China may not join the Trans-Pacific Partnership trade agreement, but the U.S. still stands to win.
Opponents of giving President Obama fast-track authority to negotiate the Trans-Pacific Partnership (TPP) — the pending trade pact between the United States and 11 countries in Asia and the Americas — cite the job-killing impacts of globalization as a prime reason for their objection. The free-trade agreement would lower tariffs and remove other barriers to imports from member countries, which opponents fear would create steep competition for U.S. industries domestically. There is indeed substantial evidence that import competition from low-wage countries has contributed to the momentous decline in U.S. manufacturing employment in the last two decades. We even researched and published some of that empirical evidence. Still, we believe blocking the TPP on fears of globalization would be a mistake.
There are several reasons to support the TPP despite globalization concerns. First, the TPP — which seeks to govern exchange of not only traditional goods and services, but also intellectual property and foreign investment — would promote trade in knowledge-intensive services in which U.S. companies exert a strong comparative advantage. Second, killing the TPP would do little to bring factory work back to America. Third, and perhaps most important, although China is not part of the TPP, enacting the agreement would raise regulatory rules and standards for several of China’s key trading partners. That would pressure China to meet some of those standards and cease its attempts to game global trade to impede foreign multinational companies.
Since 2000, America has lost 5 million manufacturing jobs. Regions that specialized in apparel, footwear, furniture, home electronics, toys and sports equipment — industries in which China achieved explosive growth — have seen factories close and wages for local workers flatten. Our research indicates that rising import competition from China accounted for 21 percent of the overall decline in U.S. employment in manufacturing industries during the 1990s and 2000s. The wave of automation that replaced middle-class jobs available to workers without a college education added to those losses. We sympathize with the regions and families that suffered, but halting TPP would not assist U.S. manufacturing or benefit U.S. workers. The reality is that the globalization of manufacturing is a fait accompli. Those manufacturing jobs are not coming back.
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