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Trans-Pacific Partnership is Key to Upstate’s Prosperity

June 27, 2016

The following opinion editorial by Upstate SC Alliance President & CEO John Lummus was published in the June 27 edition of GSA Business Report: 
 

During our primary season, we’ve heard talking points about “disastrous trade deals” written by “corporate America.”
 

As discussion continues and Congress considers the Trans-Pacific Partnership (TPP), it’s important to transcend talking points and understand the agreement. It’s especially significant for South Carolina companies, who exported $8.7 billion in goods to TPP countries in 2014.
 

The TPP establishes trade rules with the Asia-Pacific that would reduce tariffs, provide intellectual property rights protections, require transparency in customs regulations and environmental protections, and mandate adherence to fundamental labor rights as recognized by the International Labor Organization.
 

Twelve countries—the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—negotiated the agreement, which was signed in February. Implementation hinges on a two-year ratification period in which the United States Congress and five other countries must approve the final text.
 

We’ve seen trade deals catapult Mexico into an international automotive magnet—with recent investments by Nissan, Mazda, Honda, Audi and General Motors—where 44 free trade arrangements allow for 80 percent of Mexican-manufactured vehicles to be exported worldwide.
 

If we want today’s Upstate companies to experience such growth and to employ our great-grandchildren in 100 years, it’s critical to break down barriers to international market access.
 

According to the International Trade Administration, 95 percent of the world’s consumers live outside the United States, and 79 percent of economic growth in the next five years is projected beyond our borders.
 

In 2014, South Carolina automotive, chemicals, machinery, forest and energy products manufacturers exported a combined $763,084,000 to countries in the new TPP. Under the new agreement, more than 96 percent of those exports would be duty-free immediately in the destination countries, making American-made products more attainable and affordable for overseas customers.
 

And our economy is already globally dependent, with 10.6 percent of Upstate jobs tied to foreign-owned enterprises.
 

In 2014, 5,832 Palmetto State companies exported products that were supported by 153,816 U.S. jobs, and 29% of exports went to new TPP countries, according to the International Trade Administration.
 

That year, the Upstate led in metropolitan exports, with $15.2 billion for the Greenville-Anderson-Mauldin area and an additional $2.2 billion in Spartanburg exports.
 

Opposition to trade deals – particularly in the Upstate – may be associated with the collapse of the textile industry. It’s often linked to the 1994 adoption of the North American Free Trade Agreement (NAFTA), but a confluence of factors contributed to the decline of the Southern textile sector.
 

The industry saw job losses from 1973 to 2011 while under pressure from automation, companies moving jobs overseas in search of lower labor costs, Asian currency devaluations, and the strength of the U.S. dollar.
 

Since the textile downturn, our economy has grown and diversified. The Heritage Foundation reports that exports are responsible for five times as many South Carolina jobs as the entire textile industry, and overall employment in our state has been on the rise since NAFTA took effect.
 

TPP may not be perfect. It can be nitpicked in different ways by politicians and research commissions. But we cannot put walls around the U.S. and expect to be successful in the next 50 years. The rest of the world is going to be playing together, and we need to be a part of it.
 

To ensure the Upstate is aligned for such success, we recently participated in the Global Cities Initiative, a joint project of the Brookings Institution and JPMorgan Chase, that aims to equip city and metropolitan leaders with practical knowledge, policy ideas and networks to help their regions become more globally connected.
 

The Upstate Alliance is in its first implementation year for a Regional Export Plan that strives to maintain a strong export intensity and foster a strong, export-oriented business culture while building our reputation a competitive trading region.
 

Learn more about the TPP’s impact on American business sectors.
 

See how the agreement would affect your business.
 

Learn more about the Upstate Regional Export Plan.

TOPICS: News You Can Use, Upstate Thoughts