What the U.S. Withdrawal From TPP Could Mean for California

by Placerville Newswire / Jan 27, 2017 / comments

The good, the bad, and the in-between.

President Donald J. Trump signed a number of executive orders this week, many of them predictably controversial. But the one that could have the greatest impact on California is the one generating the least pushback from Democratic opponents of the president.

“Great thing for the American worker, what we just did,” Trump said Monday as he signed an order pulling the United States from the Trans-Pacific Partnership (TPP). The move was lauded even by Vermont Senator Bernie Sanders, who was a staunch opponent of TPP throughout the campaign, and U.S. Rep Maxine Waters, D-California. Indeed, opposition to the deal was so strong on both the Right and Left that it probably didn’t stand a chance regardless of who won the presidency. (Hillary Clinton initially praised the agreement, but later opposed it during her campaign.)

What Is TPP?

The Trans-Pacific Partnership (TPP) is a free trade agreement among 12 participating nations that was negotiated under President Obama. It called for the removal of thousands of tariffs and other barriers to trade. It also included a number of protections and provisions for environmental standards, labor rights, intellectual property, and more.

Business leaders hailed the agreement as a means to open foreign markets to U.S.-produced goods and services thereby benefiting the national economy. Due to its environmental and labor standards provisions, President Obama called it a way to level the playing field for American workers and businesses.

But the Democratic Party’s rank-and-file saw TPP as a U.S. job killer and a corporate power grab. Donald Trump also attacked it throughout the campaign as a ‘bad deal’. He and many of his supporters argued, for instance, that it would give countries like China the upper-hand.

How Will America’s Pullout Affect the Golden State?

California is heavily reliant on the global trade market, so anything that threatens its openness is a potential danger. Among those reeling from Monday’s executive order is Silicon Valley, which is eager to expand the market for its products, as well as the state’s agricultural industry. The American Farm Bureau had estimated that California fruit and nut farmers stood to gain $562 million in sales through TPP’s elimination of tariffs. For California dairy producers, the figure was expected to be as high as $53 million.

The film industry could take a major hit too. Copyright protections within the agreement were expected to be a boon for the entertainment industry.

“I think it’s calamitous for California,” said Sacramento economist and trade consultant Jack O’Connell of Monday’s move. John Husing, chief economist for the Inland Empire Economic Partnership, said it strengthens China’s position and will hurt Southern California badly.

Not everyone in California is down with TPP. The California Labor Federation was jubilant Monday.

“We’re pleased that the TPP is no longer on the table,” said CLF spokesman Steve Smith. With TPP out of the picture, its one less worry over wage competition and outsourcing for California workers. Now he hopes the president will negotiate trade deals that aren’t “tilted toward the interests of multinational corporations.”