 The Trans-Pacific Partnership is a free trade agreement between the United States and eleven other countries We have free trade agreements with six of those countries and five we don't big countries like Vietnam and Malaysia New Zealand and Japan it and I there's some copies of some information that you have some slides It cuts tariffs it will cut all tariffs on manufactured goods. It cuts agricultural tariffs substantially It eliminates other non-tariff barriers that our manufacturers our farm and services communities face overseas It sets in place stronger rules on issues like transparency Good government practices investment non-discrimination fair treatment reciprocal government procurement And it provides binding rules on dispute settlement To make sure that the words on those pieces of paper and they're long and most of but most of those thousands of pages mind You are a tariff cuts that those obligations will be upheld in a world where Imports of us manufactured products come into the United States two-thirds of them already come in duty-free From the manufacturing perspective We see huge gains in eliminating up to a hundred percent tariffs that our manufacturers are facing in Big and growing markets like Vietnam and Malaysia But the non-tariff barrier side the basic rules of the road of the system Which by the way are sort of the basic rules we have here in the United States like in the investment chapter Which comes exactly from our Constitution and the administrative procedure acts so that Governments don't misuse their power against the private sector These are strong rules and we believe that this is going to grow the ability of Manufacturers to engage in that part of the world and grow our manufacturing here We have two eds and they're the last names. They both begin with G so I can't say Ed Gerwin well I think the important thing about the Trans Pacific partnership is that it is a modern trade agreement You know our politicians seem hell-bent every time you turn on the TV and watch a political debate Everyone wants to relitigate NAFTA NAFTA is a 20 year old agreement and trade has changed remarkably since then Primarily because of the power of the internet and because of efficient and modern Transportation and logistics. It's a lot easier in many ways to trade But trade is also changing and I like to talk about the three major changes that are occurring in trade We're seeing big changes in who can trade We're seeing big changes in what we trade and we're seeing big changes in how we trade So for example, who can trade used to be really hard for small businesses to trade But now with internet platforms like eBay and Etsy and PayPal It is a lot easier for small businesses to trade and if you look at What small businesses now do those that are internet enabled? Those on the eBay platform 97% of them trade But only about 5% of our regular small businesses trade in terms of what we trade Look at the digital apps on your smartphone Nobody envisioned any of this back at the time of NAFTA the global market for digital apps Is only about 10 years old it drives hundreds of billions of dollars of commerce and it depends on digital trade flows Something that was not was probably a footnote at the time of NAFTA and then how we trade There are whole new ways of trading sending You know, I've told the story in an article I've written about a woman who's designed 3d printable shoes and her business model Is these she's going to ship them to boutiques all around the world you go they scan your foot and zap Outcomes a custom designed pair of shoes. That's an entirely different way of trading than back in NAFTA And you're probably wondering is he going to get back around to TPP the important thing about TPP is it sets? modern rules For a changing global economy for changing global trade It has and I've written extensively on this Extensive provisions to help small businesses trade they can take advantage of these new platforms But then at the same time we're using the power of the government to do what I'm sure many of you in this room think is important And that is getting rid of governmental barriers to American trade There are extensive provisions for small business. There are also Important rules of the road for digital trade, you know, think about it Google was registered as a domain name in 1997 That's about the time our global trade rules were last updated So what that means is we don't have a lot on the books globally To govern digital trade the way we do have rules that make it easier for for We're open freer trade for goods and services So what the TPP would do I think Ed you and your colleagues have estimated what 24? different Digital provisions that the TPP would help. I think that's right It would do many things to make digital trade flow more readily Including establishing the very important principle that governments aren't to interfere with the free flow of digital information Unless they have a legitimate reason for doing it like privacy or national security So I've been really focused on these two aspects of the TPP on small business and on the digital economy and the reason I have is because we're ignoring the fact in much of our political debate that trade has changed and We need modern agreements like the TPP that will help the United States Take advantage of that. I mean if there is a country in the world That should be able to benefit from trade. That's more friendly to small business And that depends on the digital economy. It should be the United States Thanks. Yeah, aggressive. Okay. Let me sort of dial a little bit back or pull back a little bit TPP Trans-Pacific Partnership is an agreement that we've negotiated with 11 Partner countries. They are Canada, Mexico, Peru, Chile, Australia, New Zealand, Brunei, Malaysia, Singapore, Vietnam, and Japan together our 14 part our 