Pulse Price Report: What is the TPP?

The Trans-Pacific Partnership (TPP) is a proposed trade agreement with 12 nations that border the Pacific Ocean, including the United States. President Obama hails it as a cornerstone of his administration, should Congress approve it. Donald Trump would rip up the trade agreement if elected, while Hillary Clinton has withdrawn her support for the TPP after calling it the “gold standard in trade agreements” in 2012.

But the TPP deals with trade and markets, so that’s what we will talk about here.

Free trade is a product of globalization in the 21st century. When shipping goods and services, especially in online industries, became easier with improved technology, free trade became a popular idea. Countries have historically imposed tariffs, or taxes on imported goods, to incentivize domestic production. Put simply, if the tariff on Toyotas is too high for consumers, more people will buy a Ford.

But restrictions on tech industries and online services are tricky and, since those products are becoming more prevalent in the world of trade, they are a bigger part of the discussion.

Supporters of the TPP claim that it will allow for producers in the United States to sell more of their products abroad. The United States can more effectively influence labor standards and protection of intellectual property. Some argue that with China left out of the deal, the United States will assert itself as the leader of trade throughout the Pacific, taking those trade routes away from China.

Opponents of the partnership are worried that the deal will take away jobs, primarily in the working class industries of manufacturing and textiles. Shirts and cars can be cheaper to make abroad and ship back to the United States, so companies in those industries would be attracted to moving their operations outside of the United States.

Meanwhile, the United States has an advantage in industries such as finance and software, so companies abroad could move their headquarters to the United States.

Typically, economists look at the concept of free trade favorably. In theory, if a country focuses on the things it produces the best (finance and software in the United States and textiles in Vietnam) and trades with other nations, both parties will be better off. We can have more shirts to wear to our computer programming jobs and Vietnamese shirt factories can have better computer programs to expedite business.

But politics, business interests and the idea of a level playing field all play into the true success of a trade deal such as the TPP.

Obama hopes to get the vote of Congress before he leaves office and many are holding out for a vote during the lame-duck session, after the election but before the new president takes office.

Crop prices (Oct. 10)

Rio Creek Feed Mill – Algoma

Fox River Valley Ethanol – Green Bay

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

Gas Price Averages

United States: $2.26

United States one year ago: $2.32

Wisconsin: $2.23

Wisconsin one year ago: $2.51

Northern Door: $2.38

Sturgeon Bay: $2.32

Other Commodities

Gold: $1,263.50/troy ounce

Silver: $17.72/troy ounce

Oil: $51.45/barrel

Sources: aaa.com, agweb.com, gasbuddy.com, money.cnn.com, Reuters, Wall Street Journal