The Obama administration is stepping up efforts to promote a newly brokered trade pact between the U.S. and other Pacific Rim nations, a deal the administration says will be a boon for Charlotte and the rest of the U.S.
But in North Carolina, where past trade agreements have been seen by some as job-killers, the administration’s push is being met by opponents who argue the latest deal will hurt businesses.
Final agreement on the Trans-Pacific Partnership, a 12-nation accord whose provisions include eliminating taxes on American exports, was reached by the countries at a meeting earlier this month in Atlanta. The future of the deal is uncertain as it still needs approval from Congress, which is divided over the pact.
U.S. Commerce Secretary Penny Pritzker, speaking to the Observer last week as part of the administration’s campaign to tout the deal, says Charlotte and the rest of North Carolina stand to benefit.
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You can see TPP countries are an important market for North Carolina.
U.S. Commerce Secretary Penny Pritzker
Pritzker says current export taxes are preventing companies in North Carolina and elsewhere from doing more business with the nations bordering the Pacific Ocean, a list that includes Australia, Mexico and Japan. Last year, North Carolina exports to countries in the fast-growing region accounted for 42 percent of the $31.2 billion in total goods the state exported, Pritzker said.
“You can see TPP countries are an important market for North Carolina,” she said. “This is really important to our small and medium-sized companies.”
Charlotte’s banks could also see “big opportunity” from the deal, Pritzker said.
“As your North Carolina companies sell more products, they’re going to need more financing,” she said.
But so far, such comments haven’t been enough to win over North Carolina businesses that remain wary of the deal, the full text of which has not been made public yet.
“We are absolutely concerned about TPP passing in its present form,” John Ferriola, CEO of Charlotte-based steelmaker Nucor, told analysts on an earnings call last week.
Ferriola said he won’t say whether Nucor will favor the deal or not until he has a chance to read it. But, he said, Nucor is “extremely, extremely disappointed” that the agreement doesn’t cover currency manipulation.
“At the end of the day, you can have all kinds of trade agreements and if a country manipulates its currency, it’s guaranteed to have an unfair trade advantage,” Ferriola said.
Concerns about trade deals resonate in a state where the 1990s-era North American Free Trade Agreement still conjures up memories of lost textile and manufacturing jobs. Such concerns cut across party lines in North Carolina’s congressional delegation.
I have grave concerns based on initial reports from parties on both sides of the issue.
U.S. Rep. Alma Adams, a Democrat whose district includes part of Charlotte
“I have not and will not support any trade deal that hurts our workers, our economy, and our environment,” U.S. Rep. Alma Adams, a Democrat whose district includes part of Charlotte, said in a statement.
Adams said she has “grave concerns” based on what she’s heard about the pact.
North Carolina’s two senators, Richard Burr and Thom Tillis, both Republicans, have said they will vote against the agreement. Both have criticized a provision that allows countries to deny an international arbitration process to tobacco companies seeking to challenge tobacco-control regulations. The provision is discriminatory because it singles out a specific agricultural product, the senators say.
Burr, who calls the pact “substandard,” has also said the deal fails to provide strong enough measures to address currency manipulation.
“I think the more that we learn about the agreement, the more concerns are coming” about various parts of it, Burr said.
Other Charlotte-area lawmakers, including Republican House members Patrick McHenry and Robert Pittenger, say they’re still reviewing the issue.
Congress is not expected to vote on the pact until next year.
Mark Vitner, an economist for Wells Fargo, said the agreement could result in Charlotte increasing its exports of industrial machinery, textile products and chemicals. The deal comes at a time when the Charlotte metropolitan area already posted $12.9 billion in exports last year, up 20 percent from the year before, Vitner said.
There is certainly cause for caution. Many of the trade deals that we have negotiated have proved more disruptive than was anticipated.
Mark Vitner, Wells Fargo economist
“Charlotte stands to benefit because we’ve been one of the fastest-growing export markets in the country,” he said. “Generally, it would be good for Charlotte. It would be good for the U.S.”
But, Vitner said, “there is certainly cause for caution. Many of the trade deals that we have negotiated have proved more disruptive than was anticipated.
“While the expected benefits did materialize, the costs often proved to be greater, particularly in the Carolinas.”