OSAKA – In an effort to get the Trans-Pacific Partnership agreement ratified before a new president and Congress take over next year, the White House Council of Economic Advisors has warned that congressional failure to pass the 12-nation free trade deal means U.S. firms could lose out to China in the Japanese market, resulting in the loss of potential business and nearly 5 million jobs.
“In the absence of TPP, countries have already made it clear that they will move forward in negotiating their own trade agreements that exclude the United States. One such agreement is the Regional Comprehensive Economic Partnership, a trade agreement that involves China, Japan and many of the dynamic and fast-growing economies of Asia, which could potentially fill the void left if Congress fails to pass TPP,” the council said in its latest report released Thursday.
“There are, conservatively, 35 goods-producing industries directly at risk of increased competitive pressure from China in the Japanese market if RCEP goes into effect. These 35 industries account for just under 10 percent of total U.S. exports of goods to Japan. (They) employ close to 5 million workers and maintain 162,000 business establishments in the U.S.,” the report added.
Of the industries labeled at risk, agriculture, food manufacturing, and fishing are expected to be hit especially hard without a TPP agreement. The council predicts that if the RCEP comes into force, it would probably lower Japanese tariffs on Chinese goods by between five and 10 percent while U.S. products would have tariffs nearly twice as high as Chinese products.
U.S. goods exported to Japan amounted to $62.4 billion last year.
The Council of Economic Advisors warning comes as President Barack Obama and pro-TPP business lobbies make a final push to get Congress to pass it during the lame duck session before a new president and Congress are inaugurated next year.
But other academic and government studies as well as a World Bank report predict TPP will provide few if any benefits to the American economy over the coming decades, and will likely mean job losses. Legal experts and Nobel Prize winning economists are also opposed to an investor-state dispute settlement provision in the TPP that makes it easier for U.S.-based foreign corporations to sue the American government if it passes laws they believe hurt their profits.
“Under this provision, the TPP would newly empower the U.S. subsidiaries of more than 9,500 Japanese and other TPP-nation firms to attack U.S., federal, state and local policies and government actions,” said Lori Wallach of the Washington-based consumer watchdog group Public Citizen in July.
With U.S. presidential candidates Hillary Clinton and Donald Trump opposed to the TPP, at least in its current form, and with key U.S. Senators also opposed and saying there will be no vote on the treaty during the lame duck session of Congress, the trade pact’s prospects in the U.S. remain murky.
TPP supporters hope Hillary Clinton will reverse her position if elected and push for renegotiation. But the final decision is with Congress, where media polls show incumbent pro-TPP Senators in key swing states lagging behind challengers who are opposed to the treaty.
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