Impact of Trans-Pacific Partnership on United States Jobs and Markets (Essay Sample)

Impact of Trans-Pacific Partnership on United States Jobs and Markets
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Impact of Trans-Pacific Partnership on United States Jobs and Markets
Introduction
The estimates for the Trans-Pacific Partnership (TPP) between the United States and other eleven member countries stands to increase the annual real income of the United States by 0.5% or $131 billion along with annual exports of 9.1% or $357 billion over the baseline projections in the year 2030. The other eleven members are Japan, Mexico, Vietnam, Malaysia, Canada, New Zealand, Singapore, Peru, Chile, Brunei and Australia. While the United States will be the astute beneficiary of the agreement, countries such as Vietnam, Malaysia and Japan will have substantial gains as compared to the other members. The signing of the agreement will affect the wages of workers in the United States with impact on job levels. Nonetheless, job churn will be evident in movement of jobs between organizations as well as imposing adjustment costs on employees. For this reason, the impact of the Trans-Pacific Partnership on the United States jobs and markets will be in the following four ways. The first impact of the Trans-Pacific Partnership will be perceptible in job churn. The second impact of the agreement on the jobs and market will be exposure to more liberalized markets. The third impact of the TPP agreement on the American jobs and market will be marked with demand constraints resulting in off-shoring of American jobs. The last impact will be apparent in flooding the United States market with unsafe imported products. The paper purposes to discuss the impact of the Trans-Pacific Partnership (TPP) on the United States jobs and market.
At the outset, the Trans-Pacific Partnership impact on the American job and markets will be in the form of job churn rate. The churn rate will be evident in movement of jobs among diverse firms with limited employment loss. Job churn rate, which is also rate of attrition, will be an orchestration of the unprecedented choice, as well as instant and global access to information and products. The signing of the TPP possibly will not affect the overall employment in the United States. The TPP will entail adjustments costs because of the United States employees along with capital moving from the less to industries and organizations that are more productive. Employment shifts between diverse sectors, hence the labor market churn is critical. The estimate of the employment shifts are a creation of changes in production and relative prices of the contrasting production factors in capital, skilled and unskilled labor. Whereas the total value added in an economy increases as the economy becomes more productive, the total employment rate does not increase with economy competitiveness. For this reason, the supply rate of labor will be normal in the long run levels with or with the enforcement of the TPP agreement. The classical economic theory validates the fact that trade agreements often result in competitive industries flourishing while the less competitive industries struggle (Chow, 2016). The execution of the partnership will see industries grow while some industries will grow but at a slower pace. Consequently, the job market in the United States will experience a job churn while employees will move from less competitive industries to industries that are more competitive. The churn amounts will be up to 150,000 jobs in the American industry particularly the shift from manufacturing to service industry (Cheong & Jose, 2013). Instances of the agreement resulting in unemployment may only be apparent in the manufacturing industries. For example, a laid-off steel employee without a degree may find it impossible to find a job in other fast-growing industries such as service industry.
The second impact of the Trans-Pacific Partnership on the United States jobs and the market will be exposure to the American market and jobs to more liberalized markets resulting in full employment. Economic theory underscores the fact that trade liberalization attributed to trade partnerships affect jobs and market in diverse ways. Trade partnerships remove barriers to cross-border investment and trade as well as increasing economic integration among member countries hence shifting patterns of production among these countries. The resultant effect is a shift in the labor demand among the countries involved. In the short term, the labor demand shift will be in wage changes along with temporary job loss. The temporary job loss will attribute to employees transition from the import-competing industries, which will be contracting into export-oriented industries that will be expanding as well as paying better wages because of increased employee demand. Consequently, in the long-run, aggregate employment will move towards full employment because the employee transition to a new equilibrium will be almost to completion, however, the influence on other markets and jobs may persist (Autor, David, & Gordon, 2014). In the instance of the Trans-Pacific Partnership, the United States stands to be exposed to markets with limited trade barriers for economic activities. The United States as the second largest exporter globally behind China stands to gain more from the partnership. For this reason, the economic integration between the United States and the eleven countries will result in the United States exporting more products to these countries. The increased exportations will act as catalyst to more growth of the American economy. The resultant effect will be a higher demand for workers in the market as well as enhanced wages, which will create more employment in the long-term. In the partnership, countries with unbalanced trade deficits evident from more imports as compared to exports, their jobs and market will be negatively influenced because of the contracting exports typified by growing imports (Cimino-Isaacs & Schott, 2016).
The third influence of the Trans-Pacific Partnership to the United States jobs and the market will be off-shoring of American jobs. According to Cimino-Isaacs and Schott (2016), based on a case study of other partnerships between the United States and other countries, an instance of job offshoring by American firms is common. For example, since the enforcement of the World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA), the United States has been subject to closure of over sixty thousand manufacturing facilities. The Trans-Pacific Partnership has incredible foreign investor privileges. These privileges will confer American companies with opportunities to offshore more American jobs to countries with low wages. The opportunities include conferring special benefits to American entities that relocate to foreign countries as well as eliminating the risks that often discourage firms to moving to other nations. The presence of Vietnam in the TPP, a state characterized by low wages even lower as compared to China, poses a threat to many American jobs. The risk attributes to the fact that many Americans companies will find the country attractive because of the readily available cheap labor as well as conferring ready market for their products. Since China, joining the WTO in 2001, the trade deficit between China and United States has resulted in the devastating effect on the American jobs and market. Between the year 2001 and 2011, the American job market has lost about two million seven hundred jobs because of American manufacturing firms opting to offshore their facilities to China. The devastation of the United States manufacturing industries has resulted in low wages, heightening inequality and tax bases eroding (Autor, David, & Gordon, 2014). Therefore, the enforcement of the TPP threatens the American job sector with the same implication of many American companies opting to offshore their jobs and facilities to Vietnam or Malaysia because of the large cheap labor along with low operation costs for these enterprises.
The last impact of the Trans-Pacific Partnership to the United States jobs and market will be flooding of the United States market with unsafe imported products from the eleven member partners to the agreement. Chow (2016) alleges that the signing of the TPP will not only remove all the trade barriers between the United States and the mem...