1
00:00:02,400 --> 00:00:05,760
Speaker 1: Global business news twenty four hours a day. If Bloomberg

2
00:00:05,840 --> 00:00:08,920
Speaker 1: dot com, the Radio plus mobile act and on your radio.

3
00:00:09,200 --> 00:00:13,520
Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

4
00:00:13,560 --> 00:00:17,279
Speaker 1: I'm Charlie Pellet Fidal the SMP nastac all advancing. We're

5
00:00:17,320 --> 00:00:19,599
Speaker 1: brought to you by Sector Spider et F S. Why

6
00:00:19,640 --> 00:00:22,200
Speaker 1: buy a single stock when you can invest in the

7
00:00:22,360 --> 00:00:25,400
Speaker 1: entire sector? Visit sector s p d r S dot

8
00:00:25,400 --> 00:00:30,720
Speaker 1: com or call one six Sector et F stocks are

9
00:00:30,720 --> 00:00:33,240
Speaker 1: fluctuating right now. We do have the down trading higher.

10
00:00:33,240 --> 00:00:35,400
Speaker 1: It had been larger just a moment ago. Up now

11
00:00:35,440 --> 00:00:38,560
Speaker 1: by just about half a point at eighteen thousand, three

12
00:00:38,640 --> 00:00:41,960
Speaker 1: hundred fourteen, the SMP five hundred index up a point

13
00:00:42,360 --> 00:00:44,520
Speaker 1: one fifty eight, a gain there of less than point

14
00:00:44,560 --> 00:00:47,600
Speaker 1: one percent. Nastack is up nine points, a gain of

15
00:00:47,680 --> 00:00:51,240
Speaker 1: two tents of one percent, the tenure up four thirty seconds,

16
00:00:51,240 --> 00:00:54,760
Speaker 1: the yield one point five percent, Gold down eight fifty,

17
00:00:54,800 --> 00:00:57,480
Speaker 1: the ounce thirteen fifty nine, a drop of six tenths

18
00:00:57,520 --> 00:01:00,760
Speaker 1: of one percent. And crude oil West Texas intermediate of

19
00:01:00,800 --> 00:01:05,000
Speaker 1: a Donna thirty four barrel right now on w t I.

20
00:01:05,360 --> 00:01:08,360
Speaker 1: That is a gain of three point four percent I'm

21
00:01:08,440 --> 00:01:13,960
Speaker 1: Charlie Pellett, and that's a Bloomberg Business Flash. This is

22
00:01:14,040 --> 00:01:18,559
Speaker 1: taking Stock with pin Box and Kathleen Hayes on Bloomberg Radio,

23
00:01:19,920 --> 00:01:24,200
Speaker 1: broadcasting live from Atlantic Wharf in Boston, site of Smith

24
00:01:24,240 --> 00:01:27,160
Speaker 1: and will Lensky's talking about a wharf that makes me

25
00:01:27,200 --> 00:01:31,800
Speaker 1: think of trade and Transpacific Partnership. President Obama saying yesterday

26
00:01:31,800 --> 00:01:34,039
Speaker 1: that he expects the t p P to pass the

27
00:01:34,120 --> 00:01:38,280
Speaker 1: US Congress after the election. To find out more about

28
00:01:38,360 --> 00:01:41,840
Speaker 1: this trade agreement, we have Robert Lawrence. He is Albert L.

29
00:01:42,040 --> 00:01:45,360
Speaker 1: Williams Professor of International Trade and Investment for the Harvard

30
00:01:45,440 --> 00:01:47,720
Speaker 1: Kennedy School, and he joins US now. He's also a

31
00:01:47,720 --> 00:01:52,040
Speaker 1: senior Fellow at the Peterson Institute for International Economics. Robert Lawrence,

32
00:01:52,040 --> 00:01:54,000
Speaker 1: thank you very much for being with us. What's your

33
00:01:54,040 --> 00:01:59,280
Speaker 1: analysis of the TPP as it would affect businesses in

