How Trade Liberalization Affects Unemployment Under the Trans-Pacific Partnership: A Panel Data Analysis
Between 1994 and 2000, NAFTA eliminated over 700,000 U.S. jobs from an increasing trade deficit. Will the TPP have similar detrimental effects? This study uses panel data to investigate the relationship between trade liberalization and unemployment among the TPP confirmed and interested signatories. The results show that a negative correlation exists between taxes on international goods and the net barter terms of trade index, indicating and ceteris paribus that the elimination of duties could result in a larger trade deficit for countries with comparably stronger currencies. Additionally, the fixed-effects GLS regression yields real exchange rates to be insignificant, supporting cheaper resources in a foreign nation could be the primary driver for companies to relocate in said nation.