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NEW YORK (TheStreet) -- The Trans-Pacific Partnership is likely to have far-reaching implications for the U.S. economy if it takes effect.

This proposed free trade agreement would include the U.S. and 11 other countries: Japan, Chile, Australia, New Zealand, Malaysia, Brunei, Canada, Vietnam, Mexico, Singapore and Peru. South Korea is likely to join, and so could China. Note that the TPP would be an expansion of an existing agreement among Brunei, Chile, New Zealand and Singapore.

President Obama was recently in Japan for talks with Japanese Prime Minister Shinzo Abe about regional cooperation, security and the TPP. The U.S. and Japan are at odds about certain aspects of the TPP, including Japan's desire to maintain tariffs on wheat, dairy products, sugar, rice, beef and pork. In total, the list of products numbers 586 items.

The painstaking process of reaching consensus was delegated to the Deputy U.S. Trade Representative Wendy Cutler and Hiroshi Oe of Japan. No framework has yet been reached.

The U.S. is trying to loosen regulations on imports of U.S. autos, but U.S. workers in the manufacturing sector are less convinced of the purported economic benefits.

The fear among workers in the U.S. manufacturing sector is that jobs will be exported overseas because the relative costs of labor are so much cheaper in Asia.

The TPP is expected to account for 40% of global trade and a whopping 60% of all U.S. exports. The biggest players in this arena are Japan and the U.S., and widespread liberalization of their respective markets is fundamental to the TPP working.

If the agreement removes tariffs and import duties, the U.S. manufacturing sector -- particularly heavy machinery and automakers -- will have trouble competing with foreign manufacturers. This could lead to massive layoffs, a reduction in tax revenues to manufacturing-intensive states and possible impoverishment of local communities.

South Korea is likely to join the TPP, and China has also been invited, provided it complies with the conditions set out. The Japanese economy is expected to grow by 0.66% by having tariffs eliminated, and the economic benefit will likely be 2% of gross domestic product.

Back in the U.S., labor unions and other critics are opposed to the Obama administration's desire to have Congress fast-track approval of the agreement.

A left-leaning economic think tank estimates that the TPP will lead to wage cuts for workers earning $87,000 per year or less.

According to the study, by David Rosnick, the wealthy are likely to benefit from the TPP while all others are likely to take wage cuts.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.