Talking Point in Defense of TPP Is 95% Irrelevant
As the fight intensifies against Fast Track for the controversial Trans-Pacific Partnership (TPP) - with new members of Congress and more than 2,000 U.S. groups declaring their opposition - the Obama administration has decided not to switch its talking points, but to state the same ones more loudly.
The administration seems particularly fond of flogging this one in recent TPP-defending speeches, press releases, and Internet memes: “Almost 95% of the world's consumers are outside America’s borders.”
No one is questioning the veracity of this demographic observation. The question is what it has to do with the TPP.
Not much, as it turns out. Here's why the "95%" statistic is irrelevant for the TPP:
- U.S. products already enjoy tariff-free access to consumers in most TPP countries. The United States already has Free Trade Agreements (FTAs) with six of the 11 TPP negotiating countries, meaning tariffs on U.S. products already have been zeroed out. And in Japan, which comprises 88 percent of the combined gross domestic product of the TPP countries that do not already have a U.S. FTA, the average applied tariff is just 1.2 percent. New Zealand’s average applied tariff is 1.4 percent. Such low barriers are why prominent economists like Paul Krugman have scoffed at the economic significance of the TPP, and why a U.S. government study projects 0.00 percent U.S. economic growth even if all TPP countries eliminated all existing tariffs on all products.
- The remaining three TPP countries account for just 1.7% of the world’s consumers. That includes Brunei, which has a population about the size of Mobile, Alabama.
- In the two TPP countries that actually have sizable populations and average tariffs above a mere 1.5 percent, most people do not earn enough money to purchase many U.S. exports. In Vietnam, the average person earns just $1,740 per year. In Malaysia, which has one third as many consumers as Vietnam, per capita annual income is $10,430. Neither country represents significant purchasing power for exports of U.S.-made products.
- Even if the TPP represented significant new market access, TPP-style "trade" deals have not succeeded in helping U.S. firms reach consumers outside our borders. The official U.S. government trade data reveal that U.S. goods exports to our existing FTA partners have grown 20 percent slower than U.S. exports to the rest of the world over the last decade.
Where did the administration get such a weak talking point? The Chamber of Commerce. The corporate alliance has been trumpeting the same 95% statistic for at least the last three years. It appears that rather than create its own sales pitch for the TPP, the administration decided to borrow one straight from the multinational corporations behind the deal.
Given that this particular talking point is about 95% irrelevant for the TPP, maybe the administration should ask the deal's corporate backers for a new one.