Saturday, November 7, 2015

TPP - Not One Member of Congress Has Negotiated Business Deals in over 50 countries as I have. My View

 TPP - Not One Member of Congress Has Negotiated Business Deals in over 50 countries as I have.  This is My View based on the real world experience and expertise (which is documented in my journal book "Better Times Ahead April Fool"). 

How many Americans have done this? With a bad cold on frozen Chinese conference rooms or dusty hot Bombay hotels? Only international legal negotiators know what its really like -- they have that same unique expertise that was my career for 30 years. Our members who have never left Frog Jump USA have no clue.

The terms of the Trans-pacific partnership trade agreement have been released. What should Congress and Americans make of it? How about some advice from one of the few people who has negotiated for the sale of U.S. goods in over 50 countries the past few decades? That's me.

Already, Republicans who normally like trade agreements hate it because it would give the president another accomplishment. If the President came out in favor of oxygen, the GOP would immediately condemn oxygen as a bad idea and you should avoid it. 

That is a poor reason to vote against anything. It's time they did something that would benefit the American worker as well as business. Their candidates think the pyramid I sat in one day as a young negotiator in Cairo, Egypt, was a grain factory built by a biblical person, when it was built 3,000 years before the bible was even written! I doubt any of them have even been inside a pyramid, or on the Great Wall of China. I have.

 Democrats hate it because, frankly, they always hate trade agreements, even when they help American companies market our goods overseas from plants right here in the USA. Before you throw your computer at me, here me out. Here is what TPP actually does:

"…the deal eliminates 18,000 taxes other member nations put on American goods."

 This is HUGE. It is foreign tariffs on American  products entering their country that make our goods less competitive. Imports of foreign products into the United States don't face those same tariffs. So TPP finally gives U.S. suppliers are competitive shot at expanding their production by marketing our goods to 200 countries worldwide. Some U.S. companies today get over 50% of their sales from international markets. 

I was an international lawyer who saw this personally (and described in my book "Better Times Ahead April Fool").

"In addition, the 12 nations agreed to curb cybertheft of trade secrets. A side agreement to TPP reaffirms member nations’ pledges through the International Monetary Fund not to cheapen currencies for competitive advantages...

The deal also includes guarantees of labor rights, something that could radically alter workers’ lives in countries across Asia, where employees often are subject to harsh working conditions. Brunei, Malaysia, and Vietnam have pledged to allow their workers to form labor unions under a side agreement to TPP, as well as improve foreign worker protections.

Right now, in the United States, drug companies get 12-year exclusivity on data related to new medicines. This allows them to keep generics off the market for more than a decade. Big Pharma argues this is necessary to recoup the cost of developing new drugs. None of that changes under TPP.

But exclusivity periods for many other TPP nations will change. Previously, many countries had no exclusivity, meaning their drug companies could quickly create cheaper, generic versions of medicines that are developed by rivals.

Under TPP, the exclusivity period in these countries is now between five and eight years.
The deal does contain some regulations meant to curb overfishing and deforestation..."


No, it doesn’t use the words “climate change.” Why would that be in a trade agreement?  The international climate summit is a more appropriate venue for climate issues.

In my career I worked for two Fortune 500 companies based in Texas. Most of my activities involved selling American products overseas -- products made here in the USA. I worked and negotiated in over thirty countries from Europe to South America to Asia. 

After the 80's oil bust I was laid off but put my expertise to work for small companies and individuals and went to another twenty countries as an entrepreneur.  Details of those experiences (the good, the bad and the very ugly) are in my book "Better Times Ahead April Fool."

Few people know that the United States has very low tariffs but most other countries have high tariffs on goods imported into them.  Therefore, there is no barrier for a foreign company to sell their foreign-made goods in the U.S. (unless it is subject to a quota like sugar) but if a U.S. company wants to sell our American-made goods overseas (like caterpillar bulldozers, Boeing jets, computer, pollution control equipment, etc.), we are at a price disadvantage because of their higher tariffs. 

