Pull out of TPP and watch the jobs go overseas: First up Harley Davidson

[grantcart]

In this timely thread Union Leaders complain about jobs moving from the US to Thailand.

https://www.democraticunderground.com/100210610419

Sounds like just another company moving to cut costs, but it isn't. It is an American company desperately trying to maintain its market now that the US will be out of the TPP.

Before leaving the TPP it was expected that the US factories would be able to compete and export HD bikes to Asia, now they will be made in Asia. Guess what? Even IF the Idiot in Chief does to back to TPP and even IF they let the US back in, those HD jobs will not be returning, they are gone and gone forever, the TPP was the last chance to save those kinds of jobs.

The best peer review article on the TPP estimated that by the year 2030 the TPP would add about $ 140 billion to American incomes. The reason is simple: we exchange better penetration of US jobs that are based on higher capital, higher skill, higher tech and less fungible to give TPP countries better access to the US for jobs that are lower capital, lower skill, lower tech and highly fungible. That study below but first what happened to Harley Davidson:

https://rideapart.com/articles/harleys-thailand-factory-result-pulling-tpp

Of course, selling American bikes in the APAC market—more specifically in Southeast Asia—comes with what Levatich has described as “unbelievable trade and tariff barriers". Because of the fee tacked on for importing a motorcycle from the US, it is cheaper for Harley to setup a factory in Thailand and build bikes there rather than build them here and send them there.

“We would rather not make the investment in that facility (Thailand), but that’s what’s necessary to access a very important market,” says Levatich. “It is a direct example of how trade policies could help this company, but we have to get on with our work to grow the business by any means possible, and that’s what we’re doing.”

On a macro scale the impact of TPP would have been significant to the US who would have been the biggest beneficiary:

https://piie.com/publications/working-papers/economic-effects-trans-pacific-partnership-new-estimates

The new estimates suggest that the TPP will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement is nearly fully implemented. Annual income gains by 2030 will be $492 billion for the world. While the United States will be the largest beneficiary of the TPP in absolute terms, the agreement will generate substantial gains for Japan, Malaysia, and Vietnam as well, and solid benefits for other members. The agreement will raise US wages but is not projected to change US employment levels; it will slightly increase "job churn" (movements of jobs between firms) and impose adjustment costs on some workers.

International trade is a highly complex organism and a lot of it is not ideological. The greatest sin of the populist nationalist, in this case Idiot in Chief, is to implement policies that fit on a bumper sticker but actually will have a counter affect to its intention.

US tariffs on Chinese steel and aluminum were made with the enthusiastic embrace of steel and aluminum manufacturers and their unions and it made for one of Trump's best photo ops. Last time we tried this it cost us a net loss of over 100,000 jobs and that is why Cohen left as economic advisor. The premise that China is a major disrupter in steel and aluminum is not only not true its laughable.

The major exporter of steel and aluminum to the US is Canada which has higher structural costs (like taxes) than the US.

http://www.latimes.com/business/la-fi-canada-trump-tariffs-20180303-story.html

Canadians reacted with a mixture of anger, confusion and resignation this week to President Trump's promise to hit U.S. imports of steel and aluminum with hefty tariffs, upending decades of economic cooperation and integration.

"We're pretty consistently flabbergasted that Canada is at the top of the hit parade of trade villains" in Trump's eyes, said Douglas Porter, chief economist at the Bank of Montreal.

Under the Trump policies announced Thursday, steel imported into the United States would be slapped with a 25% tariff and aluminum with a 10% tariff. The announcement sent shudders through world markets and prompted a global outcry, with European allies and others threatening retaliation.

Trump often has accused China of forcing U.S. steel and aluminum companies to fold by inundating the market with cheaper materials. But Canada is the largest exporter of steel and aluminum to the United States, supplying $7.2 billion of aluminum and $4.3 billion of steel to the United States last year.

