Why the debate over the Trans-Pacific Partnership is misguided

Focus instead on building the skills to take advantage of all it offers.

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The Trans-Pacific Partnership (TPP) is an ambitious, 21st century trade agreement that the United States is negotiating with 11 countries throughout the Asia-Pacific region. It aims to support the creation and retention of high-quality jobs in the United States by increasing American exports to a region that includes some of the world’s most robust economies — including Australia, Japan and Singapore — and that represents more than 40 percent of global trade.

“Developing a steady pipeline of U.S. skilled labor is imperative … to ensure the global competitiveness of American businesses now and in the future.”
Considerable debate surrounds it, though — with much of the focus on the potential loss of American jobs. Yet linking the TPP to job loss is misplaced. While policy makers should certainly pursue strategies to stem job loss here at home, abandoning trade is not the answer. Many of the jobs that have been lost are those that can no longer be done competitively in the United States at the wage levels Americans have come to expect.

Trade did not cause this. Whether the TPP goes into force or not, many of the jobs that were plentiful in the 20th century will not return. Instead of expending energy to block the TPP and other proposed trade agreements, our policy focus should be on developing strategies to ensure that American workers and companies are globally competitive.

Because in fact, trade helps American workers and companies. About 11.3 million people’s jobs depend on exporting. These jobs pay better; people who work in export-focused industries typically earn wages 15 percent higher than those who do not. Nearly 30 percent of GDP growth over the last five years has been the result of export growth.

Free trade agreements (FTAs) like the TPP only enhance the ability of U.S. companies to reach customers around the world by providing a rules-based framework that levels the playing field. The result is increased sales abroad and good-paying jobs here at home, demonstrated by the fact that the United States enjoys a trade surplus in manufactured goods with our FTA partners.

The TPP would make it possible for American businesses to export to access to approximately 798 million consumers, and new customers means more business; real income benefits to the United States are estimated to be $77 billion per year. Small and medium-sized businesses would benefit the most here; they comprise approximately 98 percent of all exporters and 97 percent of all importers, so access like this should be a boon to the bottom line of these enterprises.

A more productive debate should be centered on how to ensure that American workers have the skills that U.S. companies need to be globally competitive — especially because manufacturing jobs that created and sustained the middle-class in this country for decades are no longer plentiful.

Today, globally competitive companies require highly skilled and technical labor. Unfortunately, a well-documented disconnect exists between the skill levels required by manufacturing companies today and the skill levels found among American workers. This disconnect has caused many companies to resort to hiring talent from outside of this country to fulfill their needs. Developing a steady pipeline of U.S. skilled labor is imperative to sustain our way of life and to ensure the global competitiveness of American businesses now and in the future.

According to a recent report issued by Deloitte and The Manufacturing Institute, the skills gap is having a major economic impact on U.S. manufacturers. Of the manufacturing executives surveyed, 82 percent believe that the lack of skilled workers will impact their ability to meet customer demand. Further, 48 percent of executives surveyed report that the skills gap hinders their ability to expand internationally. Of particular interest is that the most critical employee segment deficiencies were in the areas of skilled production (machinists, operators, craft workers, distributors and technicians) and production support (industrial engineers, manufacturing engineers and manufacturing planners).

Moreover, the report reveals that the skills gap is not just a problem today, but threatens to impact the competitiveness of U.S. manufacturing companies over the next decade. Projections reveal that of the 3.4 million jobs that will be needed in the U.S., 60 percent — or 2 million positions — will remain unfilled due to talent shortages.

An analysis of this data coupled with the data supporting the benefits of trade and FTAs suggests that our policy debate should not be whether the United States should enter into the TPP to enjoy increased market access to a region encompassing more than one-third of global trade. Instead, the focus should be on strategies to reverse the skills gap so that the U.S. can take advantage of all that the TPP offers.

Now is the time to engage in serious policy discussions on the creation of a pipeline of manufacturing talent that will sustain the sector and good paying jobs in this country for years to come.

 

Nicole Y. Lamb-Hale is a Senior Vice President at Albright Stonebridge Group (ASG) where she provides strategic advice to companies as they develop and implement their global business objectives, including the expansion of their exports to, and presence in, international markets. Lamb-Hale also serves as Vice Chair of the National Alliance for Jobs and Innovation. Prior to ASG, she served as the Assistant Secretary of Commerce for Manufacturing and Services in the International Trade Administration. Lamb-Hale was previously the Managing Partner of the Detroit office of international law firm, Foley & Lardner LLP, where she specialized in business restructuring in the manufacturing sector.

This piece also appears in Ideas Lab.

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