By Jomo Kwame Sundaram
March 01, 2016
• U.S. income gains of 0.5 percent from TPP in 2030 – This is raised from the institute’s previous 0.4 percent, mainly by extending the implementation period from ten to fifteen years. In any case, added growth of 0.5 percent is very small, about 0.03 percent per year over fifteen years.
• Exports rise by 9.1 percent, but so do imports, because the model assumes fixed trade balances. This excludes, by assumption, the problems associated with rising trade deficits, which have been common after previous trade agreements.
• All displaced workers are absorbed immediately and costlessly in other sectors – again, by assumption. The paper does acknowledge that manufacturing employment will increase more slowly because of the TPP, and that some 53,700 more U.S. jobs per year will be “displaced” annually. But they view this as a small addition to normal labor market “churn.”
• The TPP will generate net GDP losses in the USA and Japan. Ten years after the treaty comes into force, US GDP is projected to be 0.54 percent lower than it would be without the TPP. Similarly, the TPP is projected to reduce Japan’s growth by 0.12 percent.
• For other TPP countries, economic gains will be negligible – less than one percent over ten years for developed countries, and less than three percent over the decade for developing countries. Chile and Peru’s combined gain of 2.84 percent comes to only about a quarter of one percent per year.
• The TPP is projected to lead to employment losses overall, with a total of 771,000 jobs lost. The United States will be hardest hit, losing 448,000 jobs.
• The TPP will also likely lead to higher inequality due to declining labor shares of national incomes. In the United States, labor shares are projected to fall by 1.31 percent over ten years, continuing an ongoing multi-decade downward trend.