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Just in case you are buying the "18,000 tax cuts" argument . . . [View all]
. . . here is some context from the AFL-CIO. It seems to me that information without context isn't all that useful, so it is hard for me to distinguish Michael Froman's glittering generalities on the TPP from straight up propaganda.
So Now the TPP Is Just a Massive Tax Cut? Hardly...
10/08/2015
Celeste Drake
The latest sales pitch on the recently concluded Trans-Pacific Partnership (TPP) is that it is a massive tax cut, with 18,000 tariffs (taxes on individual products from the United States to other countries) being eliminated. While 18,000 tax cuts sounds great in a vacuum, it’s not the whole story. Here are some things you should know as you evaluate this latest claim:
1. These tariff cuts can’t grow our exports all that much. Worldwide, tariffs already are extremely low because of years of tariff-reducing negotiations through the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). According to Mary Amiti and Benjamin Mandel of the Federal Reserve Bank of New York, the applied tariff rate for about 90% of U.S. exports to TPP partners is already zero. So only 10% of U.S. exports to TPP countries face any tariffs at all—and half those products face tariffs of 5% or less. This means the potential for export growth from the TPP is actually pretty small. There are far better ways to grow our economy—infrastructure investment is one example.
2. These tariff cuts may not grow our economy at all: They can be wiped out overnight by currency devaluation. The point of reducing tariffs is to bring the prices of U.S. and foreign goods into balance. But that balance can be totally undermined if, for example, Japan artificially reduces the value of the yen, which would make Japanese goods cheaper and U.S. goods more expensive. Currency devaluation acts in the same way a tariff does: as a tax on U.S. exports. Because the TPP does not contain ANY rules on currency, countries are free to devalue their currency at any time.
3. The TPP forces Americans to pay a very high price for these tariff cuts. In exchange for reducing the Japanese tariff on shoes, for example, (which are not a major U.S. export), the U.S. government has agreed to weaken our Buy American policies and provide thousands of new foreign investors with the right to sue our government, in front of panels of private lawyers, if their “expected profits” are reduced by U.S. labor, environmental and public health or safety laws. Foreign investors can even sue over local zoning and permitting decisions they don’t like! An end run around U.S. courts is far too high a price to pay for what amounts to a handful of tariff reductions.
10/08/2015
Celeste Drake
The latest sales pitch on the recently concluded Trans-Pacific Partnership (TPP) is that it is a massive tax cut, with 18,000 tariffs (taxes on individual products from the United States to other countries) being eliminated. While 18,000 tax cuts sounds great in a vacuum, it’s not the whole story. Here are some things you should know as you evaluate this latest claim:
1. These tariff cuts can’t grow our exports all that much. Worldwide, tariffs already are extremely low because of years of tariff-reducing negotiations through the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). According to Mary Amiti and Benjamin Mandel of the Federal Reserve Bank of New York, the applied tariff rate for about 90% of U.S. exports to TPP partners is already zero. So only 10% of U.S. exports to TPP countries face any tariffs at all—and half those products face tariffs of 5% or less. This means the potential for export growth from the TPP is actually pretty small. There are far better ways to grow our economy—infrastructure investment is one example.
2. These tariff cuts may not grow our economy at all: They can be wiped out overnight by currency devaluation. The point of reducing tariffs is to bring the prices of U.S. and foreign goods into balance. But that balance can be totally undermined if, for example, Japan artificially reduces the value of the yen, which would make Japanese goods cheaper and U.S. goods more expensive. Currency devaluation acts in the same way a tariff does: as a tax on U.S. exports. Because the TPP does not contain ANY rules on currency, countries are free to devalue their currency at any time.
3. The TPP forces Americans to pay a very high price for these tariff cuts. In exchange for reducing the Japanese tariff on shoes, for example, (which are not a major U.S. export), the U.S. government has agreed to weaken our Buy American policies and provide thousands of new foreign investors with the right to sue our government, in front of panels of private lawyers, if their “expected profits” are reduced by U.S. labor, environmental and public health or safety laws. Foreign investors can even sue over local zoning and permitting decisions they don’t like! An end run around U.S. courts is far too high a price to pay for what amounts to a handful of tariff reductions.
More at link: http://www.aflcio.org/Blog/Economy/So-Now-the-TPP-Is-Just-a-Massive-Tax-Cut-Hardly
12 replies
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