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Op-Ed: TPP Means Fewer Taxes and More Jobs, Despite the Politics

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Children posing for back-to-school photo.

Children posing for back-to-school photo.

Proud parents and doting grandmas have spent the last few weeks uploading back-to-school photos all over social media as smiling kids across America show off their new sneakers, backpacks and electronic gadgets on the first day of school.

Some of these new outfits and devices are made in America, but many are manufactured across the globe and imported to your favorite retail stores just in time for the first day of school. Regardless of origin, the ability of American consumers to buy and American businesses to sell goods around the world is not only contributing to those smiling faces, but it is also directly responsible for millions of great jobs in our economy.

Parents are expected to spend more than $27 billion during back-to-school this year as policymakers grapple with the issue of free trade—specifically the Trans-Pacific Partnership (TPP)—and whether an agreement that removes trade barriers and lower tariffs in 12 countries is good for their constituencies.

When the United States Congress is put to the test later this year, I see no other option than to approve the TPP agreement before 2017.

When government proposes to eliminate self-imposed U.S. import taxes, particularly those effecting middle-class families balancing family budgets while checking off items on the school supply list, all Americans will save money. When the policy supports 41 million U.S. jobs dependent on trade, it helps everyone’s bottom line. Then consider the multiplier effect of writing the trade rules to elevate and enforce the highest environmental and labor protections. It’s basic math that results in a net positive.

Simply put, when America trades Americans work.

On the export side of the equation, TPP will result in 18,000 tax cuts on Made in America products and provide an advantage in market access to nearly half a billion new customers in one of the fastest growing regions of the world.

Those lower taxes and new customers will mean more American workers manufacturing products to sell to the world, and the upstream and downstream impact means more jobs across our domestic supply chain. It means more jobs for those that harvest agricultural commodities or produce raw materials, more jobs for those who create, design and market the products. And last, but certainly not least, it means more jobs as American-made goods are packaged, hauled in rail cars or trucks across the country to our nation’s ports and loaded onto cargo ships for overseas markets.

Some argue that goods manufactured overseas represent “lost” jobs here in America, that every pair of athletic shoes or new T-shirt imported from abroad means fewer manufacturing jobs here at home. It’s an argument that has unfortunately caught steam in both major political parties this election cycle. But that argument showcases a fundamental lack of understanding of the modern economy, and discounts the enormous benefits—and millions of jobs—that result from removing the trade barriers and tariffs that stifle the free movement of goods and services.

TPP opens the door for American companies to gain access to new markets and customers. Ninety-five percent of the world’s consumers live outside our borders. Those customers crave American-made products and services and are anxious to earn our business as well. Removing existing barriers to these relationships is the best way to raise living standards across the globe, and ultimately sell more American-made and designed products to more customers. This is the key to long-term economic growth, and good-paying jobs in every sector of the economy.

Importing goods from around the globe also has a dynamic effect on our economy, even for final products manufactured in other countries.

An item assembled in Malaysia may have been designed by an artist in Los Angeles, or a mechanical engineer from Chicago whose labor contributed the greatest amount of value to the final product. Raw materials could come from a farm or forest right here in the United States. And the movement of goods from our ports to storefronts in our neighborhoods creates millions of good jobs in transportation, packaging and logistics.

TPP has been criticized by some politicians who find it all too easy to blame trade deals for America’s economic anxiety. For some, pointing fingers is easier than having a rational discussion about jobs lost because of gains in productivity and technology. But this temptation runs contrary to the long running tradition of celebrating American advances that have revolutionized our economy.

The Internet empowers consumers to book their own hotels and airline tickets thus resulting in fewer travel agents. Should we mourn the loss of those jobs and shut down the Internet to ensure their survival? Of course not. In fact, digital trade has made international trade even more powerful and accessible by bringing product information and purchasing power directly to the American consumer.

Nor should we propose to erect trade barriers or impose higher taxes on products Americans want and need under the guise of saving American jobs. We cannot afford to repeat history by self-imposing higher costs on Americans as we continue to recover from our most recent recession. Regardless of which direction goods and services are being manufactured or supplied and then shipped; a growing global economy will give American entrepreneurs the opportunity to buy and sell around the world.

The bottom line is that free trade is a job creator, both at home and abroad.

With TPP, the students getting their pictures taken for back-to-school will have unprecedented opportunity to innovate, create and thrive in a global economy where we write the rules.

 

By Sandy Kennedy, president of the Retail Industry Leaders Association and a member of the president’s Advisory Committee on Trade Policy and Negotiations.

This piece is part of the outreach by footwear, apparel, travel goods, and retail industry organizations to raise awareness regarding the positive economic potential of the TPP trade agreement.

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