporters Thursday that Vietnam might change its labor laws, but “we are concerned that Vietnam will not change its practices. They will continue to lock up union dissidents and punish people who challenge the government.”
Opponents also complain that the agreement includes giveaways to business lobbies. For instance, the deal gives drug companies about eight years of protection from cheaper competitors for biologics, which are ultra-expensive medicines produced in living cells.
The deal also stresses each country’s “right to protect public health and, in particular, to promote access to medicines for all.” But critics say that provision would keep drug prices too high.
What’s the likely economic impact?
For the United States, it probably wouldn’t wipe out as many jobs as critics fear or create as many as supporters predict. Peter Petri, professor of international finance at Brandeis University, has estimated that the impact on U.S. jobs would probably be minimal: Jobs created by expanded access to Asia-Pacific markets would likely be offset by jobs lost to increased competition.
The agreement makes it easier for Detroit’s Big Three to export vehicles to Japan. But it doesn’t include rules, which the automakers have long sought, against currency manipulation that could make their vehicles too pricey for many foreign buyers — and it make it easier for foreign automakers to undercut them here.
The countries must officially sign the deal — and then their legislatures must ratify it, which isn’t guaranteed. The debate is expected to be especially contentious in the United States. Obama faces resistance within his own Democratic Party from union supporters who fear that foreign competition would kill jobs and depress wages.
U.S. lawmakers can’t nitpick the deal with amendments. They must simply vote yes or no.
Congress will likely take up the issue next year in the heat of the presidential election campaign.
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