Here’s why TPP-Trans Pacific Partnership won’t work!
In theory, the Trans-Pacific Partnership is supposed to close the gap between imports into the U.S. and exports being shipped to 3rd world countries, allowing more of our goods to be sold overseas.
As trade import/export history dictates, we have allowed countries to manufacture our goods and services for the last 40+ years while Americans have suffered economically. Why corporations chose to open up factories overseas to exploit cheap labor while expecting Americans to have disposable income to purchase said goods-and-services makes no sense to me, but it has become the Corporate American Way!
It suddenly dawned on the bean counters in Washington that our National Debt is built largely upon this trade imbalance, and when those goods are imported into our country, we issue exporting country an IOU. We have so many IOUs outstanding that the interest on the U.S. debt alone takes up 6% or about $225 Billion of our yearly budget.
So, TPP is supposed to create a way to ease the imbalance between the import/export Trade World.
Sounds great, right?
Well, not exactly. The problem is International Law. We cannot dictate, nor enforce, what any country does with XYZ, unless they agree to allow imports from the United States to be sold in their country.
Here’s the problem. Just because these countries agree to allow U.S. imports into their country, does not mean the Natives will purchase goods “Made in America.” We cannot (force) people in said country to pay more for a U.S. product.
If the same (competing) product is made in Taiwan, which happens to be one of 12 countries currently participating in the TPP, what makes you think Taiwanese will spend more for a U.S. made product?
Out of the 12 countries participating in TPP, China – Our biggest debtor, refused to sign-on, and with good reason. Why should China allow more U.S. imports into their country, when they make more money off of imports!
According to Google, China is currently our largest goods trading partner with $598 billion in total (two way) goods trade during 2015. Goods “exported” to China totaled $116 billion; while goods “imported” totaled $482 billion. The U.S. goods Trade Deficit with China was $366 billion in 2015.
In other words, China imports “more” goods to the U.S. than they take from us! Without China participation in the TPP, the entire TPP Agreement makes absolutely no sense, and even if they did agree, how we are supposed to “enforce” a balanced import-to-export ratio?
This problem isn’t just limited to China, but every other country participating in TPP with the U.S. So what if a country breaches the TPP contract, the legal wrangling alone will cost more than the trade imbalance we’re so desperately trying to correct.
The website Alibaba, which just happens to be the Worlds largest on-line retailer of International Goods, has some of the most competitive prices for the same goods made here in the USA.
For example: A Canadian goose coat which uses Canadian Geese feathers, are imported to China. China manufacturers and assembles said Goose Coat. The retail price of this coat on Alibaba is $75/USD while the same U.S. manufactured coat costs $375/USD here.
Second Example: Our Government made an investment in a U.S. Solar Panel manufacturing company to create a Clean Energy platform. If each U.S. Solar Panel retails for, say $125 in America, but China can manufacture the same functioning Solar Panel for, say, $49., which Solar panel do you think Americans will buy?
This is the problem TPP. Since Corporations argue that Salaries and Operating Costs are higher in the U.S., they chose the cheap labor route to save money on manufacturing, but forgot about reinvesting in American workers in the process.
It is this betrayal of U.S. Corporations that created this imbalance in the first place. If we would’ve maintained an American operating base, U.S. Citizens would have had more disposable income to purchase U.S. goods Made-in-America because we can afford to.
I don’t see Taiwan spending 3x as much for the same U.S. solar panel they can get from China for the price of three – Or any other country for that matter!
At the end of the day, “Free Enterprise” is just like International Law. Our Government can’t tell Corporations how to operate, or where to offshore business – But maybe we should start.
Until Corporations reinvest in American prosperity, the United States will always struggle with a trade imbalance that leaves us in debited to other nations.
Cachae A. Thomas
Independent author of Red White and Poor, How Outsourcing has Racially Divided America – Available in paperback on Amazon.com and Digital Download at Red-White-Poor.com