Posted by: coastcontact | November 5, 2015

What’s Wrong with the TPP?

What is wrong with NAFTA, TPP, and other free trade agreements that lower tariffs?

The United States is the dream country for capitalists. The limits on corporations are minimal. Very big companies buy each other out (called a merger) with few government efforts to control the likely outcome of near monopoly. The latest example in Walgreens drug company’s plan to buy Rite-Aid drug company.

Those same companies are now referred to as multi-nationals. General Electric is a creation of Thomas Edison but consider that the company now has facilities in 130 countries. GE has invested over $200 million in a flexible new “brilliant factory” in Pune, India. This information is from GE websites.

Heinz Ketchup sits on the tables of restaurants in Paris. It is not packaged in the United States.

The United States currently imposes low tariffs on most of the goods imported into this country. The TPP will eliminate those tariffs on the other 11 countries. That probably won’t impact the amount of goods being imported. The agreement also lowers the tariffs that other countries impose on imported American goods and that appears to be a good thing.

However when those goods are shipped overseas that are in limited supply in the United States that will drive up the prices in America. An example is chicken. Tyson Foods processes 41 million chickens a year. If they can sell some of those chickens in other countries that will reduce the number of chickens available for sale in America. Less supply translates to higher prices. That means higher profits for Tyson.

If you manufacture something in the United States where $15 to $25 per hour is a common pay rate, why not manufacture your goods in Vietnam, Peru or Malaysia where pay rates are significantly lower and import the products to America?

John Deere and Caterpillar are two companies that will benefit from lower tariffs in other countries. The problem is there are too few companies that are in the category of big machines.

The United States has lost millions of jobs to lower pay rate countries. The benefit to company shareholders is obvious.   The loss of jobs in America is obvious. The rich typically get their way. I predict capitalism will prevail. I also predict the end of the middle class in America.

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