The Right TPP to Grow Manufacturing and Jobs in the U.S.

By October 1, 2015Trade

Negotiators from the twelve Trans-Pacific Partnership (TPP) countries are meeting this week in Atlanta, GA, to seek to close a final TPP agreement. Manufacturers in the U.S. are watching closely to see if negotiators aim for trade and investment liberalization with high-standards that will increase the opportunities and competitiveness of America’s manufacturing sector and expand opportunities for new partnerships that will benefit all of the TPP nations.

Make no mistake, the TPP presents an enormous opportunity. If done right, the TPP will link over 40 percent of world GDP and nearly 800 million consumers. It can spur new economic opportunities, growth and jobs.

While U.S. manufacturing trade with the TPP nations is robust, the U.S. can and should do better. The U.S. has been losing market share in the countries where it does not already have a free trade agreement – Brunei, Japan, Malaysia, New Zealand and Vietnam – where cumulative imports from the U.S. accounted for 8 percent of total imports in 2013, down from 18 percent in 2000. Much of this loss has come as a result of increased imports from China, which has increased its import share to 21 percent in 2013 from 12 percent in 2000.

The road to the right TPP has been challenging. Each country has its own tough issues and areas where it does not want to grant new market access or agree to high standards for the protection of investment and innovation, which have been critical to the growth of advanced U.S. manufacturing and the good-paying jobs it provides.  A “zero-sum game” mentality appears to be the dominant view, as is so often the case with trade negotiations.

The choices that the TPP countries will make in Atlanta this week, and potentially beyond, will have important consequences not just for the U.S. and the U.S. manufacturing sector, but for the economic growth of all TPP countries.

For example, if TPP countries refuse to lower tariffs or eliminate the many other non-tariff barriers, manufacturers in the U.S. will be denied important economic opportunities, and so will consumers and businesses in the other TPP nations. They will be limited in their ability to partner and participate in global supply and production chains.

Similarly, if protections for intellectual property are reduced for some industries, such as the vibrant bio-pharmaceutical industry, that will cost the U.S. good-paying advanced manufacturing jobs. As some TPP countries resist these protections, they should also consider that lower protections will also undermine innovation overall — to the detriment of U.S. and world consumers.

Finally, if basic protections in the investment chapter are restricted, made unenforceable or denied to specific products and industries, the cost will again be to manufacturing and jobs in the U.S. It will also undermine the ability of the other TPP nations to attract the growth-producing investment they seek and the collaboration and partnerships that are vital for all industries to grow.

Manufacturers in the U.S. want to see a strong and comprehensive TPP that will set the standard for eliminating unfair barriers, leveling the playing field and growing the economies of all TPP nations. Such an agreement is not a foregone conclusion, and manufacturers are doubling down to ensure that ambition remains the goal for all sides at the negotiating table.

Ken Monahan

Ken Monahan

Director for International Trade Policy at National Association of Manufacturers
Ken Monahan is the Director for International Trade Policy at the National Association of Manufacturers (NAM), where he works with NAM member companies to develop and advocate the association’s positions and priorities on trade agreement negotiations, ensure enforcement of existing trade agreement commitments, and other issues including the World Trade Organization (WTO), miscellaneous tariff bills, data flows and privacy, conflict minerals, forced localization, and other bilateral country trade matters (e.g., Colombia, South Korea, and the European Union and its member states). Mr. Monahan has on-the-ground experience negotiating trade agreements, having worked at the U.S. Department of Commerce on the WTO Doha Round negotiations, the U.S.-Korea free trade agreement and other international trade matters.
Ken Monahan

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