Compare the announcement of the Idiot in Chief and the bad effects of leaving the TPP with the following article which is based on the US being in the TPP and having a really smart guy as President

https://www.reuters.com/article/us-vietjet-boeing/vietnams-vietjet-to-buy-100-boeing-planes-for-11-3-billion-idUSKCN0YE0C1
The deal, signed during U.S. president Barack Obama’s visit to Vietnam, represents a coup for Boeing, as VietJet has only operated its European rival Airbus’ A320 airplanes since it began operations in December 2011.

The airline also signed a $3.04-billion deal for engines made by Pratt & Whitney, a unit of United Technologies, for the 63 Airbus planes of the 99 it ordered and 7 hired since 2013.

This is the difference between an intelligent leader and an idiot, the difference between long term policy and a bumper sticker slogan.

For every year Trump is in office it will take five years to recover, and that is based on the assumption that the American people want to change and do the work of reading, understanding and discussing actual policies.

[tazkcmo]

1. Lots of "bikers" in KC, KS.

And many made a living at the local Harley plant. Bet you they will still vote GOPee this fall.

[Turbineguy]

2. I could have been an obscenely well-compensated CEO of any company.

If only I hadn't taken economics in high school.

[ismnotwasm]

3. Yeah.

No expert in international trade, but few people are. For all it’s flaws the TPP was a complex compromise with many nations and now we are left with NAFTA. And Trump.

[grantcart]

6. I am not an expert on NAFTA

But I am an expert on the affects of NAFTA on the furniture industry. At the time I was CEO of furniture company that made both component parts and finished furniture.

In the US market our product (cut and sewn leather kits) were designed to enable American manufacturers compete with Italian manufacturers.

While we were able to help companies like Stratalounger have a cost effective advantage against imports but there were production problems. The main problem was that the incentives for the US workers was so tied to time that if there was any problem they just threw away the kit (worth $ 500 each) and go to the next one.

When I visited the factory after the first run of production and saw a huge pile of discarded kits I knew that the culture in the factory wasn't going to work. I went to Mexico to try and find a partner or consider opening up our own assembling plant there. We were not able to find a partner in Mexico and the general level of manufacturing was so low that we would have sent at least 15 Thai workers to guide the process.

While I was there I toured many factories, almost all Japanese car and electronics manufacturers who were successful there, but again they brought in dozens of Japanese workers to be line supervisors. To compare IBM Thailand at the time employed zero Americans but did have dozens of Thais who had graduated from Ivy league Universities.

The commonly held discussion that NAFTA resulted in a one way reduction of US Tariffs on Mexican goods is simply not true.

In fact the opposite is true in every example I have seen.

The US had already reduced tariffs on Mexican goods in a lot of cases BEFORE NAFTA. For example I visited dozens of very large manufacturing plants in Mexico that were established 10 years before NAFTA along the Mexican border, under the Maquiladora Program.

https://en.wikipedia.org/wiki/Maquiladora

After NAFTA tariffs of American goods into Mexico were dramatically reduced to match the low tariffs that the US already had and that led to a huge increase of US exports both ways.

The impact on the Maquiladora Program shows the complexity of trade. If you look at the importation of cars into the US from Mexico there was a huge increase, but not because tariffs changed for exports from Mexico but because with the lower tariffs into Mexico Japanese manufacturers could pay less for parts they bought in the US.

In any case one of the key issues that is not discussed is how trade effects fungible jobs (fungible meaning easily moved). The US is exporting products with higher capital, higher skill, higher tech and are less fungible, meaning that you can't just move a complex manufacturing job like high tech lasers but it is pretty easy to move garment manufacturing because sewing machines can me used any where.

The result is that the benefits to the US side of NAFTA are more permanent while the benefits to the Mexican side are less permanent. For example the WIKI on the Maquiladora Program points out that since China has become a more effective producer of low tech, low capital, low skill manufacturing more than 500 factories along the border in Mexico have closed and relocated to China.