11 partners make up about Three trillion dollars in imports each year that means every 1% of market share gains about 30 billion dollars in exports They include three of our five largest trading partners in the world Canada Mexico and Japan and Second TPP is a what you call a comprehensive agreement it is 30 chapters Trying to take on pretty much every major issue that Congress has identified to the administration in its bipartisan negotiating objectives set out last year It's it takes a while to describe it, but let me hit four things that I think are really high points of this agreement One as Linda mentioned You may have seen pictures of TPP looking about three feet high About two feet of that are tax cuts elimination of tariffs That includes three inches of US tariff elimination and about 21 inches of foreign tariff elimination Examples range from Vietnam 70% tariff on cars to Japan's 600% tariff on out of Pota peanuts to Malaysia's 30% tariff on paint Our three inches of tariff elimination they include things like 11.2% tariff on bamboo shoots and 8.5% tariffs on straw mushrooms Those are things that are going to help the proprietors of Asian groceries across the river in Alexandria or likewise elimination of 48% tariff on cheap shoes that people will buy up the street in Southeast Second thing about TPP that we're quite proud of TPP is the first US trade agreement in 22 years since the Uruguay Round that created the DELTO to eliminate a subsidy This is subsidies that contribute to overfishing and depletion of fisheries in the Pacific region That is a major environmental accomplishment It is also a very appropriate reform of bringing government out of an area that it shouldn't be operating in Third TPP is a very comprehensive agricultural agreement It includes tariffs sanitary and phytosanitary rules fair approaches to geographical indications and another and other issues To just give a sense of the scope of the farm trade part of this Japan eliminates a 40% tariff on American cheese It creates a 114,000 ton country-specific quota for American wheat it cuts tariffs on beef from thirty eight point five percent to nine percent And it agrees that Japan will never accept rules that bar imports of US wine Which use labels such as ruby tawny vintage fine Chateau and other words that certain parties across the different ocean are trying to The the world of trade as had mentioned it is The most advanced and ambitious Digital trade agreement the US has ever done requires All the TPP members must require allow free flows of digital data across borders That is very important to internet companies that is very important to manufacturers if you see for example modern tractor They take data flowing about weather about seed placement and they transfer it back and forth all the time to centers in the United States That's what makes an American tractor so attractive and so effective TPP countries cannot require servers or other computer capacity to be located in country if you want to serve The market there and TPP countries must have anti-spam privacy and anti-cyber theft policies so We feel that this is a very advanced and very high quality Internet and digital agreement and it's also a kind of strategically important one because Each day the future of the internet is kind of being determined One of the things that ambassador from and our cabinet officer likes to say is that TPP is an effort to write the rules for the next global economy In this world of digital trade, which is important to us as computer users to services companies to manufacturers all the rest The United States stands for free flows of information and consumer protection and open flow open flows of information around the world Government of China government of Russia government of Egypt others are trying very hard in the United Nations World conference on information and telecommunications international telecommunications union to set up a principle of internet sovereignty which is to say that the digital border is the same as the physical border and Any government has an absolute right to stop flows of data to censor it to redirect it as they choose and This is a case where one of those visions can Determine the future, but they can't coexist very easily and this is one of the biggest long-term It things that we see at stake as Congress is considering Well, I think first of all as I mentioned a lot of what the TPP does is reduce foreign governmental barriers to American commerce it makes Trade freer for American companies and workers many countries want to impose these barriers and make our Our economic Activities more restricted TPP is Ed. I want to get those numbers from you Ed by the way of inches It's a wonderful word picture But much of what TPP does is reduce governmental barriers imposed by by foreign countries and in terms of the way the process works I'm not a congressional person, but My understanding is that there is nothing in any of these trade agreements that requires the United States to do anything at the end Of the day, it's Congress that would have to react to Actions that you know for example violations of the TPP Congress has the last word and that is very important But I think the key point is that we're actually Creating greater freedom for people by eliminating many of the barriers that currently exist in the trade system For example as Ed mentioned the efforts of countries to limit the ability of people to trade digitally by trying to You know require that our companies put servers in their country or saying that we can only store data in their locations I would add to two points on this It is a sovereign act of a government to Negotiate and conclude a trade agreement. That's a choice if we want to isolate ourselves We we heard how Doug described smooth holly, you know unemployment went up exports went down Imports