Proposed trade pact with Asia produces hope, fear among Ohio manufacturers



Fearful that the United States may be brushed aside and overshadowed by China in Asian and South Pacific markets, the Obama administration last November moved to embrace a new trade agreement with several countries there, creating both concern and optimism within the U.S. manufacturing industry.

The Trans-Pacific Partnership Act aims to create a free-trade group with countries such as Vietnam, New Zealand and Malaysia, among others. An early outline for the agreement calls for retaining high-quality American jobs by increasing U.S. exports to a region of expanded growth that accounts for more than 40 percent of global trade.

The parameters of the final agreement will have many implications for Ohio, where in 2010, 27 percent of manufacturing jobs depended on exports to trans-Pacific markets, said Mousa Kassis, an international trade adviser at Williamson College of Business at Youngstown State University.

Heavy machinery, agricultural products and chemical equipment were a few of the products exported to Asia and the South Pacific by Ohio manufacturers, who employed 371,000 people to meet demand in 2010.

“Many of the countries in that region and in Southeast Asia wanted a U.S. partnership in order to face Chinese advancement,” Kassis said. “However, from an economic standpoint, many here feel that these sorts of agreements always lead to a loss of manufacturing jobs. Usually, outsourcing is the fear.”

Like other free trade agreements designed to promote economic growth, the Trans-Pacific Partnership would ostensibly improve market competition. Many experts believe the underlying goal is to reduce China’s footprint and help the U.S. and other countries taking part in the negotiations to increase their exports.

Still, others contend that such agreements place undue pressure on U.S. manufacturers who are forced to compete with the lower labor and environmental standards of foreign countries that enter free-trade deals.

But Kassis maintains that such assertions are difficult to quantify.

“You cannot always determine or see what effect these free-trade deals will have,” he said. “But in Ohio where you have something around $28 billion worth of product leaving the state for these markets, agreements like [the Trans-Pacific Partnership] must be kept on the table; it’s something you want to keep an eye on.”

Asia has become a key destination for U.S. manufactured goods. Growing economies have made trans-Pacific countries the fourth largest export market for the U.S., with $775 billion worth of goods delivered in 2010, according to the Office of the U.S. Trade Representative. Total exports increased by 25.5 percent from 2009 and account for 61 percent of all U.S. exports.

Youngstown-Warren area AFL-CIO President Bill Pidisak said that no matter what countries are involved in a free-trade agreement, lawmakers must work assiduously to craft a deal that ensures a level playing field for American workers. He added that “fair trade is all we want.”

For that reason, U.S. Sen. Sherrod Brown, D-Ohio, joined three other senators demanding greater congressional oversight in negotiations. Though Congress has constitutional authority to regulate trade and commerce with foreign nations, for the past several decades, Congress has delegated to the executive branch the authority to select trading partners and negotiate deals.

In June, Brown and the other senators wrote a letter demanding greater transparency in the process.

“Groups essential to the success and legitimacy of any agreements are not being provided the opportunity to provide meaningful input on negotiations that have broad policy ramifications,” wrote the senators. “The lack of transparency and input makes passage of trade agreements more contentious and controversial.”

Kassis attributed any level of negotiating secrecy to the Obama administration’s desire to keep China out of the new trading bloc.

For some, keeping China out of the trade agreement is a bad idea. When economies from South Korea to Thailand revived and regional product-sharing matured, China embraced an activist economic diplomacy to open its markets to the rest of Asia. The benefits were deemed mutual, and now other countries such as India are souring on American efforts to build an exclusive partnership, Kassis said.

Still, if the trans-Pacific partnership is crafted carefully, the market liberalization could serve as a counterweight to China and help create more jobs in places like the Mahoning Valley. Between 2010 and 2011, both Mahoning and Trumbull counties combined to create 843 new manufacturing jobs. If future trade accelerates because of a new agreement, companies here and elsewhere could restructure to meet new demand and add more jobs.

“I think it will be interesting, especially considering all the development we’ve seen as of late, to see the

direction these negotiations take,” Kassis said.

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