In the furniture world we can see the high capital, high tech manufacturing remains in the US and the labor intensive has not really gone to Mexico, so for furniture the US under NAFTA was a big winner. An example of the former is a manufacturing facility that turns wood into very thin veneer and is compressed with particle board which is significantly cheaper than using a slab of wood for a table, an example of the latter, say upholstery has generally moved from the Midwest, to North Carolina and is now located mostly in Mississippi, there just isn't enough saving to move a plant from Mississippi to Mexico given all of the other problems you will get in Mexico.

It may be that there are some areas where NAFTA worked the other way but in general, as far as the areas that I have looked at, the advantages that Mexico would have gotten they in fact had already achieved years before NAFTA existed.

[Cicada]

7. NAFTA leveled the anti US tilt of the playing field

Pre NAFTA Mexico imposed average tariffs of 15% on US made goods while we imposed average tariffs of five percent on Goods made in Mexico. The playing field was tilted heavily against the US and NAFTA reduced the anti US tilt. And NAFTA included funds to compensate any US firms which was harmed by NAFTA. For instance there were US manufacturers of brooms protected before NAFTA which could no longer compete. People were surprised that the claims for compensation to damaged US firms were only a very tiny percentage of what was expected. But NAFTA could have been better. Dick Gephardt went batshit furious when he learned that we were unable to get into the law a provision that Mexico would have to raise their minimum wage in proportion to the increase in per capital Mexican GDP. Our NAFTA negotiator Mickey Kantor told Gephardt that he tried hard to get that provision in but that Mexico simply would not sign any agreement with that provision. People hated NAFTA but I always thought leveling the playing field of tariffs was good for us. Plus the number of jobs in both countries exploded upwards after the deal. But the labor ally Gephardt was bitter that we did not assure rising Mexican wages, the primary selling point for the deal. The argument was that Mexican wages would rise so their advantage competing against US workers would decline with time.

[Wellstone ruled]

4. As Transportation Infrasturce is Modernized.

More of our Industrial Goods will come from China as well as Africa via China.

Today's Multi-National Corporations could care less where it is made,only where it is sold.

[LSFL]

5. but ..but...

Aren't "progressives" supposed to be against TPP? So all this is great news! Thanks for the post.

[Exotica]

8. The US was never in the TPP, so how could it 'pull out'?

Also, Sec. Clinton, as POTUS candidate, turned on it and said it needed significant modifications before she would support it. The main issues with it were cogently laid out 3 years ago here by Robert Reich:

[grantcart]

16. The US was a signatory on Feb 3 2016

https://www.reuters.com/article/us-trade-tpp/trans-pacific-partnership-trade-deal-signed-but-years-of-negotiations-still-to-come-idUSKCN0VD08S

From that point the United States had two choices: to ratify or to leave

On January 23rd 2017 the United States officially notified that they were "leaving" the TPP

The United States Officially Withdraws from the Trans-Pacific Partnership
WASHINGTON, DC – The Office of the U.S. Trade Representative (USTR) today issued a letter to signatories of the Trans-Pacific Partnership Agreement (“TPP”) that the United States has formally withdrawn from the agreement per guidance from the President of the United States. The letter emphasizes the commitment of the United States to free and fair trade, and encourages future discussions on “measures designed to promote more efficient markets and higher levels of economic growth.”

The letter was sent to each TPP signatory as well as the TPP depositary. The letter to the TPP depositary can be found here.

I am not particularly impressed with Reich on trade but if you want to lay out what you think is cogent I will be happy to take it apart.

We have a binary solution on trade, there are only 2 paths: bilateral or multilateral. President Obama, Biden and all of the wise leaders of the country understand that while never perfect that the benefits to the US with multilateral agreements are far greater than can be reached in bilateral. Secretary Clinton was for the TPP but when the nonsensical national economic populists in both parties poisoned the water and made it impossible to have an intelligent conversation she shaded her views.