Here is an example from real life. 

A few years ago, Brazil wanted to buy telecommunications equipment costing about $200 million dollars. AT&T in the U.S. wanted the business and so did companies in Canada. However, Canada had a free trade agreement with Brazil that eliminated the 10% tariff on equipment imported into Brazil. The U.S. did not have such an agreement, meaning that the Brazilian buyer would have to pay an extra $20 million tariff on the U.S. equipment. That $20 million cost difference was a deal killer, so the contract and the manufacturing jobs for that project went to Canada instead of the U.S. --meaning that Canadian workers got to build the equipment to export to Brazil instead of Americans. This is one reason we export less than we import.

The above Brazil example happens more than Americans realize.  In short, the lack of trade agreements is costing Americans jobs and exports! Keep that in mind as the hysteria over the TPP begins. It's been called "NAFTA on steroids" but its structured quite differently than NAFTA.

Some people think that a trade agreement like NAFTA and TPP moves jobs overseas.  I can tell you that jobs move overseas without a trade agreement! Here's why.

Before NAFTA, if my Fortune 500 (or a small) company sold a pump or motor for a power plant to Mexico, the tariff would be 10% (or more). In India, the tariff could be up to 70%!  In order to avoid that tariff  companies would avoid it by licensing a manufacturer in Mexico to make it there. Since it was no longer an import, it avoided the tariff and brought down the cost to be competitive.  With NAFTA, the 10% Mexico tariff was eliminated so the equipment could be made in a U.S. plant and shipped to Mexico! 

Of course, some companies moved to Mexico but they could have done that anyway without the trade agreement. It happens all the time, even before the GOP Congress under President Bush enacted tax deductions for moving a plant or headquarters overseas to duck U.S. taxes (and adding to our deficit.) 

After NAFTA, Mexican corn farmers went out of business as Midwest corn producers could import their less expensive corn products into Mexico much cheaper than Mexico could produce it. China moved production of hard goods from China to Mexico to enter the U.S. market, so it cost Chinese laborers work (which they had taken from U.S. workers.) 

Today, without a trade agreement, low cost countries like Korea then Vietnam took over from China as China's labor costs soared. Its a global labor market even without trade agreements.

The TPP lets America set the rules of future trade in Asia instead of China, which now has the world's second largest economy and doesn't give a hoot about fair trade or free trade. I saw it personally. TPP would help American companies sell into China if they eventually join. Even with U.S. approval, all the other countries also have to pass legislation for it to become law.

In the end, it will upgrade labor conditions which are appalling in places like Vietnam (which is now beating out China as a lower-labor cost country for manufacturing exports). It helps U.S. companies export more products made by Americans here in the U.S. 

If you don't believe me, read the struggle I personally experienced selling American products into places like China, Mexico and India in Better Times Ahead April Fool - those tough experiences are still exist today because we don't have trade agreements with them. Approval of TPP is a step in the right direction.

Beyond that, the roadmap in "Agenda for American Greatness" at the book link explores how we get America back to No. 1 in this high tech, inescapable global economy.

1 comment:

  1. This is an interesting article which has support for the conclusions, unlike so many others that shoot from the hip based on missing words like "climate change" - probably why the Sierra Club came out with a dumb opinion against TPP which it does not get. And so many other liberal progressives so little about economics, including the effect of the macro wage level on established economies like the US and in the past few decades, this is a good view of the controlling substance of some significant issues that apparently have been properly addressed....and regrettably, people like Bernie Sanders that has a poor understanding of the financial sector prefer to be against than know enough to be reasonable and analytical based on objective empirical facts.


Comments from real people welcome. The only comment rule is "BE CIVIL." Let's discuss SOLUTIONS based on real FACTS.

Thanks for your feedback! Click "Subscribe" or "Follow" for notification of future posts. Feel free to Share with your friends.