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Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement

Author

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  • Jeronim Capaldo
  • Alex Izurieta
  • Jomo Kwame Sundaram

Abstract

Proponents of the Trans-Pacific Partnership agreement (TPP) emphasize its prospective economic benefits, with economic growth increasing due to rising trade volumes and investment. Widely cited projections suggest modest GDP gains after ten years, varying from less than half a percentage point in the United States to 13 percent in Vietnam. However, these projections assume full employment and constant income distribution in all countries excluding some of the major risks of trade liberalization. In this paper, we provide alternative projections of the TPP’s economic effects using the United Nations Global Policy Model. Allowing for changes in employment and income distribution, we obtain very different results. We find that the benefits to economic growth are even smaller than those projected with full-employment models, and are negative for Japan and the United States. More important, we find that the TPP will likely lead to losses in employment and increases in inequality.

Suggested Citation

  • Jeronim Capaldo & Alex Izurieta & Jomo Kwame Sundaram, 2016. "Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement," GDAE Working Papers 16-01, GDAE, Tufts University.
    • Handle: RePEc:dae:daepap:16-01
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    Cited by:

    1. Jacques Sapir, 2020. "Basic Principles of Economic Sovereignty and the Question of the Forms of Its Exercise," Studies on Russian Economic Development, Springer, vol. 31(2), pages 129-135, March.
    2. -, 2016. "United States-Latin America and the Caribbean Trade Developments 2015-2016," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 41070, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Baybars Karacaovali & Deveraux Talagi, 2017. "International Trade Effects of Trans-Pacific Partnership for North America," Working Papers 201701, University of Hawaii at Manoa, Department of Economics.
    4. Robert Z. Lawrence & Tyler Moran, 2016. "Adjustment and Income Distribution Impacts of the Trans-Pacific Partnership," Working Paper Series WP16-5, Peterson Institute for International Economics.
    5. Pierre Kohler & Servaas Storm, 2016. "CETA Without Blinders: How Cutting ‘Trade Costs and More’ Will Cause Unemployment, Inequality and Welfare Losses," GDAE Working Papers 16-03, GDAE, Tufts University.
    6. Kwame Sundaram Jomo, 2016. "Lessons from the Dead: The Trans-Pacific Partnership Agreement as Model Free Trade Agreement," Development, Palgrave Macmillan;Society for International Deveopment, vol. 59(1), pages 48-52, June.
    7. Kamal Halili Hassan & Muhammad Faliq Abd Razak & Rohaida Nordin & Rohani Abdul Rahim, 2018. "Malaysia with the Trans-Pacific Partnership Agreement: Aftermath of the United States Withdrawal From the TPPA," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 8(10), pages 868-880, October.
    8. Dean Baker & David Rosnick, 2016. "Trade and Jobs: Can We Trust the Models?," CEPR Reports and Issue Briefs 2016-05, Center for Economic and Policy Research (CEPR).
    9. Stiglitz, Joseph E., 2018. "Trump and Globalization," Journal of Policy Modeling, Elsevier, vol. 40(3), pages 515-528.
    10. Tsang, Cheuk Yan & Shakur, Shamim, 2017. "New Zealand’s Trade Prospects in an Uncertain Trans-Pacific Partnership (TPP) Environment: Results from Gravity Model," 2017 Conference, October 19-20, Rotorua, New Zealand 269528, New Zealand Agricultural and Resource Economics Society.
    11. Peter A. Petri & Michael G. Plummer, 2016. "The Economic Effects of the Trans-Pacific Partnership: New Estimates," Working Paper Series WP16-2, Peterson Institute for International Economics.
    12. Kwame Sundaram Jomo, 2023. "Poor Trade: Liberalization Agreements Undermine Development and Food Security," Development, Palgrave Macmillan;Society for International Deveopment, vol. 66(3), pages 260-269, December.

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