December 2, 2015 The Honorable Barack Obama President of the United States 1600 Pennsylvania Avenue, NW Washington, D.C. 20500 Dear Mr. President: Pursuant to Section 135(b) of the Trade Priorities and Accountability Act of 2015, and Section 135(e) of the Trade Act of 1974, as amended, I am pleased to transmit the report reflecting the opinions of the Labor Advisory Committee (LAC) on the Trans-Pacific Partnership (TPP). The LAC strongly opposes the TPP, negotiated between the United States (U.S.), Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. We believe that the Agreement fails to advance the economic interests of the U.S. and does not fulfill all of the negotiating objectives identified by Congress in the Trade Priorities and Accountability Act of 2015. The threat to future economic gains here in the U.S. and the standard of living of our people will be put in jeopardy by the Agreement. These threats will grow over time based on the potential for open-ended expansion of the TPP to countries ranging from Indonesia to China. The LAC believes the agreement should not be submitted to Congress or, if it is, it should be quickly rejected. The interests of U.S. manufacturers, businesses, workers and consumers would be severely undermined by the entry into force of the TPP. Sincerely, R. Thomas Buffenbarger, Chair Labor Advisory Committee (LAC) Cc: Ambassador Michael Froman Secretary Thomas Perez Anne Zollner, FDO LABOR ADVISORY COMMITTEE December 2015 1. Ms. Clayola Brown, National President, A. Philip Randolph Institute 2. Mr. R. Thomas Buffenbarger, International President, International Association of Machinists and Aerospace Workers 3. Mr. Tim Canoll, President, International Air Line Pilots Association 4. Mr. James Clark, President, International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers 5. Mr. Leo Gerard, International President, United Steelworkers of America 6. Mr. Raymond M. Hair Jr., President, American Federation of Musicians of the United States and Canada 7. Ms. Mary Kay Henry, President, Service Employees International Union 8. Edwin D. Hill, President, International Brotherhood of Electrical Workers (retired)* 9. Mr. James Hoffa, General President, International Brotherhood of Teamsters 10. Mr. Gregory Junemann, International President, International Federation of Professional & Technical Engineers 11. Mr. Richard Kline, President, Union Label and Service Trades Department, AFL-CIO 12. Ms. Sara Nelson, International President, Association of Flight Attendants 13. Mr. Cecil Roberts, President , United Mine Workers of America 14. Mr. Lee Saunders, President, American Federation of State, County and Municipal Employees 15. Elizabeth Shuler, Secretary-Treasurer, American Federation of Labor, Congress of Industrial Organizations 16. Mr. Richard Trumka, President, American Federation of Labor & Congress of Industrial Organizations 17. Ms. Randi Weingarten, President, American Federation of Teachers 18. Mr. Dennis Williams, President, United Automobile, Aerospace & Agricultural Implement Workers of America 19. Mr. Edward Wytkind, President, Transportation Trades Department ii Report on the Impacts of the Trans-Pacific Partnership By The Labor Advisory Committee on Trade Negotiations and Trade Policy December 2, 2015 iii Table of Contents Table of Acronyms ................................................................................................................................................................... iv I. Executive Summary ........................................................................................................................................................ 6 II. A Note on the LAC Process .................................................................................................................................... 8 III. Statutorily Required Analysis .............................................................................................................................. 10 IV. Were the Trade Negotiating Objectives Set Forth in Fast Track 2015 Achieved and in the Best Interests of America’s Working Families? ....................................................................................................... 11 V. Were the Labor Advisory Committee’s Objectives Met? ........................................................................... 14 Currency: Objective not met. .............................................................................................................................. 14 Rules of Origin: Objectives not met. ................................................................................................................... 14 Market Access Assurances: Objective not met. ................................................................................................. 15 State-Owned Enterprises: While an SOE Chapter is included in the TPP, the LAC’s objectives were not met. .. 15 Labor: Objectives not met. .................................................................................................................................. 15 Investment: While the Investment Chapter has some very minor differences from the version in the Peru FTA, the LAC’s objectives were not met. ..................................................................................................................... 17 Enhanced Screening Mechanism for Inward Bound FDI: Objective not met. ..................................................... 18 Procurement: Objectives not met. ...................................................................................................................... 19 Dock-on: Objectives not met. .............................................................................................................................. 19 Elimination of Technology Transfer Mandates and Production Offsets in Return for Market Access: Objective not met. ............................................................................................................................................................... 20 Intellectual Property & Drug Pricing Transparency: Objectives partially met. ................................................... 21 Public Services: Objective not met. ..................................................................................................................... 21 Financial Services: Objective not met. ................................................................................................................ 22 Climate Change: Objective not met. ................................................................................................................... 22 VI. Analysis of the TPP’s Likely Effects on Critical Industries & Sectors ........................................... 23 Manufacturing—General ..................................................................................................................................... 23 Aerospace Manufacturing ................................................................................................................................... 25 Air Transport Services .......................................................................................................................................... 26 Apparel and Textile .............................................................................................................................................. 26 Auto & Auto Parts Industry ................................................................................................................................. 27 Call Centers .......................................................................................................................................................... 29 Dairy .................................................................................................................................................................... 32 Meat/Proteins ..................................................................................................................................................... 33 i Public Sector ........................................................................................................................................................ 34 Steel ..................................................................................................................................................................... 35 VII. Analysis of Critical Issues in the TPP .................................................................................................................. 38 The LAC Expects the TPP to Drive Down Wages, Cost Jobs, and Have a Negative Impact on the U.S. Economy as a Whole................................................................................................................................................................ 38 Chart 1: Job Displacement Due to Existing Bad Trade Policies ....................................................................... 39 Chart 2: Workers’ Share of National Income is Shrinking (U.S.) (Credit: St. Louis Federal Reserve) .............. 40 Chart 3: Workers’ Share of National Income is Shrinking (Comparative) (Credit: The Economist) ................ 41 Currency Manipulation Is Addressed Only in a Completely Unenforceable Side Agreement, Wholly Outside the Legal Structure of the TPP ..................................................................................................................................