Tuesday, January 24, 2017

Trump TPP Two-fer Hurts Greensboro and Helps China

An ill-considered stroke of Donald Trump's pen on Monday removed the U.S. from the Trans Pacific Partnership (TPP) and in the process dampened prospects for jobs and growth in Greensboro but brightened the prospects for Chinese hegemony in the Pacific.

The TPP, which included 11 other countries but excluded China, would have eliminated those countries' tariffs on all U.S. manufactured goods and farm exports and greatly lowered tariffs on other goods. By doing so, it would have increased trade between countries that account for 40 percent of the world's output AND given the U.S. a trade advantage over China within that huge block.

The TPP would have also strengthened intellectual property protections to allow the U.S. to better benefit from its thought capital and would have bolstered environmental regulations, labor standards, and human rights in the partner countries in ways that would have leveled the playing field for U.S.

A substantial portion of Greensboro's economy, including emerging high-tech manufacturers like HondaJet and RFMD, involves exports. Figures from the International Trade Administration show that the Greensboro-High Point metropolitan area exported $3.3 billion worth of goods in 2015 (the latest year for which figures are available) of which $1.6 billion went to TPP countries. Other important Greensboro employers, including FedEx and UPS, provide services that support this trade. Good-paying jobs at all of these companies are put at risk by the withdrawal from the TPP, and Greensboro is hurt.

At the same time, China benefits. Without the TPP, China's exports to the other partner countries will remain relatively competitive. With Trump making the U.S. unreliable and unsteady, the other countries have an incentive to look elsewhere. And to the extent that Trump's action and other "America First" rhetoric signal a withdrawal from the Pacific, our partners have less support to stand up to China. China couldn't be happier about this.

It really makes you wonder who Donald Trump is working for.