Rapid Response: WCIT Responds to Dean Baker Remarks against TPP

In his recent Huffington Post piece, economist Dean Baker presents several arguments against the Trans-Pacific Partnership (TPP). A recent data-driven analysis conducted by WCIT and the Association of Washington Business shatters these claims by calculating this agreement’s benefits for trade-dependent Washington state.

Baker argues that “the classic story of gaining from free trade by removing trade barriers doesn’t really apply to the TPP primarily because we have already removed most of the barriers between the countries in the pact.” This is not true: in reality, trade barriers with important Pacific Rim nations are debilitating to U.S. businesses. Export tariffs alone make Made-in-America products less competitive in foreign markets – and they run as high as 31% for wheat, 30% for salmon, 208% for whey powder, and 10% for French fries. By removing 18,000 existing tariffs, including every tariff on U.S. manufactured goods, the TPP would even the playing field.

Beyond tariffs, Baker ignores a long list of other barriers the TPP tackles that currently limit U.S. exporters’ success:

  • Foreign state-owned enterprises that receive unfair advantages
  • Discriminatory regulations that bar U.S. exports from Pacific Rim nations
  • Requirements to localize servers in foreign countries that impede cross-border data flows, as well as prohibitions to a free and open internet
  • Weak intellectual property rights
  • Unpredictable rules and customs procedures that are confusing and expensive for small businesses to navigate

Baker goes on to claim that “trade barriers are already low…pushing them to zero will not have much economic impact.” On the contrary, our study shows huge local gains for Washington. If the TPP were fully enacted in 2015, Washington state’s exports could have been up to $8.7 billion higher and as many as 26,400 direct jobs would have been created (as well as 47,000 indirect jobs). These are tangible areas of growth that benefit businesses, employees, and residents alike.

Finally, Baker argues that there won’t be many gains under the TPP, even with the five TPP countries with which we don’t currently have trade agreements. However, our study shows that Washington exports with these nations would increase by 18.7%, and that Washington exports to Japan alone could grow as much as $3.6 billion. This data presents large gains under the TPP that are hard to ignore.

For more information about TPP’s benefits to Washington and our nation, visit wcit.org/tpp and download the full study, Wins for Washington: Economic Impacts of the Trans-Pacific Partnership on Washington State here.

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