34
00:01:59,280 --> 00:02:02,680
Speaker 1: the United States. Well, I think on balance, it's a

35
00:02:02,760 --> 00:02:07,280
Speaker 1: very positive agreement. It's an agreement between twelve countries. They

36
00:02:07,360 --> 00:02:12,040
Speaker 1: constitute about of the world economy, and it's going to

37
00:02:12,120 --> 00:02:16,080
Speaker 1: achieve low trade barriers among them, almost remove all of

38
00:02:16,120 --> 00:02:19,600
Speaker 1: those not only at the border, but also deal with

39
00:02:19,639 --> 00:02:22,919
Speaker 1: a lot of the rules that govern international trade. So

40
00:02:23,000 --> 00:02:26,680
Speaker 1: it's going to offer a lot of opportunities, especially actually

41
00:02:26,720 --> 00:02:32,040
Speaker 1: for smaller businesses who depend more on e commerce and

42
00:02:32,160 --> 00:02:36,240
Speaker 1: other ways of reaching markets abroad. So when we do

43
00:02:36,400 --> 00:02:41,200
Speaker 1: an analysis of the potential gains of the agreement by

44
00:02:41,280 --> 00:02:45,600
Speaker 1: night By, they amount to something like a half a

45
00:02:45,639 --> 00:02:48,800
Speaker 1: percent of g d P about a hundred and thirty

46
00:02:48,840 --> 00:02:52,720
Speaker 1: billion dollars. So I think on balance it's going to

47
00:02:52,800 --> 00:02:56,360
Speaker 1: be it would be a positive development. Give us an

48
00:02:56,360 --> 00:03:00,960
Speaker 1: example of a rule that will be chain that would

49
00:03:01,000 --> 00:03:04,120
Speaker 1: be benefit beneficial state to the United States, what's been

50
00:03:04,160 --> 00:03:06,680
Speaker 1: a hindrance, even if it's very specific, to give us

51
00:03:06,720 --> 00:03:08,480
Speaker 1: kind of a sense of what this would mean to

52
00:03:08,560 --> 00:03:12,840
Speaker 1: a national business and a national even worker. Well Um,

53
00:03:13,040 --> 00:03:16,680
Speaker 1: one of the areas in which rules are going to

54
00:03:16,720 --> 00:03:21,120
Speaker 1: would be agreed relate to service and where they could

55
00:03:21,120 --> 00:03:26,320
Speaker 1: be located. So an American firm that wants to service

56
00:03:26,360 --> 00:03:30,120
Speaker 1: the entire Asian market might find an economic to have

57
00:03:30,200 --> 00:03:35,000
Speaker 1: its server in only one country and to then UH

58
00:03:35,120 --> 00:03:40,800
Speaker 1: serve countries and have its Internet UH sales occur throughout

59
00:03:40,880 --> 00:03:46,840
Speaker 1: the whole market. Well Um. Today, individual countries can require

60
00:03:47,040 --> 00:03:50,760
Speaker 1: those servers to be located within the country, but as

61
00:03:50,800 --> 00:03:54,000
Speaker 1: a result of the agreement, countries will no longer be

62
00:03:54,040 --> 00:03:57,440
Speaker 1: able to do that except in the financial area, So

63
00:03:57,480 --> 00:04:02,080
Speaker 1: that would be an example. But there are many standards

64
00:04:02,560 --> 00:04:05,520
Speaker 1: which country which firms have to meet in order to

65
00:04:05,520 --> 00:04:08,640
Speaker 1: sell their products in different countries, and this would make

66
00:04:08,680 --> 00:04:14,280
Speaker 1: headway in making regulations and much more transparent and much

67
00:04:14,320 --> 00:04:17,800
Speaker 1: easier to deal with. Can you address the issue of

68
00:04:17,960 --> 00:04:21,000
Speaker 1: US workers will they be displaced if the t p

69
00:04:21,000 --> 00:04:25,039
Speaker 1: P has passed. Some workers would be displaced as a

70
00:04:25,040 --> 00:04:29,000
Speaker 1: result of TPP. Obviously, if we're opening our market in

71
00:04:29,080 --> 00:04:32,640
Speaker 1: return for foreign countries opening, there's there is going to

72
00:04:32,720 --> 00:04:37,200
Speaker 1: be some dislocation. So we've come up with estimates of

73
00:04:37,279 --> 00:04:40,279
Speaker 1: what the magnitudes of that dislocation is likely to be.

