The Obama administration needs Minnesota businesses to press for ratification of the Pacific trade agreement, one of its last major economic projects, the nation's top trade official said in Minneapolis on Monday.
In a speech at the Economic Club of Minnesota, U.S. Trade Representative Michael Froman said the state stands to be among the biggest winners of the Trans-Pacific Partnership, or TPP, a treaty to lower trade barriers in the U.S. and 11 other nations around the Pacific Rim.
Froman said the TPP holds the potential to boost exports of agricultural, manufacturing and med-tech products and advance intellectual property rights. Minnesota is the nation's fourth-largest exporter of food and the Twin Cities is the 15th-largest exporter of goods by value.
Froman also addressed the strong opposition coming from the state's Iron Range, where iron and steel producers blame international trade for the collapse of prices that forced companies to idle more than 2,000 workers in the past year. China, the world's largest producer of steel, is not a party to the TPP and its steel trade would not be covered by the deal.
Froman said the U.S. has encouraged China to rein in production of steel. The Chinese last week announced plans to cut output by about 20 percent and eliminate 1.8 million jobs in its steel industry but did not set a timetable for action.
"When it comes to steel, there is a significant issue of overcapacity around the world, significantly in China," Froman said. "We are pushing that issue with the Chinese."
The pact, formally signed last month, sets higher product and service standards. The U.S. and Japan started work on TPP in part to counter China's growing influence on trade rules in the Asia-Pacific area, which has been the world's fastest-growing economic region even through the 2008-09 global downturn.
"Shape globalization or be shaped by it? Lead on trade or be led?" Froman asked the audience in his speech Monday.
Vilsack also visits
U.S. Agriculture Secretary Tom Vilsack underlined the same idea in a meeting with national farm leaders in Minneapolis on Monday.
"This trade agreement is in a part of the world that America needs to be in, to balance the Chinese influence," Vilsack said. The American Farm Bureau Federation has estimated that the deal will increase ag exports and boost U.S. farm income by $4.5 billion annually, he said.
Although some have urged Congress to delay approval, Vilsack said that would cost the U.S. billions of dollars in lost trade. Many Asian countries would go off by themselves, he said, and arrange their own trade deals that give preferential treatment to one another, but not to the U.S.
Republicans, who control Congress, are historically champions of free trade, but Republican Senate Majority Leader Mitch McConnell asked that TPP not be introduced for ratification before the November election. Froman told the Star Tribune that proponents will wait and, in the meantime, that they "need to do a better job of selling" the deal and shoring up support.
Froman said he hopes that by "doing all the spade work that needs to be done" now, officials will have the pact ready for ratification "when the political window of opportunity opens."
TPP would open up nearly 40 percent of the global economy to more Minnesota goods, Froman said in his speech, by cutting about 18,000 foreign tariffs, or taxes, currently levied on U.S. exports. He gave several Minnesota examples: 3M tape has a 17 percent tariff in some TPP countries, General Mills cereal has up to 27 percent tariffs and Hormel chili faces up to 34 percent tariffs in certain countries, Froman said. Under TPP, these would drop to zero.
"Minnesota may only be the 21st-largest state by population, but it's number 10 when it comes to patent awards," Froman said. TPP addresses this, he said, through protection of intellectual property rights in the 11 participating countries of Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, New Zealand, Vietnam and Brunei.
The AFL-CIO, the largest federation of trade unions in the U.S., has slammed TPP as a "bad deal" for American wages and American workers. On Monday, the International Union of Operating Engineers (IUOE), which represents construction workers in the U.S. and Canada, unveiled its campaign against TPP, calling it a "secret, job-killing trade deal."
Froman said the deal's opponents didn't wait for it to be done before condemning it. But, he added, "The underlying sentiment that they are responding to is real and legitimate and shouldn't be ignored."
Several presidential candidates, including party front-runners Hillary Clinton and Donald Trump, have come out against it.
"People are feeling economically insecure. A lot of it has to do with wages," Froman said. "A lot of it is just a reaction to the changing nature of the American economy, which is a reflection of technology, globalization. And trade agreements are the vessel into which they pour a lot of their economic unhappiness."
Staff writer Tom Meersman contributed to this report.
Kristen Leigh Painter • 612-673-4767
