Not only that the approval of TPP by the Congress will have the sociological effect to the U.S. society, but the approval is also going to cause great impact to the U.S. economy. The economic problems due to the TPP involves greatly with the concept of scarcity and the pig principle as the resources are limited and the desires are unlimited. In addition to the problem with the scarcity, it is worthy to point out how approval of TPP will lead to the need for government to responses to the market failure, which is imperfect competition in this case. The government need plan out economic policy to ensure that certain fairness for economic opportunities. In order to deliberate the policy, the government needs to analyze economic benefit and cost
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Market failure is the situation when products and services are not allocated efficiently or lack of equity in the market. One of the market failure regarding TPP is that trade regulations are keeping away the market from the possible consumers outside the U.S. As trade barriers are cut down, the U.S. export is likely to increase significantly in result of more active trade around the Pacific Rim. Research by the Peterson Institute of International Economics estimates TPP will provide net export gain of $357 billion by 2030 (Varas 1). For instance, even just the export of American pork to Japan will worth $435 million annually as 20% tariffs turns into 0% (United States 7). If TPP are enforced one year later than as it was planned, opportunity cost is estimated to $94 billion revenue for the U.S. (Varas 1). This shows how the decision to approve or not approve TPP is urgent deal with tremendous impact to the U.S. economy.
Also, TPP will have positive externalities. Positive externalities are market activities that benefit someone not involved in the market. By 2030, the U.S. will increase its GDP by 0.4% and other signatory nations will also experience increase in GDP (Mauldin 1). One of the most evident increase happens in Vietnam, where GDP is expected to boost 10% by GDP (Mauldin 1). Increase in GDP means the nation are richer. Thus, those nations will …show more content…
Imperfect competition happens when either consumer or producer hold market power, an ability to affect the price og goods or service. Opened foreign resource market by TPP gives huge corporations market power in labor market. As TPP allows companies to have ability to freely transfer factories to other nations, the companies can lower wages for American workers by threatening them that there is cheaper replacement in Vietnam or other developing nations. The government might need to subsidize factories in the U.S. or regulate firing mass of workers. However, those policies are unrealistic as subsidies requires a lot of government spending and regulation for employment are likely to be opposed by the business lobbyist groups like the U.S. Chamber of
Market failure is the situation when products and services are not allocated efficiently or lack of equity in the market. One of the market failure regarding TPP is that trade regulations are keeping away the market from the possible consumers outside the U.S. As trade barriers are cut down, the U.S. export is likely to increase significantly in result of more active trade around the Pacific Rim. Research by the Peterson Institute of International Economics estimates TPP will provide net export gain of $357 billion by 2030 (Varas 1). For instance, even just the export of American pork to Japan will worth $435 million annually as 20% tariffs turns into 0% (United States 7). If TPP are enforced one year later than as it was planned, opportunity cost is estimated to $94 billion revenue for the U.S. (Varas 1). This shows how the decision to approve or not approve TPP is urgent deal with tremendous impact to the U.S. economy.
Also, TPP will have positive externalities. Positive externalities are market activities that benefit someone not involved in the market. By 2030, the U.S. will increase its GDP by 0.4% and other signatory nations will also experience increase in GDP (Mauldin 1). One of the most evident increase happens in Vietnam, where GDP is expected to boost 10% by GDP (Mauldin 1). Increase in GDP means the nation are richer. Thus, those nations will …show more content…
Imperfect competition happens when either consumer or producer hold market power, an ability to affect the price og goods or service. Opened foreign resource market by TPP gives huge corporations market power in labor market. As TPP allows companies to have ability to freely transfer factories to other nations, the companies can lower wages for American workers by threatening them that there is cheaper replacement in Vietnam or other developing nations. The government might need to subsidize factories in the U.S. or regulate firing mass of workers. However, those policies are unrealistic as subsidies requires a lot of government spending and regulation for employment are likely to be opposed by the business lobbyist groups like the U.S. Chamber of