went down Not the type of result and it was found following that with Cordell Hull And and beyond that unemployment only went up again after the smooth holly terrorist when the United States Started its reciprocal trade agreements program and started negotiating as a sovereign with other sovereign countries So that everybody would be reducing their tariffs and that's the trading system that began In that in that period and has continued forward So it is a sovereign act of a government to choose to enter into a trade agreement and make these But I think the more important point and building on something both Ed's have said This is building on US values US rules US systems So much of what is in the TPP is reflective Of the rules we already have in the United States. So the United States If we hopefully get to implement it this year is not going to be making a lot of legal changes We're not changing things that we've done wrong We've got a few tweaks here and a few statutes to make but this is basically Exporting basic values things like the takings clause of our US Constitution That requires the government to compensate a private property owner if they take their property do process Principles equal protection principles fair and equitable treatment type principles that we see also in our administrative procedure act These are baseline principles that we in the United States have developed as part of our Democracy as part of our capitalist system that we are trying to get the other parts of the world to adopt And so this is very much very much An act of our sovereignty Yeah, I don't really have very much to add. It was a very, you know, well well presented points The the only additional thing Linda and I became acquainted as congressional staffers not so long ago yeah, and Constitutionally all of this is foreseen and set out Constitution tells Congress to regulate commerce with foreign nations tells presidents to negotiate agreements with foreign countries and That is exactly how TPP has been done. Congress has looked at our relationships. They've set negotiating objectives for us We have done our very best to meet those objectives and Congress now has the chance to act on it. So No, I do not see that there's any diminution of sovereignty in that We're exact, you know, this is exactly the way US government has been told to act by the frame. Yeah It seems it seems to me that anyone who objects to TPP on the grounds that it somehow Is an unwarranted reduction in US sovereignty? Must object to all treaties in principle. I mean and but the Constitution clearly provides for the treaty making power Yes, we had our very first treaty agreement. I believe it was 1794 And you know to build on Linda's point It's really amazing when you look at it the degree to which other countries are being asked to change their rules We went last September to Vietnam and we met with government people manufacturers and people from the International Labor Organization Vietnam is agreeing to set up independent unions You got to remember this is a socialist workers paradise They're not supposed to need anybody other than the government to look out for the welfare of workers But they've agreed to do that in part because they want this agreement But also in part that they recognize the fact that you know They're already a lot of Wildcat strikes now in Vietnam and they recognize that maybe having independent representation For their workers would be a good thing for them as well But these are huge changes that other countries are making that Redound in many instances to the benefits of American Exporters and American workers who produce for This is a question from someone in the audience How do you see? TPP two years from now under either a Clinton or a Trump presidency Wow Well, can I take a first stab absolutely as One of the laws that we in the government operate under is the Hatch Act And we are not permitted to say anything about Presidential candidates or their proposals, but let me talk about TPP as it is likely to play out as you know analysts have You looked at it and modeled it and as people who are kind of engaged in some of the issues it raised You know make the case for it and point out what might happen in this absence There have been a number of professional You know independent modelings done on the TPP These show different things depending on what your assumptions are and how much of the agreement you model, but they agree Both the International Trade Commission and the Peters Institute that TPP will raise the rate of economic growth in the United States to some extent That it will raise wages in the United States and in the ITC's model. They find the first year Which would be 2017 as if we were implemented Coming this year. There's a jump in GDP of about 20 billion dollars About two-thirds of that goes to workers in the form of higher wages and some degree of new jobs Peterson Institute has different figures but comes out with the same figure of growth beginning quickly and two-thirds of the benefits going to workers Look a little bit more detailed One of the groups that's really interested in TPP and working very hard on its ratifications National Cattlemen's beef association I've mentioned big cut in Japanese beef tariffs What they say is that I've had this written down somewhere NCBA says our future success rests on our ability to compete on a level playing field in the Pacific Rim and TPP presents us with that golden opportunity So that's they say if we have TPP going to effect we'll be selling more beef to Japan Rancher incomes will rise all those sorts of things without the TPP. We have some erosion We are not the only country that's doing trade agreements and Australia Japan FTA went into effect year ago January the NCBA believes that has already cost them by virtue of tariff differentials about a