Free traders: Mexico, Chile and Perú
Mexico, Peru and Chile have joined the big boys of world trade.
Mexican-made cars are sold in 100 countries thanks to Mexico having 44 free-trade agreements around the world. Peruvian avocados are sold in ubiquitous Costco’s around the U.S., the same with avocados from Mexico. When California grapes are out of season and disappear from American supermarkets, grapes from Chile fill the gap.
The newly agreed to Trans-Pacific Partnership (TPP) includes these three Latin American countries as full partners with the gargantuan trading countries of the United States of America, Canada, Japan and Asian up-and-coming traders of Singapore, Malaysia, Vietnam and Brunei.
Standing in the wings for future membership is South America’s Colombia and a long list of Asian countries starting with South Korea, the Philippines, Laos, Cambodia, Thailand, Indonesia, Bangladesh and the second largest country in the world, India.
With some more hard work and some success the TPP will eventually encircle Communist China and limit its influence in the Pacific world of trade, commerce, international politics and influence.
As it is, Mexico, Peru and Chile are original TPP members. The TPP accounts for 40 percent of all world trade today in its present form and that will increase as other countries petition to join it.
Consumers in all TPP countries will benefit and each country will show increases in Gross Domestic Product (GDP) which means more jobs. Some of those jobs will move sideways from one TPP country to another but in general jobs will increase in numbers in all countries. Critics in the U.S. And Canada will complain that those industrialized countries will lose jobs to less advanced TPP countries as they claim the U.S. lost jobs to Mexico under the North American Free Trade Agreement (NAFTA) 21 years ago. The facts are that a possible million jobs were moved from the U.S. to Mexico in NAFTA’s first 20 years, while millions of more new jobs were created in trade with Mexico and Canada that off-set that minor loss of jobs by millions. There was no net job loss to the United States under NAFTA.
The same will be true under TPP.
Actually, some barriers still exist in the TPP that some Americans are unhappy with. For example, the Ford Motor Company is unhappy that more barriers against American cars were not done away with so it could sell more cars in Japan. So all is not Kumbaya with TPP. American tobacco farmers are unhappy because tobacco isn’t as protected in TPP countries as they would like from future legal restrictions. American Big Pharma companies would have wished for longer patent protection than the five years arrived at in all-night negotiations.
In other words, there are unhappy Americans that would wish for a TPP stronger in their fields of interests as well as labor unions that pine for job security even when artificial or “greenies” that insist on environmental policies that choke economic progress.
On balance, however, most Americans, Mexicans and Canadians will benefit from TPP as they have from NAFTA.
One example is the booming Mexican car manufacturing sector that will now have new markets to sell its cars to, cars that contain 40 percent of their content made in the U.S.A. by American workers.
On the negative side, politics and special interest still manage to hold out in some areas. For example, when NAFTA went into effect on January 1, 1994, Mexican consumers in Tijuana, Mexico, were buying sugar at one third what sugar cost one hundred yards north in San Diego, CA. For the innocent among us, sugar producers in the U.S. had more political juice than Mexican sugar producers did in the tortuous NAFTA negotiations. Today, TPP allows for more sugar imports into the U.S. thus prices should fall like they didn’t under NAFTA.
As in all massive trade negotiations, TPP has winners and losers. Despite AFL/CIO and Teamster union bosses, whiny politicians like Presidential candidates Socialist Senator Bernie Sanders and former Democrat, presently GOP candidate Donald Trump, who join to call it a terrible deal and a pending opposition by Hillary Clinton, Congress will pass TPP just as it did NAFTA 22 years ago. NAFTA passed with heavy Republican support and massive Democrat opposition. Democrat President Bill Clinton couldn’t mobilize support from his own party just as it looks like President Obama will be unable to do with TPP.
Nonetheless, by the grace of the U.S. being the largest exporter and importer in the world, the U.S. and its consumers are winners; so are Mexico, Peru and Chile that will gain jobs and better consumer prices. Win, win!
Contreras formerly wrote for Creators Syndicate and the New America News Service of the New York Times Syndicate