The Trans-Pacific Partnership trade agreement – TPP – is one of the hottest potatoes in this year’s presidential election.
Donald Trump says he is for free trade but against TPP. Hillary Clinton was for TPP but now she’s against it.
President Obama has staked a part of his legacy on getting TPP passed, saying, “The more we sell abroad, the more higher-paying jobs we support here at home.”
Sen. Bernie Sanders, who made TPP a centerpiece of his race for the Democratic presidential nomination, calls it “a disaster, designed to protect the interests of the largest multi-national corporations at the expense of workers, consumers, the environment and the foundations of American democracy. It will also negatively impact some of the poorest people in the world.”
But what about on the ground, away from the campaign trail and the Beltway, where companies try to grow their businesses and workers try to stave off the changes that might make their skills obsolete?
Last month, during the Democratic National Convention, Gov. Terry McAuliffe of Virginia said Clinton would reverse her TPP position once she was elected. Though he later walked back that statement, he did say international trade was critical to the growth of companies in his commonwealth.
As one commonwealth goes, so go them all. There’s advocacy for TPP in Kentucky, too. On behalf of his member companies, Ed Webb, president and CEO of the World Trade Center of Kentucky, says he sees a great many advantages to the agreement – 18,000 of them, in fact.
“Under TPP, roughly 18,000 tariffs would be removed and lowered,” Webb told Insider Louisville, “which opens the gates for more activity, more growth for companies, more job retention, more job growth.”
Webb sees the world as an oyster for his member companies, 130 Kentucky-based businesses ranging in size from international giants like Toyota, UPS and Clark Equipment Co. to small, specialty companies with as few as 12 employees. The pearl in the oyster is the $27.6 billion in export business that Kentucky companies did in 2015, 17th-highest among the 50 states.
But, Webb says, there’s so much room to grow. “Kentucky has had record years of export growth, but still only 5 percent or less of Kentucky businesses are involved in those activities,” he says. “We have to push beyond that 5 percent.”
Webb feels that trade would only grow as TPP lowers or eliminates tariffs on exported goods. In addition to that, he says, it reduces the uncertainty of companies – especially small companies – testing the international waters.
“It would take the fear out of doing business internationally,” he insists, “and push more products into the pipeline, especially for smaller companies that are not yet doing much volume in Asia.”
The TPP would involve 12 countries on both sides of the Pacific Ocean that account for nearly 40 percent of the world’s economic output, a consumer marketplace of 800 million people. Those trade partners would include Canada, Mexico and Japan, Kentucky companies’ top three trading partners. Not only do Japanese interests own Toyota – whose Georgetown plant is Toyota’s largest vehicle manufacturing plant in North America – but also, since 2014, the Jim Beam bourbon distillery.
Plus, says Webb, two of the participating TPP countries are Vietnam – “coming on strong as a new market for Kentucky companies” – and Australia – “not yet a big market for Kentucky but one with enormous potential.”
Richard Grana, president and owner of Paducah-based Impex, is a strong advocate of TPP. “Our main thrust, as small- and medium-sized business representatives, is that we need to sell our products overseas, and to do that, we have to be price competitive,” Grana recently told The Paducah Sun. “In order to do that, it helps if you get tariff reductions.”
His company, Impex, is heavily involved in the export of industrial machinery. He is also vice chairman of the Kentucky District Export Council, one of the organizations strongly supporting the pact. Others are said to include the National Association of Manufacturers, the U.S. Chamber of Commerce, The Business Roundtable and the National Farm Bureau.
Another strong local advocate is Robert Brown, dean of the W. Fielding Rubel School of Business at Bellarmine University, who insists that U.S. workers and citizens in general benefit from TPP.
“The U.S. consumer wins in every trade agreement,” he told the Associated Press. “The one thing most economists agree on, and there’s very little they will agree on, is that improved trade helps a society. Society benefits, the purchaser of these cheaper imported goods benefit, and overall, the net gain is positive for the importing as well as the exporting countries.”
Trump, Sanders and others have insisted that TPP will hurt the American workforce. Grana, and those who favor the agreement, insist it will not.
“It is important to note there are approximately 3.1 million U.S. jobs supported by the export of manufactured goods to the TPP countries, and another 1.1 million jobs involved in exporting services,” Grana said. “In addition, jobs supported by goods exported to TPP partners are up 20 percent since 2009, and TPP countries account for 43 percent of all jobs supported by the export of manufactured goods.”
The job discussion is exacerbated by the claim that the last such trade agreement the U.S. entered – the North American Free Trade Agreement (NAFTA), signed by Secretary Clinton’s husband, President Bill Clinton, in 1994 – cut deeply into the domestic job market. Like the TPP, NAFTA significantly reduced trade tariffs – in that case, among the United States, Mexico and Canada.
“Secretary Clinton supported virtually every one of the disastrous trade agreements written by corporate America,” Sanders said in a campaign speech in Flint, Mich., in March. “NAFTA, supported by the secretary, cost us 800,000 jobs nationwide, tens of thousands of jobs in the Midwest.”
But the World Trade Center’s Ed Webb feels TPP would in fact be a boost to employment – the right kind of employment.
“It’s a changing world,” says Webb. “Manufacturing no longer means hammering out metal rivets. We live in a technological, digital age. There are jobs to be had, but they require intensive training.”
He cites the Work Ready Skills Initiative program announced last month by Gov. Matt Bevin and Workforce Development Secretary Hal Heiner. It’s a $100 million package for workforce training, especially for 21st century job skills.
According to The Lexington Herald-Leader, Kentucky ranks 47th among states for the percent of its population involved in the workforce.
Bevin said that last year, Volvo had considered Kentucky as the site of its new, $500 million North American plant but ended up choosing South Carolina instead. He said the automobile company was concerned about not getting enough trained and trainable employees here.
“Bevin’s program shows that he recognizes new trading agreements will force Kentucky to compete from a labor standpoint,” Webb says. “It’s our job to make sure we train, develop, promote, manage and employ as many talented workers as possible to remain competitive. This is a global economy, today. We no longer trade with just one country at a time. We’re international and we have to think that way.”