A group of economists studying the Trans Pacific Partnership (TPP) have concluded that the sweeping trade agreement will have a net negative impact on the US economy.
Economic researchers with Tufts University’s Global Development and Environment Institute said Monday that widely cited projections claiming the TPP will boost economic activity in the US are “based on unrealistic assumptions.”
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Instead, the economists noted, the 12-nation Pacific Rim trade deal will likely lead to the loss of 448,000 jobs from the US workforce, while lowering GDP by more than a half-percentage point over the next decade.
The report also estimates that TPP will cause labor’s share of income to decline by 1.3 percent, increasing inequality in the United States.
It noted, however, that this would not be unique to the US – that new income going to workers in all TPP signatories is expected to drop as a result of the deal, according to the analysis, widening the gap between the global rich and poor.
The Tufts researchers also found that while the US job market is projected to take the biggest hit, the TPP would lead to 771,000 job aggregate losses over the next ten years in all member nations.
“[B]usinesses in participating countries would strive to become more competitive by cutting labor costs, thereby seeking higher short-term profits while undermining efficiency and productivity in the long-term,” they said.
And of the few countries that would experience economic gains from the agreement, the boost would only be “negligible.” The report projects GDP gains from less than one percent to less than 3 percent for Australia, New Zealand, Mexico, Peru, Chile, Brunei, Vietnam, and Singapore – all occurring over the course of the next decade.
Finalized by the Obama administration last year, the TPP still needs to be approved by Congress before taking effect. Senate Majority Leader Mitch McConnell said last December that it’s unlikely the legislature will attempt to sign off on the deal before the 2016 elections.
Both presidential front-runners for the Democratic Party, former Secretary of State Hillary Clinton and Sen. Bernie Sanders (I-Vt.) have come out in opposition to TPP – Sanders long before Clinton.
Many business elites in the US are still holding out hope, however, that they will ultimately have an ally in Clinton – a booster of the deal while Secretary of State. In an interview with Bloomberg TV last month, Chamber of Commerce President Tom Donahue speculated that Clinton may reverse herself if she’s victorious in November. “If she were to get nominated, if she were to be elected, I have a hunch that what runs in the family is you get a little practical if you ever get the job,” he said.