The increasingly discredited Trans Pacific Partnership trade deal has been dealt another blow, this time from within the US government itself. The US International Trade Commission has just issued a massive 792-page review of the TPP, which found that the impact could be marginal at best for the US economy.
The commission is an independent body charged with overseeing the US tariff schedule and advising on trade-related matters, so its underwhelming conclusions are deeply damaging for proponents. It has concluded that the deal would add just 0.15% to US economic output — or around three weeks of normal US economic growth — by 2032, the 15th year after the deal, if it is ever ratified, would come into effect. The report also found it would add the equivalent of 128,000 full-time jobs, or 0.08% (yes, 0.0008) of the US current workforce while real income would be US$57.3 billion, or 0.23%, higher. The biggest beneficiaries of the deal would be the US agriculture industry, with farm exports likely to increase by US$7.2 billion, or 2.6%, by 2032.
According to the commission, the TPP would produce a US$15.2 billion, or 0.9%, increase in exports by the manufacturing, natural resource and energy industries. But it would also lead to a small number job losses, ranging from 0.3% to 1.3%, in sectors like chemicals, textiles and auto parts, as imports grew more than exports in those sectors. “Output in manufacturing, natural resources, and energy would be $10.8 billion (0.1 percent) lower with the TPP Agreement than it would be compared with baseline estimates without the agreement.”
Handily, page 39 of the report makes it clear that US firms will be able to go after the Australian government via investor-state dispute settlement provisions:
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“The TPP Investment chapter provides new protections for U.S. investors abroad, primarily in the five TPP parties with which the United States does not already have a FTA, so TPP could promote some new U.S. investment… Because the U.S. economy is already substantially open to foreign investment, it is unlikely that TPP would generate significant new investment flows into the United States. The Investment chapter’s Investor-State Dispute Settlement (ISDS) mechanism benefits U.S. investors in the five new TPP parties, but also in Australia; the U.S.-Australia FTA did not include ISDS.”
The commission report confirms the World Bank’s report in January that showed virtually negligible economic benefits for the United States — and Australia — from the deal. Even the Australian government’s own wafer-thin justification for the deal released last year by government bureaucrats in the Department of Foreign Affairs and Trade couldn’t identify any significant benefits.
None of the current presidential contenders — Hillary Clinton, Donald Trump or Bernie Sanders — support the TPP. The only chance of its passage through Congress in Washington (and thus, to come into effect at all) is in the “lame duck” session between the election day in November, when a new House and a third of the Senate will be elected, and January 3, when the new Congress will assemble for the start of its regular session. There will be no consideration of the deal between now and election day — Republicans don’t believe it offers enough to the US, and Donald Trump outright opposes it, while Democrats are traditionally more opposed to trade deals.
In the event the TPP is passed, the primary beneficiaries, it seems, will be US corporations would be able to sue Australia for any policy change that they could argue might disadvantage them.