Pros And Cons Of The Trans-Pacific Partnership (TPP)

Trade between countries is said to make all participating parties better off through an increase in productivity, that is, by allowing them to consume at a point outside the production possibilities frontier. The United States has been engaging in trade since its conception, and policies have grown and changed with the fluctuations of our economy over the past two centuries. One specific policy that has gained notoriety recently is The Trans-Pacific Partnership (TPP), a free-trade agreement over 10 years in the making among 11 nations across the globe. The TPP has the potential to further economic integration among the Western Hemisphere and the Asian-Pacific region, resulting in a major increase in economic gains across the globe (Kotschwar, …show more content…
The first, and arguably the most important upside of the TPP, is the increase in income. Under the TPP, the United States would oversee an increase in real annual incomes by $131 billion, as well as a $357 billion increase in exports (Petri & Plummer, 2016). Internationally, “annual income gains by 2030 will be $492 billion” (Petri & Plummer, 2016). These economic gains would be created by an in increase in cooperation and competition among the members of the TPP, which both foster “faster productivity growth and more innovation” (Petri and Plummer, 2012). Furthermore, a stronger, ever-growing economy looks more attractive to investors, thus increasing the likelihood of overseas investment (Petri and Plummer, 2012). Political relationships would also see improvement as a direct consequence of a more codependent relationship between the participants of the TPP (Petri and Plummer, 2012). On the other hand, the negatives of the TPP appear to be rather glaring, but they can be easily avoided. $98 billion dollars in permanent costs are lost when implementation is delayed by only one year (Petri & Plummer, 2016). This cost is the opportunity cost of participating in this free trade agreement, and has the potential to grow larger as the negotiations are prolonged (Petri & Plummer, 2016). Moreover, in the United States, “53,700 jobs will be affected, both eliminated in less …show more content…
The “food and agriculture” industry will enjoy “new export market access in Japan and Vietnam” as a result of the decrease in tariffs (Bloodgood & Signoret, 2016). Dairy, beef and processed food markets will enjoy a positive impact on exports, however, they will experience less of an impact on imports (Bloodgood & Signoret, 2016). Moreover, “manufactured goods, natural resources, and energy products” will see a positive impact from the TPP as well, also as a result of “reductions in tariffs and the elimination of non-tariff barriers” (Bloodgood and Signoret, 2016). However, the titanium metal sector of this industry “would experience lower growth from TPP” (Bloodgood and Signoret, 2016). It would see a negative impact due to lower tariffs, with output “1.2 percent lower and employment 1.3 percent lower than the projected 2032 baseline” (Bloodgood and Signoret, 2016). On the other hand, many service industries will also enjoy growth, such as the “express service industry” (Bloodgood and Signoret, 2016). An increase of merchandise being shipped across international borders will call for a “higher demand for express delivery services”, and the TPP also includes provisions that will assist “Small and Medium-sized Enterprises (SMEs) engage more effectively in international trade” (Bloodgood