This can’t be good news for Americans: As they keep slogging through its weakest recovery on record, the Obama administration keeps on repeating the same talking points about the Trans-Pacific Partnership (TPP) trade agreement, and economic reality keeps proving these contentions wrong.
The latest instance is almost providential, at least for opponents of the Pacific rim agreement. The same week that negotiators announced that the TPP has been completed, the International Monetary Fund (IMF) came out with its latest projections for global economic growth. And they continue undermining the administration’s uber claim that the TPP will “create new opportunities to sell to the world’s fastest-growing markets.”
Not that the IMF has a perfect crystal ball. But it’s at least revealing that its new World Economic Outlook survey again shows that most TPP first-round members are actually on course to grow more slowly than the United States after inflation, including most of the biggest. Moreover, the Fund downgraded the 2016 and 2020 growth prospects for the majority of TPP members (including the United States) compared with its April forecasts.
The IMF’s April WEO reported that nine of the eleven foreign signatories of the TPP were growing more slowly this year that the 3.1 percent rate then estimated for the United States: Japan, Canada, Mexico, Australia, Chile, Peru, New Zealand, Singapore, and Brunei. The only outperformers were Malaysia and Vietnam – both of which are not only small, but unusually reliant on net exports for growth. This week, the rest of the TPP membership looked no better. Nine were still pegged by the IMF as growth laggards compared with the United States, even though the 2015 U.S. figure had been cut to 2.6 percent.
Prospects will brighten for the non-U.S. TPP area in 2016, according to the IMF. In April, the Fund predicted that the number of TPP members that would outgrow the United States next year would increase from two to five. The latest WEO foresees improvement on this score, raising the number of growth leaders to six. (Mexico’s 2016 growth will supposedly be the same as the United States’ 2.8 percent.) At the same time, the biggest non-U.S. TPP economies – Canada and Japan – are projected to underperform America, and the next biggest first-round member, Australia, will barely top the U.S. performance with 2.9 percent expansion.
Moreover, the fund’s new 2015, 2016, and 2020 growth forecasts for most of America’s TPP first-round partners are lower than those presented in April. Four TPP countries were downgraded for all four years – Mexico, Chile, Peru, and Japan. The latter is by far the largest TPP economy after the United States. Growth predictions for four more members were cut for two of those years – Australia (again, another one of the larger TPP economies), New Zealand, Malaysia, and Singapore.
And for all of these except New Zealand, growth predictions remained positive only in 2020 – five years from now. The only growth upgrades over April were earned by minor TPP economies Vietnam and Brunei. Also revealing – 2020 is the only year in which the IMF sees America’s growth trailing that of most TPP members’, with gigantic Japan being the exception.
The Obama administration is right in claiming that a trade deal linking America more tightly to the world’s biggest economic winners would argue strongly for TPP’s Congressional passage – especially if those foreign economies weren’t export-led. These IMF numbers, however, strongly indicate that the TPP isn’t that deal.