As the chairman of the U.S. House Ways and Means Committee, Rep. Kevin Brady, R-The Woodlands, wields more power impacting U.S. trade agreements than any other congressional committee chairman during this critical election year.
Topping the list of trade issues is the Trans-Pacific Partnership. Negotiations were concluded last fall, and the agreement is now subject to member country approvals. Many of the participating nations have already acted upon or indicated a quick approval process.
But U.S. approval — the hinge to the agreement's implementation — is lagging behind, leaving the trade pact vulnerable due to acrimonious political debate and criticism from extreme wings of both our major political parties.
Many who oppose the agreement have been disillusioned by previous such deals — primarily the North American Free Trade Agreement. Ratified in 1994, NAFTA is credited with liberalizing markets, but it’s also been widely criticized — most famously by 1992 presidential candidate Ross Perot when he predicted the "giant sucking sound" that would be created by jobs moving across our southern border as a result of the deal. In the short term, he was spot on — the United States lost hundreds of thousands of manufacturing jobs to Mexico. But those jobs were leaving regardless, if not to Mexico then to China or Southeast Asia.
Over time, however, studies have proven NAFTA’s benefits to the United States, particularly in Texas. According to a 1999 Texas Public Policy Foundation study, just five years after NAFTA’s ratification, it had resulted in increased exports from Texas to Canada and Mexico by $16 billion — and increased exports equates to more jobs. Today, it would be difficult to argue that quality of life has not improved in Mexico, the United States and Canada as a result of NAFTA.
The 2,000-page Trans-Pacific Partnership agrees to exchange trade benefits and open markets in 12 countries along the Pacific Rim, creating the potential to become the largest U.S. regional trade agreement in history, and according to economic estimates, the United States stands to benefit the most from the deal.
Here’s how: According to the U.S. Coalition for TPP, the agreement covers 40 percent of global GDP and benefits every state in the country. In 2013, 50 percent of Texas goods and services exports ($162 billion) went to countries that would be part of the agreement, supporting many Texas industries including the oil and gas and technology sectors.
A recent Peterson Institute for International Economics report on the economic effects of the agreement says it will increase annual exports by $357 billion (9.1 percent growth) and incomes in the United Sates by $131 billion (0.5 percent GDP growth).
Business groups, including the U.S. Chamber of Commerce and the Business RoundTable, have expressed support. The U.S. Coalition for TPP has grown throughout the seven years of negotiation to include more than 100 companies, and it continues to expand as the voices supporting TPP become louder.
As is the case with all trade agreements, there will be opposition on behalf of specific industries, particularly those who enjoy competitive advantages due to market barriers that block out competition from international markets. The Peterson Institute report estimates that delayed implementation of the agreement by even a year would represent a $77 billion opportunity cost to the U.S. economy.
These issues need to be resolved. Chairman Brady is expected to lead the charge, but he cannot resolve these issues unilaterally — other Texas lawmakers at the state and federal level need to engage as well.
Trade agreements will always be criticized given the veil behind which they are generally negotiated. Political pressures on the negotiating process across multiple governments and industries require delicate ambiguity. However, with leaders like Chairman Brady at the helm, the Trans-Pacific Partnership stands a much better chance of Congressional approval. Texas leaders need to take a stand – support the partnership and support more jobs in Texas.