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Trans-Pacific Partnership: Why Can't We Get a Better Deal?

By    |   Wednesday, 07 October 2015 12:11 PM

While White House officials tout the Trans-Pacific Partnership as a comprehensive and balanced agreement that will raise living standards and reduce poverty, the U.S. didn't broker the best possible deal for American interests, Tom Hutchinson, the senior financial editor for The High Income Factor Newsletter, told Newsmax TV.

The TPP, as the deal is known, would eliminate or reduce tariff and non-tariff barriers across a spectrum of goods and services, address issues like the development of the digital economy and the role of state-owned enterprises in the global economy, the U.S. Trade Representative said in defending a pact that is expected to face opposition in the U.S. Congress.

Hutchinson agreed that one must be skeptical about the long-sought trade agreement reached between 12 Pacific Rim countries intended to create the world's largest free-trade area, encompassing 40 percent of the global economy.

"It's good for some companies, but let's look at the track record of these deals," Hutchinson explained to "Newsmax Now."

Story continues after video.

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"Before and after we had a trade surplus with Mexico. Now we have a trade deficit of $50 billion. Three years ago, we made a free trade agreement with South Korea. Since then, our exports to South Korea have increased $800 million – their exports to us have increased $12.6 billion. So that deficit has doubled. I mean where are we going here?" Hutchinson asked. "I'll trade you a $10 bill for a $5 bill?"

The deal aims to liberalize commerce across nations accounting for 40 percent of the world's economy but still needs ratification by each country. The TPP also seeks to press China, not one of the 12 nations, to shape its behavior in commerce to the TPP standards.

"The most notorious of all is China. Last year we ran a $477 billion deficit overall. Seventy-two percent of that was China, $343 billion. And here's the galling thing, they're notoriously hostile to our companies that try to do business over there," Hutchinson said.

"So my question is this, with the leverage of sending them $3.5 trillion a year, why can't we get a better deal?"

The accord involves significant market openings from Canada, the United States and Japan but also sets controversial new patent standards for cutting-edge biologic drugs and demands countries like Vietnam, Mexico and Malaysia improve labor standards.

"There's a lot of details yet to be disclosed, but it's the same government ingenuity negotiating this deal that negotiated those other deals."

But Hutchinson did point out some industries likely to benefit from the deal.

"Agriculture for one, because that's a lot of what we sell to these emerging markets, food. They can't really buy much else, so that's a big thing. Also, some of the big multinationals like Boeing, who export a lot, gets a better deal for selling their airplanes there," he said.

Among those expected to welcome the deal are U.S.-based global e-commerce companies like Google Inc and Uber , which will have restrictions removed on sales into foreign markets, including existing requirements that they establish local infrastructures.

As part of the deal, the United States agreed to cut tariffs on Japanese vehicles over 25 to 30 years but also won better access for U.S. carmakers to the relatively closed Japanese market. Still, Ford Motor Co recommended lawmakers vote against the deal as it does not include sanctions against countries found to be manipulating their currencies.

Reuters reported that early industry reaction to the long-sought trade agreement amounted to faint praise that it could have been worse and umbrage that the United States appeared to be the biggest winner.

Initial ambitions for the deal, covering products and services from kiwifruit to semiconductors, were clipped back in many areas to find agreement. There was also concern that public summaries did not disclose the detail where the devils might lurk - making it hard to quickly pick winners and losers.

U.S. companies including Citibank Inc, Honeywell International Inc and Gap Inc cheered the conclusion of a deal which is expected to bring the biggest comparative benefits Vietnam, where shares in seafood and textile companies rose after the news was announced.

(Newsmax wires contributed to this article.)

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While White House officials tout the Trans-Pacific Partnership as a comprehensive and balanced agreement that will raise living standards and reduce poverty, the U.S. didn't broker the best possible deal for American interests.
Trans-Pacific Partnership, trade, TPP, newsmax TV
Wednesday, 07 October 2015 12:11 PM
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