Here is what she said about the TPP when she was in the administration

"This TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field," she said then. "And when negotiated, this agreement will cover 40% of the world's total trade and build in strong protections for workers and the environment. That's key because we know from experience, and of course research proves it, that respecting workers' rights leads to positive long-term economic outcomes, better jobs with higher wages and safer working conditions."

This is what she said when the Idiot Trump had poisoned the well and she had to put some distance

"I still believe in the goal of a strong and fair trade agreement in the Pacific as part of a broader strategy both at home and abroad, just as I did when I was secretary of State," she said in a statement. "But the bar here is very high and, based on what I have seen, I don't believe this agreement has met it."

That is not the same thing as being against it. When she was in the administration she called it the gold standard. When the issue became politicized with a bunch of lies from Trump she still endorsed the architecture, goals and substance of the agreement but wanted to reach some unspecified "bar". She was never against the TPP, she simply stated that it needed to be improved.

But hey you can continue to fight one of President Obama's clarion calls and support the misinformation of Trump every day of the week. Lots of people do.

[duforsure]

9. rump's Americans first is BS

And once again the opposite of his claims, and he said making America first to use to con people with ,got there votes, then now as we see everything he's doing benefits Russia and putin. He's doing this on everything . It was all an act, another con job for the people's vote, with claims of draining the swamp, probably all Russian think tank slogans to use to whip up the people's emotions with, all lies.

[betsuni]

10. K&R

[Tavarious Jackson]

11. I sure wish some politicians who call themselves champions of the working class

Would do their homework on trade agreements and not bash them before they know anything.

[Jim Lane]

12. In 2016, Clinton, O'Malley, and Sanders all opposed the TPP.

I think all three are pretty smart and pretty diligent. I doubt that their opposition was announced on a basis of ignorance.

[Tavarious Jackson]

13. Hillary said it needed work. She wasn't completely against it.

She said it needed some tweeks before she would sign it.

[Jim Lane]

15. She opposed the final draft.

The version that was officially released to the public represented the product of years of negotiation. That version was settled on and was then taken back to each prospective member for that nation's ratification process -- on a yes-or-no basis.

That was just as true of the United States as of the other nations. If Obama had chosen to submit the proposal to Congress, pursuant to the trade promotion authority bill that had already been approved, it would have been before Congress on a yes-or-no basis, with no amendments allowed.

Hillary talked in general terms about what her standards for trade agreements were. In addition, however, she quite properly recognized that the immediate issue was this particular (untweaked) text. On that text, she announced her opposition.

What would have happened if she had been elected? With other nations already having ratified the version she opposed, would there have been any realistic prospect of substituting a renegotiated version? My guess is No.

Hence, if the OP is correct that the Harley-Davidson decision was made solely because the United States is not currently a party to the TPP, then that decision would have been made even if Hillary had become President.

You may of course disagree with her about the merits of the proposed agreement that was sent out for ratification. I personally agree with her. What should be clear, however, is that "politicians...[who] bash [trade agreements] before they know anything" is not a description that can be applied to Hillary Clinton.

[Xolodno]

17. Many on DU were against the TPP...its one of the few things...

...that both Democrats and Republicans agreed with.

And yet...was completely necessary.

The TPP guaranteed that US jobs WILL BE LOST! Industries WILL suffer. However, some industries will prosper, particularly agriculture. New jobs will be created, which would require people retraining....but that comes along with hardships as well. Oh and China, has a less foot hold on Asian Economics.

Since we pulled out, the only guarantee we have is, US jobs will be lost and industries will suffer. Oh and China a dominant foot hold on Asian Economics.

[comradebillyboy]

18. I was denounced as a 'neoliberal' for supporting TPP and free trade

in general. Protectionism does not breed prosperity. Neither does isolationism.

[FiveGoodMen]

19. ISDS would let foreign corporations write (or cancel) all our environmental laws

The TPP is the attempt to relinquish US sovereignty to various money interests.