hundred and forty million dollars in exports and In the absence of TPP that will continue and it will be replicated across many many industries Because at the moment as we're debating TPP There's also Negotiation of a much very large China-centered regional crop closer economic partnership agreement Which would create a large duty-free zone excluding the United States for China and Korea and Japan and Australia and New Zealand and 10 Southeast Asian countries plus India So that's a big thing and the the future will Evolve in the absence of TPP and one in a way that isn't all that great for us economically Second point a person. I'd like to quote This is our Pacific Fleet commander Admiral Harris. I was looking at the implications of TPP for security and strategy and what he says is TPP would strengthen stability and security deepening our Relationships throughout the region and raising the bar to protect the things that matter things like enhanced cyber security Privacy and provisions to combat the theft of trade secrets including by cyber theft to protect our defense industrial base And obviously our partners who've signed up for TPP. This is our allies Japan Singapore Australia New Zealand Canada and so forth see it as a vital demonstration of America's enduring commitment to the region so In the absence of TPP if it does not go into effect, there will be a Significant economic penalty in a number of areas and there will be a large and impossible to quantify but probably somewhat serious Blow to the US position in the age of Pacific, which is a big thing This is a serious choice and one that has implications in a lot of areas Maybe I could build on as first point, but look at it from the manufacturing sector US Manufacturing is alive and well Doug sort of talked about that a bit We manufacture more today in the United States than we ever have before but for many of the reasons that Doug talked about We do so with fewer workers, but we are at a status quo Disadvantage in the global economy and you have on on the slides We face in the United States as exporters higher tariffs than 129 other countries including China including Chile including Mexico and Every member state of the European Union and all of those countries the reason why they face lower tariffs in their exports is because they've Negotiated a heck of a lot more trade agreements than the United States has we have 14 trade agreements with 20 countries Those 20 countries are outsized purchasers of our products purchasing nearly 50% of US manufactured Exports even though they represent 6% of the world's population 10% of the global economy we do better when markets are open when distortions are Eliminated and we're in a global economy where we're not just competing against ourselves in these foreign markets We're competing against all these other countries from our perspective we've got to open up these economies and one easy example and this is in in the slides as well is We are losing market share right now, and we have been over a decade Coming to China in those four TPP economies where we don't have trade agreements But they do so that's Brunei New Zealand Malaysia and Vietnam We used to be about 30% of the import share to those markets We're down to about 10% and China has completely taken it and taken it above our share We are losing under the status quo, so we've got to figure out how to get this done Or we are going to continue to lose and so we are working very hard Trying to get the administration to solve some of the outstanding issues so that we have political ability to move this agreement during the lame duck Working with Congress as well because you need both sides to work on this But that's got to get done so that we can get this agreement implemented Well done, I think it's a truism that Political candidates are usually a lot more a lot less favorable toward trade than presidents happen to be It's amazing when a candidate gets into office How they have a change in perspective when it comes to trade take for example President Obama, you know He campaigned in many ways against NAFTA in 2008 He got into office it took his team a while to kind of get up and running But eventually they realized the wisdom of three trade agreements that the United States had negotiated with Korea Columbia and Panama and Pushed very hard for those agreements to get enacted then they've taken the reins as well on TPP and other initiatives that the Bush administration started I think the same would happen with a new president If TPP were enacted during the lame duck session I think a new president whoever that is would start to realize how important those Agreements are to the United States economy. I think one of the things they would realize is The day they're in office They're going to be a whole bunch of other countries knocking on the door saying you know that TPP We want in too. I mean there are a number of other countries that are sitting on the sidelines Who want to join the TPP and be part of this greater Asia Pacific? free trade area and Smart presidents would realize that's some geopolitical leverage that they could use to their advantage So I think that's something that extreme that's extremely important And you know again, they would also recognize the benefits of these agreements of mr. Trump was quoted as saying in a rally I think it was in Kansas that the day after he's elected president He's going to get rid of high duties on American beef to Japan Well, if the TPP is enacted before he's into office that product that process will already begin and I think he he and other and Secretary Clinton as well would recognize that ultimately this is in the strong benefit of the United States It's not easy. It will be messy like all our politics are but I think eventually people Come around to recognizing the benefits of these trade agreements