The purpose of trade agreements is to lower barriers for trading among countries. The North American Free Trade Act (NAFTA), signed by Mexico, Canada and the United States, is an example.
Trade agreements end tariffs and quotas on goods that have been made elsewhere. This allows businesses to find the cheapest place to make their products.
A good result is that consumers pay less for the things they buy. A bad result is that some manufacturing jobs may go from the U.S. to other countries. It is a trade-off. Lower-income Americans can buy low-price items at places like Walmart.
Free trade pacts usually include money to retrain workers who lose their jobs. They are also supposed to make sure the lives of workers in poorer counties improve.
The Trans-Pacific Partnership (TPP) is the next chapter. President Obama wants to be able to make a trade agreement with countries around the rim of the Pacific Ocean.
Most Republicans support the idea. They say it is good for business. Most Democrats do not support the idea. Democrats say it is bad for workers.
The president wants to be able to “fast-track” the agreement. He wants to limit the changes Congress can make to the agreement.
The other day, the House voted on a bill that supported the TPP agreement. The bill was defeated. The defeat showed the president did not have the support of Democrats.
Both sides are now trying to see if there is a way to support the trade pact.
The real problem is that people are predicting the future based on the facts of today. Politicians worry about getting elected. They do not have a “global view.”
China is not currently a part of the agreement. The TPP is meant to compete with China in global markets. Many experts say if you have a worldview, the TPP is good. If you are only worried about the U.S. or your reelection, you may not think the pact is so good.
Source: The Wall Street Journal June 14, 2015