As members of the Trans-Pacific Partnership countries prepare to gather next week to sign the historic trade deal, a new study has been released analyzing the impact of the TPP here at home.
While Congress and member nations will still have to approve the deal after the signing, a study completed by the Peterson Institute concluded that the U.S. will be a big winner.
According to the study,the U.S. will see annual real incomes would rise $131 billion, or about half a percent of GDP, by 2030 when the deal is almost entirely implemented. The annual incomes in the U.S. would rise at least at that rate every year after. That’s roughly the equivalent of $1.45 trillion in domestic investment here in the U.S.
The study, authored by Peter Petri at Brandeis University and Michael Plummer of Johns Hopkins University, is one of the first to try to fully quantify the impact of the impact of the trade deal on the U.S. economy. The study also said that Vietnam and Malaysia would proportionally get the biggest boost to their economies from the TPP.
Footwear and apparel do stand to gain from the agreement long term, but the authors of the study do note that these are the industries most affected by imports, and are most likely to feel some short term pain points, especially in employment.
According to the report, there will be some job losses and a bump in what the authors call “job churn,” or movements of jobs between sectors and industries. Apparel, footwear and other labor-intensive manufacturing industries are most likely to see job cuts as a result of the deal. About 50,000 jobs a year are expected from the agreement during the years of implementation.
“On the import side, foreign producers have comparative advantages in labor-intensive manufactures and in some services and will be able to increase sales as U.S. barriers are gradually removed in sectors such as textiles and apparel,” wrote the authors.
The authors though do say that while some of the labor-intensive industries may lose jobs, overall the TPP will help to boost employment for high-skilled manufacturing and financial industries.
While the study singles out footwear and apparel, shoe industry experts said that overall the deal will be a boon for the industry. “At the end of the day, the study can’t know the industry like we do,” said Matt Priest, president of the Footwear Retailers and Distributors of America. “Brands like Wolverine, New Balance and HH Brown continue to produce here to be close to market, and because there are so many specialty types of shoes, whether specialty boots or for the U.S. military, that need skilled laborers.”
Priest also pointed out that in an FDRA backed study in 2013, China is most likely to lose the jobs from the TPP as the industry shifts to rely more heavily on Vietnam. “Because China is currently the main source of U.S. athletic footwear imports, it stands to reason that the shift in sourcing to Vietnam predicted here, would come largely at China’s expense,” concluded the FDRA study.
The FDRA also estimates in the first year the TPP will save the U.S. footwear industry about $450 million in tariff savings, which will almost entirely be passed to consumers as lower prices.
One thing that is for certain though about the TPP, is that there is still a long way to go for legislative approval.