The fate of a sweeping trade agreement — a deal with significant implications for Massachusetts’ leading industries — is up in the air while an unlikely alliance between President Obama and Republican leaders seeks to push ahead against resistance from an equally unlikely coalition of liberals and Tea Party conservatives.
The Trans-Pacific Partnership, known as TPP, would eliminate tariffs and enact rules to open markets betweem the United States and 11 other Pacific Rim nations, including Japan, Malaysia, Singapore, and Vietnam. Last week, the House narrowly passed legislation that would allow negotiations to move forward; the measure now heads back to the Senate, where another tight vote is expected.
Supporters of the agreement, including Obama, House Speaker John Boehner, Mitch McConnell, the Senate majority leader, and much of big business, say it’s critical to expanding US exports and countering the ambitions of China, which is not a party to the negotiations.
Opponents, including the 11 Democrats in Massachusetts’ congressional delegation, view the deal as another blow to US workers that would send more American jobs overseas and depress wages.
About one-third of all goods exported from Massachusetts, more than $9 billion worth, go to the Trans-Pacific Partnership countries, according to trade statistics. The state’s leading industries and exporters — technology and life sciences companies — would benefit from more open markets, particularly in developing economies growing at three times the rate of the US economy, averaging 2 percent to 3 percent a year, analysts and industry officials said.
Peter A. Petri, a professor of international finance at Brandeis University, acknowledged the concerns about US workers who are struggling with job losses and wages that barely keep up with inflation. But, he said, the Trans-Pacific Partnership would produce stronger economic and job growth over the long term.
“Yes, inequality and wage stagnation are serious problems,” he said, “but saying no to trade would solve nothing and harm our most promising sectors, here and nationwide.”
Here’s how the Trans-Pacific Partnership might affect the state’s key industries:
Massachusetts, with its highly skilled workforce, is a national leader in aerospace, telecommunications, navigation, optics, robotics, telecommunications, and semiconductors. Advanced manufacturing equipment, high-tech measuring and process-control devices, and semiconductors are perennially among the state’s top exports.
The trade pact would eliminate tariffs of as much as 30 percent on many of these products, making them more competitive in foreign markets.
The Massachusetts High Technology Council, which represents some of the state’s biggest technology companies, called TPP “a huge opportunity not to be missed.”
“These are huge markets for many of our local tech companies,” said spokesman Mark Gallagher.
Proposed trade rules also would forbid countries from regulating or restricting the import of semiconductors encrypted for privacy. Chips in cellphones, computers, and most other electronic devices are encrypted to protect user data, but some countries want to use encryption as a reason to impose higher tariffs on US products, industry officials said.
Devi Keller, global director at the Semiconductor Industry Association, a trade group in Washington, said the proposed rules would remove market obstacles in nations with large electronics industries, including Malaysia, Singapore, and Vietnam. “It’s a precedent-setting trade agreement and a very important region for us,” Keller said.
Massachusetts exported more than $1.5 billion in semiconductor products last year, making it the nation’s sixth-largest exporter of semiconductors, after Texas, Oregon, California, Vermont, and Arizona, according to WiserTrade, a Leverett nonprofit research group that tracks trade.
Massachusetts biotechnology and medical device industries, among the nation’s biggest, employ at least 60,000 people in the state, according to the Massachusetts Biotechnology Council. Medical devices were the state’s top merchandise export last year, exceeding $2.6 billion, according to trade statistics. The state also exported nearly $1.7 billion in pharmaceutical products.
The Trans-Pacific agreement would lower tariffs in markets such as Japan, where an aging and affluent population is increasing demand for high-quality health care products like those made in Massachusetts. Just as important, industry officials said, the pact would create more uniform rules to make it easier to gain regulatory approval for devices and drugs in foreign markets.
For example, one of the state’s largest medical device makers, Boston Scientific Corp., a Marlborough company, must undertake additional clinical trials of pacemakers in some countries, even though the company may have completed similar trials to gain US approval, said Ralph Ives, a senior vice president at the Advanced Medical Technology Association, a trade group in Washington. Those requirements create barriers to Boston Scientific and other US companies.
“That’s a concrete type of discrimination that a trade agreement is designed to address,” Ives said. “The trade deal is a way to level the playing field.”
Sarah MacDonald, spokeswoman for the Massachusetts Biotechnology Council, said patent protections in the trade pact are vital to the state’s biotechs, which invest hundreds of millions of dollars to develop innovative drugs and treatments. Rules aimed at preventing theft of such intellectual property would lower the risk of doing business overseas.
“The issue of gaining IP protection in an international market is very important to the industry,” MacDonald said.
Despite manufacturing’s long decline in the United States, Massachusetts remains the home of about 8,000 mostly small manufacturers that employ about 250,000 people.
Jack Healy, executive director of the Massachusetts Manufacturing Extension Partnership, a Worcester nonprofit that supports manufacturing in the state, fears that a Trans-Pacific agreement would put manufacturers at a disadvantage with foreign companies that pay lower wages and don’t have to comply with US labor and environmental laws.
Healy said he also worries about the secrecy surrounding the trade negotiations and the possibility the deal might eliminate the US government’s “Buy American” requirement, which helps many small manufacturers stay in business. One example is Sterlingwear Boston in East Boston, which makes pea coats for the Navy and employs up to 450 people.
Such companies, Healy said, don’t have the money to pay lobbyists or get the attention of trade groups representing the biggest corporations.
“Who represents the interests of the small manufacturer, really?” he said. “No one.”