How Good of a Deal is the Trans-Pacific Partnership?

The Trans-Pacific Partnership (TPP) is one of the most ambitious trade deals the global economy has ever seen. Encompassing 40% of global GDP and a third of its trade, the 12 nations who are negotiating stand to see benefits resulting from the easing of trade restrictions amongst such a massive bloc. More importantly than lowering already historically low tariffs, the TPP hopes to create a set of coherent quasi-global labor, environmental, and intellectual property standards. Its intention is to “define the rules of the road” for Asian trade according to Michael Froman, America’s chief negotiator.

Despite the great benefits expected from greater trade related gains, these will not necessarily benefit all countries involved equally. The elimination of trade barriers will disproportionately benefit the most efficient countries and industries. While countries which had coddled their industries with generous protections will see declining market share due to increased competition. The TPP will not be helpful to all countries in the same way or for the same reasons.

 Vietnam provides an example of the uneven benefits that TPP’s members will see. Vietnam is a developing nation which is estimated by many experts to receive some of the biggest increases to GDP as a result of the TPP. It is expected to see an increase of 11% to its GDP by 2025. With its combination of a large and young workforce, high productivity and low wages, the country stands to see manufacturing industry expansion as everything from car parts, textiles and other manufactured goods can be exported tariff free to America and Japan. In addition the exclusion of China from this deal means that Vietnamese manufacturers will see a comparative advantage when exporting to rich countries compared to their Chinese competitors.

In addition there as of yet unaccounted benefits that will come to Vietnam as a result of a set of rules that it will have to adhere to that will steer it towards a more open economic environment. Restrictions on SOE’s which it protested but will likely free its private sector to become more efficient and innovative as its allowed to flourish. The state controlled behemoths will be forced to loosen their grip on the economy and may eventually fade away Vietnam could see the emergence of its own private enterprise titans, just as South Korea did after it opened up its trade. Due to the rule setting nature of the TPP, the benefits to developing countries will be twofold better labor and environmental standards will help all, and fair rules will help entrench Anglo-American capitalism which has proven to be a powerful force for growth when embraced by developing nations.

However, in reality there may be some “losers” in these deal, primarily developed nations with inefficient industries that currently benefit from some degree of exclusivity. Canada stands as a prime example the plight of developed countries that sign on to this agreement. It has a highly developed economy is tightly integrated with America’s benefitting greatly from its current free trade agreement NAFTA, encompassing the U.S., Canada and Mexico.

Manufacturing in Canada is an important part of the supply chains of Americans manufacturers. As a result the availability of a new source of cheap parts from Asia will directly hurt Canadian industry. The auto sector has already been promised a billion dollar handout to help it cope. (Keenan) In addition dairy manufacturers and the agricultural sector in Canada which is less efficient than the American and Australian sectors, and kept profitable through heavy restrictions on imports and a system of tariffs and quotas will definitely lose in this deal. Ottawa responded with a series of measures to support agriculture worth five billion dollars. Ultimately the country and its consumers will benefit from lower priced goods and products allowing increased consumption, however for all its costs Canada is expected to receive a negligible change to GDP as a result of the TPP.

The challenge then is for industrialized countries to create a system within their country that equitably shares the gains from trade, while developing nations must cope with a significant upgrade to their labor/environmental laws. Better enforcement and information gathering would help both tremendously with this endeavor. Luckily the world has seen the need for a system to maintain the rule of law in the face of serious challenges and compromise seems possible on even the thorniest issues.

The TPP represents more than just a chance to boost GDP for developed nations, it is being pushed through despite its potential to hurt vested interests in certain nations due to its greatest strength. An encompassing and enforceable regulatory environment binding so much of the world economy will ultimately be far more beneficial to all nations, specially allowed to expand, as every country has a chance to benefit from more open trade and rules that follow the liberal consensus as opposed to an increasingly assertive China’s diktat.

Immigration and Climate in the Words of Francis

The last couple of weeks have been a tornado of arguments around the Globe, especially for America, from the Republican Party presidential debate to teen Ahmed Mohamed going to Jail for showcasing his homemade clock. On Tuesday afternoon, Pope Francis landed on American Soil. This marks a historic moment for the United State because no other pope has visited the United States since 1965. Perhaps his timing is appropriate; though the US has given him the warmest welcome Pope Francis is ready to create uncomfortable moments (as he should) by bringing light to controversial modern day issues.

The pontiff received the media’s attention with his blunt comments - not only has he condemned capitalism and imposing inequalities for the poor but he also has blunt critiques for society, global economics, and other national topics.

Yesterday afternoon the pontiff directed a speech to the Senate and the House of Representatives and surprised many with his choice of topic. Francis is different from other popes; he introduces himself as a “son of inmigrants” from which America was built.

The pope started his speech with a controversial statement. He challenged congress to see immigration as a moral issue rather than a political issue, that instead of treating people as numbers they should be treated as people. "Do not be afraid to welcome them... I am certain that, as so often in the past, these people will enrich America and its church" he stated in his speech by making the argument that America was once a country full of foreigners which made the Country we are today.  His thoughts on immigration come in an appropriate time, just very recently the republican presidential candidate Donald Trump made strong accusations in regards to immigration against Mexico by stating that if elected he will build an impenetrable wall across the border. But what  people say? 51-year-old Maria Lira made the journey to D.C. from Pennsylvania where she traveled to make a statement for the undocumented. She believes that the pope is the voice of the community because he addresses issues that everyone wants to raise.

Next, Pope Francis addressed climate change. He proclaimed that we need to take immediate action and we cannot pass this problem to the next general. Furthermore, he stressed that America has a duty to act now and advocated that we need to lead that movement. Similar issues have been brought up before but it seems like GOP is slightly more interested in what really matters in this country, the money, just recently they challenged president Obama in regards his plan to cut carbon emissions from power plants because it would hurt the economy and the improvement to the environment would be minimal. Would this plan be effective? I am not sure but what I do know is that it would immoral and illogical to forget to protect and maintain human life at any given time, and that includes our planet.

Francis also urged Cuba and the United States to reconnect after more than half a century of tension. He remained positive during his speech because “the dream continues to inspire us all” every day we wake up in America, although Pope Francis advocated many changes, I am quite unsure on how proactive we are with Cuba. Can we finally rebuild ties? Only time will tell.

The pope is charismatic and people agree with his ideas. Dolores Reyes, a community resident, waited hours to see him. Reyes stated “He is more humble, more connected with people, with everyone. He is a great Pope. I love his approach."

Though the pope has left, his arguments still ring. We should endeavor to practice individualism and self-reliance to see in order to move forward. Global Climate and immigration, the main issues he addressed will require everyone’s participation. Until next time Pope Francis.