The gigantic Pacific trade pact is looking like a political orphan, even as the latest numbers show what’s at stake for California.
Donald Trump, the presumptive Republican nominee, calls the Trans-Pacific Partnership a “horrible deal” that will mostly help China. Sen. Bernie Sanders says it’s a job-killer and promises to spike it. Democratic front-runner Hillary Clinton, once more of a free-trader, now opposes it as well.
While the U.S. signed the TPP in February with 11 other Pacific Rim nations after five years of negotiations, what would be the largest regional free-trade agreement ever won’t go into effect unless it’s ratified by 2018. For that to happen, both the U.S. and Japan need to approve it.
But getting it through Congress before he leaves office is going to be a lonely and uphill fight for President Barack Obama, who doesn’t have the backing of many fellow Democrats or many political chips left to use. The handicapping is that he won’t try until the lame-duck session after the November election, when members of Congress might be more inclined to cast a politically tough vote. But Clinton said recently she would object to that if she’s elected.
The fate of the Pacific trade deal means a lot to California, the second-highest exporting state in the nation and the world’s seventh-largest economy.
Three of the state’s top four export markets are in the TPP – Canada, Japan and Mexico. In March, however, California’s exports to all three dropped significantly from a year ago: 10 percent to Canada, 9 percent to Japan and 7 percent to Mexico. Not a good trend.
Overall, California’s total exports dropped by $1.3 billion, or 8 percent, compared to March 2015, continuing a decline that started last May. Of the state’s top 10 export markets, the numbers rose in only two – Taiwan and the United Kingdom, according to federal figures. And of the 10 biggest products, only exports of transportation equipment increased.
Still, California accounted for 11 percent of U.S. exports, behind only Texas with nearly 17 percent.
While California’s agricultural industry hopes that lower tariffs under the TPP will expand markets overseas, the biggest beneficiaries would likely be Silicon Valley software firms, Hollywood studios and others who want to protect their intellectual property from piracy, says international trade economist Jock O’Connell.
The TPP is also crucial to California’s ports, which handled 18 percent of all U.S. imports and exports in March, the most of any state. The ports are key centers of middle-class, blue-collar jobs, as the California Center for Jobs & the Economy points out, and they have spent big bucks on improvements. After spending $400 million to deepen its harbor, the port of Oakland welcomed the largest container ship ever to dock at a U.S. port last December.
TPP promoters say it would boost trade and the U.S. economy by lowering tariffs and other barriers, while protecting foreign workers and the environment. But many are far more worried about workers losing their jobs here.
Like every trade deal, there would be winners and losers. But it’s not looking good for the TPP to be approved, and that makes Obama the big loser.
By the numbers
California’s exports to its top 10 markets in March, and the change from March 2015:
- Mexico: $2.1 billion, down 6.9%
- Canada: $1.4 billion, down 10.3%
- China: $1.3 billion, down 3.2%
- Japan: $1.0 billion, down 8.6%
- South Korea: $800 million, down 19.9%
- Hong Kong: $600 million, down 2.5%
- Taiwan: $600 million, up 6.4%
- United Kingdom: $500 million, up 17.7%
- Germany: $500 million, down 2.0%
- Netherlands: $400 million, down 31.3%
Source: California Center for Jobs & the Economy