1. NS3040 Fall Term 2018 Case for The TPP
Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar

2. Overview
Mireya Solis, The Transpacific Partnership: The Politics of Openness and Leadership; in the Asia-Pacific, Brookings, October 2016
Main point:
TPP is vitally connected to the national interests of:
Prosperity,
Security, and
Governance
Strengths
New rules on the digital economy
High tariff elimination targets and
Disciplines to address behind-the-border protectionism

3. Security/Globalization Trilemma

4. TPP I
TPP creates opportunities for sectors that enjoy competitive strength
Services
Advanced manufacturing, and
Agriculture
To expand their reach in overseas markets
Projected annual income gains from deal range between $57 billion and $131 billion by 2032 compared with baseline scenario

5. TPP II
For the U.S. in contrast to experience of import competition with China – TPP will
Not impose large adjustment costs in terms of employment and wages
Generate a net (albeit small) positive effect on job creation ad wage rates
However individual costs for displaced employees are very high
But new pro-adjustment safety net will enable workers to navigate difficult economic transitions (brought about by technological change or trade)

6. TPP III Geopolitical aspects
TPP enhances American influence in Asia and world by
Reassuring allies and rivals that the U.S.
Being fully anchored to the region and
Being capable of supplying novel institutions for regional cooperation
Having a smart strategy vis-à-vis China’s regional and global leadership bid since it is both
Proactive (building a new economic architecture and
Inclusive (leaving the door open for a potential Chinese accession in the future.

7. TPP IV
TPP also aims to close the governance gap in the trading regime caused by the inability of the WTO to update the multilateral rules on trade and investment over last 20 years.
TPP can advance dissemination of new rules – already covers 40% of world trade, but also diversity – countries of very different levels of development.

8. TPP V
Unfortunately, Congressional ratification clouded by the rise of anti-trade movements in the U.S.
Conventional case for trade focuses on gains to be had while downplaying costs of transitional unemployment
Does not resonate in environment of marked increased in income inequality or job losses in recent years
Advocates need to
Show technological change is the largest force behind job loss in manufacturing
Develop pro-adjustment safety nets for all workers
Close the skill deficit through better, more appropriate education and training