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Trade agreement helps countries stay competitive

As economies of countries increasingly become more interconnected and interdependent, the Free Trade Agreement (FTA ) is becoming a vehicle to help countries become more competitive.

The Trans-Pacific Partnership (TPP) when in force will bind the United States with 11 Pacific Rim economies: Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, Brunei, Chile, New Zealand and Singapore. China, the largest Pacific Rim trading nation and the world’s top exporter, is not part of this agreement.

The debate continues regarding whether TPP is a threat or an opportunity for American workers. Proponents of the agreement claim that it will reform difficult areas such as environment and labor standards, protect intellectual property rights, help small and medium sized businesses benefit from trade, eliminate 18,000s individual tariff and will reduce the overall cost of exporting goods and services by leveling the playing field based on lessons learned from previous trade agreements, including the North American Free Trade Agreement (NAFTA) an agreement between the U.S., Canada and Mexico.

TPP in particular will upgrade NAFTA with enforceable highest environmental and labor standards to reflect current economic realities, which was voluntary in the previous agreement, enacted in 1994.

Opponents argue that TPP is a repeat of NAFTA. They claim that NAFTA did not live up to expectations, claiming the jobs promised were not delivered. This is in agreement with the prediction that was made by Independent presidential candidate Ross Perot in 1992, who famously said that “There will be a giant sucking sound going South,” referring to U.S. jobs going to Mexico. They also claim that this trade deal was negotiated in secret without the full participation of all stakeholders.

The U.S. has FTA in force with 20 countries. Forty-six percent of U.S. goods exports go to trade agreement partners. TPP will apply to 40 percent of the world’s economy. In 2014 TPP countries supported 4.2 million U.S. jobs through the export of goods and services.

Trade-dependent Oregon will also benefit from TPP. The state exported $9.2 billion; 44 percent of Oregon’s goods went to TPP countries in 2014. Over 3,639 companies from Oregon exported goods to TPP countries in 2013, of these 88 percent were small- and medium-sized companies.

TPP will almost eliminate all import tariffs on Oregon’s major export sectors including information and communication technology, chemicals, forest products, transportation equipment and consumer goods. Some of these products have tariffs up to 185 percent. TPP will also provide market access for Oregon’s agricultural products. Eleven of Oregon’s agricultural organizations support TPP.

The final TPP text, 30 chapters and 2,000 pages was released for the public to review in early November 2015. Congress has 90 days to review the deal for an up or down vote with no amendments due to the “fast-track” procedure that was granted last year. Once received, Congress should vote and approve TPP to help connect U.S. exporters with the fastest growing middle class in the world to generate more U.S. jobs.

Tekle Sebhatu, Ph.D. is Principal of STC International, a Beaverton-based company which offers online export and import courses. He is also adjunct faculty at Strayer University and UCC online. where he teaches international business and general business courses. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..