Despite much political wrangling, a trade deal among the United States and many Pacific Rim nations now appears likely. Congress last week gave President Obama the authority he needs to negotiate a good deal. Good thing.
The deal, known as the Trans-Pacific Partnership or TPP, would expand our economic links with the fastest-growing part of the world economy.
Opposition to the TPP, like most trade agreements, has been fierce. Labor unions, in particular, are fearful that it would hurt the working Americans they represent. This is a reasonable concern, but it can be addressed, and it should not stop the deal.
There are few things that nearly all economists agree on. The benefit of global trade is one of them. The economic principle underlying this view is that each nation should focus on making what it is very best at and trade with other nations for everything else it needs. All nations benefit from being able to consume more of what they want at a lower cost.
We Philadelphians are enormous beneficiaries of global trade. Our comparative advantage is in the life sciences, financial services and computer software, which we sell across the globe. The world's best and brightest are educated in our universities, and many global travelers use our airport and visit our historic sites and the Convention Center.
The TPP is a particularly good trade deal, as it would more closely bind the U.S. economy with 11 other Pacific Rim nations that together account for about 40 percent of the global economy. These countries have among the best growth prospects in the world.
Without TPP, U.S. companies would be at a significant disadvantage, especially in their mounting competition with China, which is not part of the agreement. China is working hard to cement its economic relationships with the region. That isn't a bad thing, but it would be a problem if the U.S. does not also have strong relationships.
There is understandably significant skepticism among labor unions over the TPP, and they have fought hard in Congress to kill it. While more open global trade is a big plus for the economy, not everyone wins. Indeed, less-skilled workers in less-competitive industries can suffer badly as more open trade exposes them to formidable global competitors.
This happened after the big 1990s trade agreement between the U.S., Canada, and Mexico known as NAFTA. Then-presidential-candidate Ross Perot argued that there would be a "giant sucking sound" as U.S. manufacturing jobs left the country. Indeed, lots of jobs moved from the U.S. to Mexico in the apparel, appliance, chemical, and textile industries.
More broadly, the globalization of our economy in recent decades has contributed to the increasing gulf between the haves and have-nots. The haves benefited from selling what they make to a huge global market, while the have-nots lost their jobs or saw their wages cut in competition with cheaper foreign labor.
But this is changing, and the TPP would be a win-win for nearly everyone. The global economy has grown up a lot since NAFTA. There are now large middle-class populations in many emerging economies that want and can afford to purchase what we make.
We are arguably the best in the world at many things. Technology, aerospace, entertainment, financial services, health care, logistics, and agricultural products come immediately to mind.
Our companies have done a marvelous job of reducing their costs and becoming more competitive. Meanwhile, wages and costs have risen in other countries. We are thus poised to sell much more of what we produce to the rest of the world.
At the same time, those jobs most vulnerable to global competition have already left. The sucking-sound has stopped.
Increased trade thus will mean lots more American jobs. Instead of helping some and hurting others as trade deals have done in the past, TPP and other future trade deals should help nearly everyone.
But, to make sure that no one is left behind by TPP, policymakers should also provide more financial assistance and training to those who lose their jobs as a result of the deal. Past efforts to provide help to those hurt from global trade fell well short of the need.