Additional reporting by Rick Newman
The White House is pushing the Pacific Trade Partnership, and they’re pushing it hard.
President Obama recently made a personal plea to about 30 Congressional Democrats – promising that if they supported the bill he would defend and campaign on their behalf, according to The New York Times.
The potential deal would form a partnership between twelve countries, including the U.S. and Japan, which account for 40% of all global output. Purposely excluded from the agreement is China. Obama is billing the agreement as a way for the U.S. to set the terms of trade in the Pacific rather than China.
Commerce Secretary Penny Pritzker joined Yahoo Finance at the 2015 Milken Institute Global Conference to help explain why the so-called TPP deal matters to ordinary Americans. In the video above, she points out that tariffs on U.S. food products exported to other countries range from 10% to 400%. Consumer goods exported from the U.S. can face tariffs of 30% or more.
In order to get the agreement passed, President Obama intends to fast track the deal through Congress. But he faces criticism from labor unions who believe the agreement will incentivize job outsourcing. Detroit automakers are also against the deal, they want tougher limits in the ability of Asian countries to keep their currencies low as a kind of trade barrier. Still, president Obama hopes to pass the legislation in the coming weeks. Passage seems likely.
The agreement would limit financial barriers like tariffs and quotas among the 12 nations that sign it. The deal would also extend intellectual property protections and rules on international arbitration. Economists estimate that the deal could boost GDP by 0.4 percentage points per year by 2025.
To address concerns about liberalized trade, U.S. negotiators are seeking labor standards for trading partners that are closer to those in the United States, to minimize the likelihood of U.S. employers moving jobs to countries where labor is cheaper. “We require minimum wage, workplace safety standards and no forced labor or child labor,” Pritzker says. “We also require respect for our environment. Our trade agreements for the very first time are going to have those standards for all participants.”
In 2010 President Obama pledged to double U.S. exports by 2015, they've only risen about 25% since then. Some worry that because of the strong dollar exports could actually fall this year. These new trade deals are important to Obama's political legacy and the United States economic growth.
Despite labor unions and Detroit's opposition to the deals, many business leaders and economists say they'll generate more economic activity. “Let’s remember something very fundamental,” Pritzker says. “It’s really easy for a foreign company to sell their products here in the United States but it’s not so easy for our companies, who make great products, goods and services, to sell them outside of the United States-- particularly to markets in Asia. Ninety-six percent of customers are outside of the United States."
Pritzker also points to an unprecedented growth of the middle class in Asia over the next 15 to 20 years, from about 500 million people to 3.2 billion people. “You want to be in the middle of the market," she says. "That’s an opportunity for American workers and that’s an opportunity for American business.”
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