74
00:04:41,360 --> 00:04:45,440
Speaker 1: And for individual workers this can be very painful. But

75
00:04:45,600 --> 00:04:48,640
Speaker 1: what we find is that the TPP is going to

76
00:04:48,680 --> 00:04:51,360
Speaker 1: be phased in over a period of about ten years,

77
00:04:52,279 --> 00:04:55,880
Speaker 1: and even during the period when it's being phased in,

78
00:04:56,720 --> 00:05:00,480
Speaker 1: the aggregate benefits to the economy are about twelve times

79
00:05:00,839 --> 00:05:04,280
Speaker 1: costs to the workers who are dislocated, and then once

80
00:05:04,320 --> 00:05:08,680
Speaker 1: the workers have adjusted, the economy is left with the benefits.

81
00:05:08,720 --> 00:05:13,080
Speaker 1: So over the medium term we're left with something like

82
00:05:13,520 --> 00:05:16,359
Speaker 1: a hundred and thirty billion dollars worth of net benefits

83
00:05:16,400 --> 00:05:21,160
Speaker 1: per year. However, you also acknowledge, and it seems to

84
00:05:21,200 --> 00:05:24,320
Speaker 1: me are also seeming to urge that we don't just

85
00:05:24,360 --> 00:05:26,240
Speaker 1: ignore and say, oh, the net benefits gonna be great

86
00:05:26,240 --> 00:05:28,120
Speaker 1: in ten years. We acknowledge that if if I'm them

87
00:05:28,120 --> 00:05:30,479
Speaker 1: on losing my job, it's not worth it at all,

88
00:05:30,600 --> 00:05:34,640
Speaker 1: that we need trade adjustment assistance, that we need wage insurance.

89
00:05:34,880 --> 00:05:37,560
Speaker 1: Explain to us how that would work. Are the provisions

90
00:05:37,600 --> 00:05:41,080
Speaker 1: for that right now, say in the proposals person Obama's backing,

91
00:05:41,400 --> 00:05:44,279
Speaker 1: So there are. We do have a program which is

92
00:05:44,480 --> 00:05:47,960
Speaker 1: called Trade Adjustment Assistance, although in my view it's much

93
00:05:48,000 --> 00:05:52,719
Speaker 1: too small for individual workers who lose their jobs trade

94
00:05:53,440 --> 00:05:58,080
Speaker 1: or for any reason. That's a very painful experience. Uh.

95
00:05:58,120 --> 00:06:01,080
Speaker 1: The estimates of that they could lose is something like

96
00:06:01,200 --> 00:06:04,840
Speaker 1: one point four times their annual income over their whole lifetime.

97
00:06:05,680 --> 00:06:09,479
Speaker 1: So we, I believe need to improve our programs. The

98
00:06:09,560 --> 00:06:15,160
Speaker 1: existing programs do UH provide additional assistance in addition to

99
00:06:15,240 --> 00:06:20,080
Speaker 1: unemployment insurance to workers who are dislocated, but I think

100
00:06:20,120 --> 00:06:24,240
Speaker 1: we should be expanding those um not only for workers

101
00:06:24,240 --> 00:06:27,080
Speaker 1: who lose their job because of trade, but workers who

102
00:06:27,160 --> 00:06:31,200
Speaker 1: lose their job for other reasons beyond their own control. UH.

