Despite uncertainty arising from a heated presidential race and Americans’ anxiety about their jobs, the country’s top trade negotiator is pushing for passage of the Trans-Pacific Partnership in Congress this year by promoting the benefits for Made in USA products and highlighting the risks of a delay to big markets like California.
At a talk with Politico columnist Ben White on Monday at the Milken Institute Global Conference, U.S. Trade Representative Michael Froman said that, although his team is working on some issues with members of Congress about benefits to their constituents in industries such as dairy and pork, “our goal is to get it done this year.”
No matter how hard the Obama administration is making a case for the TPP, the presidential race is appearing to be a bit of a conundrum. Republican Donald Trump, whom White dubbed a “rage candidate,” has voiced his opposition to free trade and the trade agreement, which involves 12 countries, including the U.S., Australia, Canada, Japan, Vietnam and Mexico. Democrat Hillary Clinton once supported the pact, but not anymore. Froman skirted White’s multiple attempts to get him to speak directly on the presidential candidates. The trade representative can’t get around the politicking back in Washington, however. Senate Majority Leader Mitch McConnell (R, Ky.) has said he doesn’t want to see a vote on the trade deal before the Nov. 8 national election.
In both political parties, Froman said, “there clearly is a great deal of anxiety out there about the changing nature of work in America.”
Automation has contributed to a higher level of manufacturing productivity with fewer jobs, he said. Still, he acknowledged that much more can be done to increase wages, which are finally trending upward — albeit too slowly.
At the same time, the lower cost of energy in the U.S. compared to Europe could open opportunities for foreign automakers who want to make cars here and sell them in Europe.
“We want to be that place where people want to produce,” Froman said.
Some of the benefits from the TPP Froman cited included adding $130 billion to the U.S. economy and $350 billion to annual exports. Every $1 billion in exports supports as many as 7,000 jobs, which pay up to 18 percent more than jobs in non-export industries, he said.
Still, in the audience, one man who identified himself as a Republican state office holder said he’s met people in his party who are barely making ends meet by working two jobs. “I don’t think you can tell them all about the great benefits and they don’t see it,” he told Froman.
“If TPP doesn’t exist, that problem will continue to exist,” Froman responded. “People can criticize TPP but they don’t have the alternative.”
Froman pointed out that the risk of a delay allows a major trade rival like China to enact its own pacts — such as the Regional Comprehensive Economic Partnership with the 10 members of the Association of Southeast Asian Nations, Australia, India, South Korea and other countries — that could put the U.S. at a big disadvantage. Seven countries that are part of the RCEP are also counted among the dozen in the TPP.
“We’re either going to write the rules of the road with our trading partners or China is,” he said. Plus, he noted, “We’ve had another 12 countries that want to join TPP. That’s going to force China to up their game as well.”
Froman sandwiched the chat with White, who is also the chief economic correspondent for Politico, at the Beverly Hilton in Beverly Hills between a morning tour of Sriracha-sauce maker Huy Fong Foods in Irwindale, Calif., and a discussion with the Independent Film & Television Alliance in Los Angeles.
Indeed, he highlighted how the TPP would affect U.S. food exports and intellectual property. For instance, because Australia has inked a free trade agreement with China, the U.S. is losing $120 million each year in beef exports to China, he said. Moreover, he said 40 million Americans owe their jobs to IP. As such, the TPP includes a provision for eight years of data protection for biologics and pharmaceutical IP. While that amount of time is lower than the 12 years of data protection in the U.S., it is better than the four or five years other TPP countries offer. Five member countries actually guarantee no data protection of such IP, he said.
In particular, California totals more than $170 billion in annual exports, including agriculture, biotechnology and entertainment. As the gateway to Asia, which is expected to be the home of 3 billion consumers by 2030, “California really has a great deal to benefit from this,” Froman said. “We need to be part of that market.”