Article Analysis

Trump Abandons TPP

Instructions:

This assignment is optional. Please consult your Syllabus for further details.

The following article discusses the recent U.S. withdrawal from the Trans-Pacific Partnership (TPP). I would like you to critically analyze the article by using the knowledge about the consequences of international trade that we have accumulated in class so far. Please write a short paragraph to answer each question.

Questions and Analysis: Please read the attached article and answer the following questions:

1. What is TPP?

2. According to the article, "Mr. Trump said American workers would be protected against competition from low-wage countries like Vietnam and Malaysia, also parties to the deal." (p.2) We have seen, discussed, and found flaws in a very similar statement as one of the main misconception about international trade. Use the Ricardian model to explain why trade between a high-wage and a low-wage country could be mutually beneficial.

3. It is safe to assume that Vietnam is more abundant in unskilled labor as compared to the US. Another safe assumption is that high-tech goods are more capital abundant (note that you can think of capital here as human capital, i.e. skilled workers). Use the H-O framework to describe the effects of TPP on US if the agreement happened and US started trading (more easily) with Vietnam.

4. In addition to a possible impact of trade on economic outcomes, TPP is viewed as an important geopolitical agreement. Why?

5. Why is the US withdrawal from TPP seen as a win for China?

Article: Trump Abandons Trans-Pacific Partnership, Obama's Signature Trade Deal By PETER BAKER.