What Is The TPP And What Does It Mean For Your IRA ( Individual Retirement Account)
- Written by: Trevor Gerszt
- October 7, 2015
Due to the secrecy behind negotiations for the Trans-Pacific Partnership, or TPP, the trade deal has become sort of a blank canvas. Those opposing the agreement suggest it will have dire consequences; those in favor paint sunny pictures of enhanced international trade and cooperation. The truth will likely be somewhere in between, but without a doubt the deal will change how small investors must manage their portfolios and retirement accounts.
Like anything government does, the TPP started out with the best intentions. China’s growing ascendancy in the Asia Pacific region is leaving many smaller countries at the mercy of their dominant influence on trade. Many countries in Asia literally don’t have anywhere else to go. So the TPP started out as a pathway to make the United States an alternative market for small countries outside China, which includes nations friendly to the U.S., like Australia.
China Need Not Apply
The most significant aspect of the TPP is the countries that were left out, specifically China and Korea. There’s a reason for that: China doesn’t play fair on trade. China makes sure that trade policy tilts its way, even if their People’s Bank has to dilute its own currency so it’s always cheaper to manufacture goods in China. Hence the TTP is also intended to boost the power of our allies in the region, including Japan.
NAFTA Looks Good by Comparison
Our trade deficit with China is so bad almost any trade deal we make with other countries ends up looking good in contrast. The North American Free Trade Agreement, or NAFTA, gets a lot of hate, but U.S. trade deficits with NAFTA partners Mexico and Canada, even combined, is a fraction of the deficit we run with China. So call it a case of “the competitor of my trade enemy is my friend.”