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Seven years after negotiations began and four months after a deal was reached, the United States and eleven other nations this week signed a monumental new trade agreement that would create better jobs for American workers and increase U.S. exports by hundreds of billions of dollars.
A historic moment? Absolutely.
Time to pop the champagne? Not yet.
Known as the Trans-Pacific Partnership (TPP), the agreement would eliminate barriers that restrict the flow of goods, services and investments among nations that represent nearly 40 percent of the world’s economic output. During a ceremony in New Zealand on Wednesday, negotiators from each member country finally put ink to paper on the agreement, which was finalized back in October.
However, in order for it to take effect, Congress must vote to approve the agreement.
“History shows that if we don’t move ahead on trade, we’ll be left behind,” Myron Brilliant, U.S. Chamber of Commerce executive vice president and head of international affairs, said in a statement. “Other nations understand this: While the ink is barely dry, the TPP is already drawing interest from other Asia-Pacific economies that want to follow its ‘race-to-the-top’ recipe for trade and growth.”
At the same time, congressional leaders and even the U.S. Chamber have pointed to areas where further work is required. TPP provisions impacting pharmaceuticals and financial services, for instance, need additional work. This isn’t unusual, either: Many past trade agreements have been supplemented by side letters and other commitments developed to address congressional concerns. Addressing these substantive issues is part and parcel of the effort to build the support needed for congressional passage.
Meanwhile, many other nations want in on the agreement. Officials from Indonesia, the Philippines, Taiwan, and Thailand have expressed interest, as did President Juan Manuel Santos of Colombia during a visit earlier this week to the U.S. Chamber.
The potential gains are huge. The U.S. would see its exports increase by 131 billion and its incomes increase by $357 billion by 2030 under the accord, according to a recent analysis conducted by the nonpartisan Peterson Institute for International Economics. All other members of the TPP would see similar though less robust economic benefits.
How does the deal deliver such a wealth of benefits? Brilliant explains: “The TPP will sweep away the tariffs and other trade barriers that too often deny a level playing field for U.S. exports. It will unleash the digital economy, strengthen our innovative and creative industries, and end the favoritism afforded to state enterprises. It would be a game changer for American workers, ranchers, and companies — and for our friends and allies in the Asia-Pacific region.”
That’s why, he said, Wednesday’s signing ceremony “marks a potentially historic step forward for U.S. competitiveness and more dynamic economic growth.”
A potentially historic step forward.
It’s up to Congress to turn that potential into a real, lasting windfall for America’s economy.