103
00:06:31,320 --> 00:06:34,920
Speaker 1: Some workers, many workers who lose their jobs can find

104
00:06:35,040 --> 00:06:38,840
Speaker 1: alternative work each sometimes even at higher pay, But for

105
00:06:38,920 --> 00:06:42,800
Speaker 1: some they're forced to take lower wages. And one component

106
00:06:42,880 --> 00:06:48,000
Speaker 1: that I believe ought to be expanded is what I

107
00:06:48,120 --> 00:06:51,520
Speaker 1: call wage insurance, and that would mean that if you

108
00:06:51,600 --> 00:06:53,800
Speaker 1: lose your job and you take a new job at

109
00:06:53,800 --> 00:06:56,839
Speaker 1: a lower wage for some period of time, the government

110
00:06:56,880 --> 00:07:00,960
Speaker 1: would compensate you. And we find that if you take

111
00:07:01,000 --> 00:07:05,080
Speaker 1: the aggregate benefits from TPP, you can easily afford to

112
00:07:05,120 --> 00:07:08,280
Speaker 1: have a much more generous program for those workers who

113
00:07:08,279 --> 00:07:13,160
Speaker 1: are dislocated and who lose. If the TPP does not

114
00:07:13,440 --> 00:07:17,440
Speaker 1: pass the US Congress, will the other countries that are

115
00:07:17,520 --> 00:07:19,720
Speaker 1: part of the t p P. Will they reap the

116
00:07:19,760 --> 00:07:26,240
Speaker 1: benefits well? UH, specifically, probably not through keeping the same TPP,

117
00:07:27,000 --> 00:07:31,240
Speaker 1: because a requirement for TPP to go into effect is

118
00:07:31,280 --> 00:07:34,920
Speaker 1: in fact that countries which account for eighty five pc

119
00:07:35,160 --> 00:07:38,760
Speaker 1: of the of the income UH sign it. But it

120
00:07:38,880 --> 00:07:43,000
Speaker 1: is very likely that if the United States rejects the

121
00:07:43,080 --> 00:07:46,040
Speaker 1: t p P or does not go along, that the

122
00:07:46,120 --> 00:07:50,840
Speaker 1: Asian countries who are who have concluded the t p

123
00:07:51,000 --> 00:07:56,520
Speaker 1: P will liberalize among themselves. It's also the case that

124
00:07:56,640 --> 00:08:01,280
Speaker 1: China is leading another big trade negotiation in which several

125
00:08:01,320 --> 00:08:06,240
Speaker 1: of the TPP partners are participating. So we would be withdrawing,

126
00:08:07,200 --> 00:08:10,280
Speaker 1: but China will be leading. And in a sense, if

127
00:08:10,320 --> 00:08:14,200
Speaker 1: we don't contribute to setting the rules of the trading system,

128
00:08:14,280 --> 00:08:16,760
Speaker 1: what we're going to land up with in Asia is

129
00:08:16,760 --> 00:08:20,720
Speaker 1: a trading system in which China sets the rules. You're

130
00:08:20,720 --> 00:08:23,480
Speaker 1: the author of many books, one of them Crimes and

131
00:08:23,480 --> 00:08:27,240
Speaker 1: Punishments Retaliation into the w t O. Co author of

132
00:08:27,480 --> 00:08:30,560
Speaker 1: several books, but one of my favorite titles is globe

133
00:08:30,600 --> 00:08:34,880
Speaker 1: a Phobia. Confronting fears about open trade. Is global globe

134
00:08:34,960 --> 00:08:37,880
Speaker 1: phobia more rampant now, do you? I mean? Certainly Donald

135
00:08:37,920 --> 00:08:41,360
Speaker 1: Trump's cry that that free trade is not fair trade

136
00:08:41,440 --> 00:08:47,120
Speaker 1: is resonating with a lot of voters. Absolutely so. I think, um,

137
00:08:47,240 --> 00:08:50,760
Speaker 1: we have had poor economic performance in the US, especially

138
00:08:50,760 --> 00:08:54,760
Speaker 1: when it comes to raising the median incomes of the

139
00:08:54,800 --> 00:08:59,319
Speaker 1: average American, and what Donald Trump has done is to

140
00:08:59,440 --> 00:09:03,680
Speaker 1: seize on and several other candidates have seasoned on trade

141
00:09:04,320 --> 00:09:07,200
Speaker 1: as the big source of all of these problems, both

142
00:09:07,240 --> 00:09:11,760
Speaker 1: the slow wage growth and the erosion of manufacturing employment.

