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The Trans-Pacific Partnership: More Job Offshoring, More Income Inequality

The Trans-Pacific Partnership (TPP) includes special protections for corporations that offshore American jobs to low-wage countries. The TPP would not only replicate, but actually expand on, past deals' extraordinary privileges for firms that relocate abroad, and eliminate many of the usual risks that make firms think twice about moving to low-wage countries. The TPP's offshoring incentives include a guaranteed minimum standard of treatment in the offshore venue and compensation for regulatory costs.

The offshoring incentives that the TPP would expand have contributed to the net loss of more than 57,000 American manufacturing facilities and nearly 5 million U.S. manufacturing jobs – one out of every four – in the era of corporate-rigged deals. The U.S. Department of Labor lists millions of workers as specifically losing their jobs to offshoring and import competition in this era-- and that is under just one narrow program that excludes many whose job loss is trade-related. Studies estimate that the U.S. economy could have supported 7 million more manufacturing jobs if not for the massive trade deficits that have accrued under current U.S. trade policy.

By expanding this failed model, the TPP would also exacerbate U.S. income inequality. A litany of studies has produced an academic consensus that trade flows during the era of TPP-like deals have contributed to the historic increase in U.S. income inequality – the only debate is the degree to which trade is to blame. Failed trade deals like the TPP have exacerbated inequality by displacing well-paid manufacturing workers who must then compete for lower-paid non-offshoreable service sector jobs, which in turn depresses wages in those sectors, spurring broad-based middle-class wage stagnation.

One study finds that even with a conservative estimate of trade's contribution to inequality, the losses from a projected TPP-produced increase in inequality would wipe out tiny projected gains from the deal for most U.S. workers. The net result would be wage losses for all but the richest 10 percent of U.S. That is, for anyone making less than $88,000 per year, the TPP would mean a pay cut.

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