NEW YORK – In an earlier column, I made the case for the Trans-Pacific Partnership (TPP) in terms of benefits for U.S. exporters and U.S. geopolitical interests. But what about worker interests? One common knock against free trade is that it forces U.S. workers to compete with workers in countries that have few environmental protections or labor standards. That could force U.S. workers into a “race to the bottom” that pushes down wages to compensate for the U.S.’ better working conditions and environmental regulations.
But this is simply not a big concern for the TPP. Why? Because many of the countries in the agreement are rich countries with strong labor protections and high environmental standards. Note that the most important country in the agreement by far is a country whose labor and environmental laws are, if anything, stricter than the U.S.’: Japan.
Japan is about as significant to the U.S. economy as all of the rest of the TPP countries combined. And when it comes to competition with Japanese workers, American workers have little to fear. Although Japanese workers are famed for their legendary unpaid overtime, in actuality they’ve been working far less in recent decades, and are now barely ahead of the U.S. With more than half of Japan’s employees still in a rigid system of lifetime employment and seniority pay, labor costs there are very high. Hiring and firing of workers is famously difficult. And despite the public debacle of the Fukushima nuclear accident, Japan’s environmental regime is similar to that of the U.S. and other rich nations. In other words, this isn’t a country that is going to provoke a race to the bottom.
The importance of Japan to the TPP is a huge reason to support the deal. Here we go back to the issue of geopolitics. Japan is an incredibly important U.S. ally, and the lynchpin of the Obama administration’s “pivot to Asia” — a euphemism for an attempt to balance Chinese influence in the region that is rapidly becoming the center of the global economy.
Enacting the TPP shows Japan (and our other East Asian allies) that the U.S. is committed to preserving the liberal economic order that it created after World War II. Safeguarding and expanding international trade was always one of the U.S.’ big selling points as a benign global hegemon. The failure of the World Trade Organization to conclude any major trade accords showed that U.S. power and leadership is no longer sufficient to push forward free trade at the global level. A failure of the TPP would show that the U.S. no longer has the will to push it forward even at the regional level.
The TPP also represents the best aid the U.S. can give to a crucial ally, which could use all the help it can get. With its aging population and hidebound corporate culture, Japan desperately needs increased productivity. The TPP would boost productivity by forcing protected sectors,such as agriculture, to compete on global markets. That in turn will strengthen other reform efforts being undertaken by the administration of Prime Minister Shinzo Abe, such as the push to reform land use and eliminate small unproductive farms. The push for productivity is always a difficult thing, always very disruptive to entrenched interests. Foreign competition, via the TPP, will be one of the big sticks that Abe can use to force Japan Inc. to change its ways.
Abe faces stiff opposition from the domestic farm lobby, which is even more powerful in Japan than in the U.S. Rural areas are severely overweighted in Japan’s electoral system, giving farmers a huge amount of clout. And there is deep sentimental attachment to the traditional way of life of the Japanese farmer, even if that lifestyle no longer makes sense in the global economy.
National security — in particular, the importance of Japan’s relationship with the U.S. — is Abe’s most powerful counterargument to these forces of resistance. In other words, if we don’t pass the TPP, some of Abe’s reform efforts — and perhaps the political momentum of his administration’s entire big reform push — will be compromised.
So when you frame the TPP as a U.S.-Japan trade agreement, many of the objections go away, and many new reasons to support the deal become apparent. Instead of a giveaway to multinational corporations at the expense of U.S. workers, the TPP starts to look like a crucial element of our partnership with the U.S.’s closest and biggest ally in the world’s most important region.
Noah Smith is an assistant professor of finance at Stony Brook University.
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