Good Morning
Good Morning

Trans-Pacific trade pact brings little accord on LI

Diane Atkinson, of Bayport, attends a mock funeral

Diane Atkinson, of Bayport, attends a mock funeral for American middle class jobs outside of Rep. Lee Zeldin's office in Patchogue as protesters speak out against the Trans Pacific Partnership free trade agreement. Credit: Newsday / Thomas A. Ferrara

The free-trade agreement proposed for the Pacific Rim would have a big impact on Long Island's economy and jobs.

Local business executives and union leaders are closely following the agreement's fate in Congress and at negotiating tables around the world.

Exported goods from companies in Nassau and Suffolk counties totaled more than $10 billion in 2013, or about 7 percent of the Island's economic activity, according to the latest data from the U.S. Department of Commerce. (Similar figures on imports weren't available.)

Experts identified the Island's top exports as aerospace parts, pharmaceuticals and medical devices, processed food, and information and communications technology. The top markets are Canada, China and the United Kingdom.

Trade puts Long Island, and the United States, in competition with countries where workers often earn far less. In the past 30 years, free-trade agreements have created U.S. jobs in industries such as software, and destroyed them in others such as apparel manufacturing -- stoking workers' fears.

The proposed trade deal, called the Trans-Pacific Partnership, or TPP, would likely benefit the Island's corporations with operations overseas, and technology startups, economists said. The losers would probably be low-skilled workers and some small businesses.

"Trade is already significant for Long Island, and it's going to become more significant because the TPP hopefully will open more doors to our exporters," said Susan Sadocha, director of the commerce department's Long Island U.S. Export Assistance Center, which helps 100 to 150 small- and medium-sized businesses each year.

The TPP cleared a major hurdle with Wednesday's Senate vote to enable negotiations among the 12 partners to continue. The partners are the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam -- but not, importantly, China.

Together, the countries represent nearly 40 percent of the world's economic output and one-third of its trade.

President Barack Obama has finally received "fast-track" power from Congress -- after several contentious, close votes -- to conclude the TPP talks begun seven years ago. Fast track means that Congress will consider the final trade deal in an up-or-down vote without making amendments that could potentially unravel the accord.

What the accord would do

Details of the TPP are scarce because of extraordinary secrecy surrounding the negotiations. Still, documents released by WikiLeaks, statements by the U.S. Trade Representative and interviews with lobbyists suggest the accord would do the following:

Reduce tariffs on imported goods, particularly with the five nations that don't already have free-trade agreements with the United States: Brunei, Japan, Malaysia, New Zealand and Vietnam;

Add environmental and workplace safety standards, and supervision of patent rights to existing trade deals such as the North American Free Trade Agreement, or NAFTA, between the United States, Canada and Mexico;

Ease the flow of data across borders and end restrictions on where computer servers can be located;

Facilitate more trade in finance, engineering, education, law and other services -- where the United States has a distinct advantage;

Reduce preferences given to state-owned industries;

Strengthen U.S. ties to Asia as a counterweight to China's growing influence.

"The TPP is not a simple agreement where we get rid of or reduce tariffs," said John A. Rizzo, chief economist for the Long Island Association, the region's largest business group, and a Stony Brook University professor.

"This agreement will include an intellectual property-rights extension to other countries and incentives for foreign investment and possibly shipping jobs overseas," he said. "There will be winners and losers in this; it's a double-edged sword."

For that reason, the TPP has revived a nationwide debate, at times ferocious, over how to bring prosperity to the most people.

Free-trade agreements, most notably NAFTA, have become a touchstone for clashing beliefs about the definition of fair trade, the effects of capitalism, and society's responsibility to help those who cannot help themselves.

Locally, there have been protests against the TPP, including a mock funeral for U.S. jobs held in Patchogue at the office of Rep. Lee Zeldin (R-Shirley). Zeldin voted against giving the president fast-track power after previously signing a letter in support.

In a statement emailed to his supporters in mid-June, Zeldin said, "An important consideration in voting no . . . was quite simply that so very much of my district wanted me to."

In addition, supporters and opponents of free trade have deluged House and Senate members with letters, email and telephone calls about the fast track and the TPP.

Trade pact seen as a threat

At Die-Matic Products Inc., a stamping plant in Plainview that makes assorted metal and plastic parts, the owners and employees see the TPP as a threat.