143
00:09:12,600 --> 00:09:16,640
Speaker 1: If you look carefully what you find is that trade

144
00:09:16,679 --> 00:09:21,840
Speaker 1: has been a contributor, but it's a relatively small contributor. Moreover,

145
00:09:22,600 --> 00:09:25,440
Speaker 1: if you were to interfere with trade, as Donald Trump

146
00:09:25,480 --> 00:09:28,920
Speaker 1: is advocating, if you start to put barriers at the border,

147
00:09:29,800 --> 00:09:33,320
Speaker 1: you're actually going to cause more job losts and more

148
00:09:33,440 --> 00:09:36,680
Speaker 1: just location. You know, about two thirds of all of

149
00:09:36,720 --> 00:09:39,719
Speaker 1: the products that we import into the United States are

150
00:09:39,760 --> 00:09:44,319
Speaker 1: not finished products. There are parts, they're intermediate products. If

151
00:09:44,320 --> 00:09:47,800
Speaker 1: you think of your Apple telephone, at least of your iPhone,

152
00:09:48,520 --> 00:09:52,000
Speaker 1: you'll realize that it has parts from all over the world.

153
00:09:52,720 --> 00:09:55,880
Speaker 1: So if you come along and you put tariffs on

154
00:09:56,040 --> 00:09:59,880
Speaker 1: those imports, what you're gonna do is prevent the man

155
00:09:59,880 --> 00:10:03,320
Speaker 1: of factoring that's currently taking place in the United States

156
00:10:03,840 --> 00:10:09,239
Speaker 1: from actually a curry. So that would be extremely disruptive.

157
00:10:09,960 --> 00:10:15,080
Speaker 1: So I think, um, not only is trade being villainized

158
00:10:15,800 --> 00:10:19,400
Speaker 1: as the source of all our economic problems. It has

159
00:10:19,440 --> 00:10:22,440
Speaker 1: contributed some, but the estimates off instance, when it comes

160
00:10:22,480 --> 00:10:26,360
Speaker 1: to manufacturing jobs, it's probably accounted for one sixth of

161
00:10:26,400 --> 00:10:31,319
Speaker 1: the loss of the manufacturing jobs. But interfering with trade

162
00:10:31,559 --> 00:10:35,680
Speaker 1: and erecting new trade barriers certainly isn't part of the

163
00:10:35,720 --> 00:10:39,360
Speaker 1: solution to our problems. Robert Lawrence, thank you so very much.

164
00:10:39,720 --> 00:10:44,000
Speaker 1: You're most welcome. You just I think enlightened everyone listening

165
00:10:44,360 --> 00:10:48,240
Speaker 1: to the the reality and an intelligent analysis of trade,

166
00:10:48,280 --> 00:10:50,840
Speaker 1: the pros and the cons. The pros outweighing the cons.

167
00:10:50,880 --> 00:10:54,079
Speaker 1: But there's the ways he said to offset job loss,

168
00:10:54,160 --> 00:10:56,520
Speaker 1: wage loss. We'll look forward to having you back on

169
00:10:56,559 --> 00:10:59,960
Speaker 1: the show. Is this debate over trade continues? Robert Lawren

170
00:11:00,320 --> 00:11:03,720
Speaker 1: is the Albert O. Williams Professor of International Trade Investment

171
00:11:03,760 --> 00:11:06,800
Speaker 1: at Harvard's Kennedy School and Senior Fellow at the Peterson

172
00:11:06,880 --> 00:11:10,840
Speaker 1: Institute for International Economics, and Kathleen Hayes, along with Pim Fox,

173
00:11:11,040 --> 00:11:11,920
Speaker 1: this is remembered