The head of FedEx Freight, the less-than-truckload (LTL) arm of FedEx Corp., today strongly voiced his company's support for the controversial Trans-Pacific Partnership (TPP), despite concerns that the ambitious 12-nation trade deal is now dead after Donald J. Trump's stunning presidential victory last night.
Michael L. Ducker told the JOC Inland Distribution Conference in Memphis that opponents of TPP and other trade pacts have presented an inaccurate and imbalanced view of global trade. "Trade is good for, and critical to" the U.S. economy, Ducker said. As an example, plantings on one of every three acres of America's farms will yield crops that are designated for export, he said.
Should TPP be defeated, small to mid-size businesses would be deprived of the opportunity to sell to 480 million people outside the U.S. who reside in TPP countries, Ducker said. "The big companies are already there," said Ducker, noting that Memphis-based FedEx operates in 221 countries.
TPP streamlines trade barriers, improves customs clearance procedures, and over time eliminates 18,000 foreign tariffs on U.S. exports. The treaty became a political football during the general election campaign as President-Elect Trump and his opponent, Hillary Clinton, voiced opposition to the treaty as a killer of U.S. jobs.
The text of the TPP will have to be signed and then ratified by all 12 signatory nations. Congress had granted President Obama "fast-track" authority over the deal, meaning the Senate, which ratifies treaty, would only have an up or down vote. However, Trump's victory last night appears to make it impossible that Congress will take up a TPP vote in the "lame-duck" session before the transfer of power.
To take effect, TPP must be ratified by February 2018 by at least six countries that account for 85 percent of the 12 members' aggregate economic output. This effectively means that the U.S. and Japan, the world's third-largest economy and the second-largest that is a signatory nation, must both be on board.
Lost in the hand-wringing over international trade agreements is the fact that the U.S. runs a trade surplus with its top 10 trading partners, and that those nations buy 13 times the volume of U.S. exports that trade partners not in the top echelon do, Ducker said. In addition, rejection of TPP will not improve the lot of U.S. workers whose jobs may have been lost to foreign competition, Ducker said. In fact, those workers may be further disadvantaged as other nations begin to negotiate their own pacts, without U.S. involvement, he said.
Ducker, who spent many years working for FedEx in the Asia-Pacific region and is vice-chairman of the U.S. Chamber of Commerce, said the TPP would stimulate U.S. economic activity and, by extension, reduce persistent U.S. trade deficits. "Trade agreements are the solutions to the trade deficits, not the problem," he said.
Ducker emphasized that he was speaking on behalf of his company, not just himself. "We have been strongly behind TPP from the start," he said.