"The problem with these free-trade agreements is the playing field isn't level," said Arnold Klein, president of Die-Matic, which has a workforce of 21 people. "How do I compete against Mexico, where workers earn $200 a month, and my guys earn $3,000 a month?"

He said the TPP would be a setback for the maker of components found in parachutes, air conditioners, store shelves and other items used by the military and businesses. Employees recently resumed five-day shifts after working three days a week because commercial orders were lost to competitors in Vietnam, China, India and Dubai.

Klein said improvements to the 30,000-square-foot factory have made it more efficient and now is the time to increase annual sales -- which total between $4 million and $5 million -- if the TPP doesn't scuttle his plans.

"There used to be 200 [stamping] job shops like us on Long Island; there are now 15," he said. "The U.S. government should do more to protect U.S. companies."

Officials at CA Technologies, the computer software giant with a large office in Islandia, said the TPP could increase its sales, which totaled $4.3 billion last year.

They said the trade accord could, depending on its final provisions, open more markets to U.S. products and ease development of software by limiting restrictions on the transmission of data across borders and where computer servers are located.

Many of the customers that Manhattan-based CA and other information technology companies are pursuing are outside of the United States, the officials said, and 75 percent of the industry's growth will be derived from those customers.

"It's to our benefit . . . to try to have this regional trade agreement with all the Pacific Rim countries so that we can have access to these foreign markets that are going to grow and are continuing to grow," said Claude Boudrias, CA's trade policy expert in Washington, D.C.

On Long Island, CA isn't the only probable winner from the TPP.

Richard Vogel, business school dean at Farmingdale State College, predicted specialty manufacturers would "thrive" because of increased demand for high-quality products made in small batches, and greater protection against counterfeiting.

He said local factories would be strengthened by foreign competition, and consumers would benefit from access to goods at lower prices.

"Look at the U.S. auto industry and how competition from Japan, Korea and other countries forced Detroit to make higher-quality cars at better prices," Vogel said. "It has been a 40-year transformation, and it has cost thousands of jobs . . . But it had to happen, and would have happened regardless of free trade."

He also said three big sectors of the Island's economy -- health care, education and retail -- might not be impacted at all.

Vogel identified TPP's losers as likely being low-skilled workers and those employed by businesses that have already shifted jobs to foreign lands or lost orders to foreign rivals.

Sonya Dungee, a directory assistance worker at a Verizon call center in Nassau County, is worried the TPP will send her job to Mexico or the Philippines, where Verizon has similar operations.

"TPP is going to take jobs away from the working class," said the 18-year employee. "They are basically moving us out of the country."

Dungee, 48, who also serves as a chief steward for Local 1108 of the Communications Workers of America, earns about $70,000 a year at Verizon. If she were laid off, the Suffolk County resident said, it would be difficult to find a job and it probably would pay less.

Verizon spokesman Rich Young declined to comment on plans for its call centers or the TPP, which the company has endorsed.

Fears about trade-related layoffs are supported by federal government data.

Pink slips in the past

Locally, at least 2,280 people have received pink slips since 2000 as manufacturers shifted production to Mexico, Canada and Malaysia -- all parties to the future TPP, according to a Newsday review of documents certifying the workers were eligible for retraining funds because they had lost their jobs to trade.

However, exports of goods from New York State to eight of 11 TTP countries have increased in the past 10 years, according to Commerce Department figures. Similar data weren't available for Long Island.

Canada was New York's largest customer last year, accounting for nearly 17 percent of the state's $86 billion in exported goods.

The TPP has the potential to boost these numbers -- but only if it bars currency manipulation, said Pat Moffett, founder and chairman of the Long Island Import Export Association. He said some Asian countries that are party to the agreement keep their currencies artificially low against the U.S. dollar so the prices of goods they import are exorbitant.

"If the TPP doesn't address the currency issue, it's not going to help Long Island exporters," said Moffett, global logistics vice president at electronics manufacturer Voxx International Corp. in Hauppauge.


Winners: Large corporations will global operations; technology companies with patents and other intellectual property in need of protection

Losers: Workers, particularly those at high-volume manufacturers or in low-skilled jobs; some small businesses

Unclear: Exporters, unless the trade accord bars currency manipulation by foreign countries

SOURCE: Newsday interviews


* Lower or eliminate import taxes to create a Pacific Rim free-trade zone

* Loosen restrictions on imported services

* Establish labor and environmental standards, and supervision of intellectual property rights

* Ease data flows

SOURCE: Office of the U.S. Trade Representative

More news