The Trans-Pacific Partnership

The Trans-Pacific Partnership (TPP) is a trade agreement between 12 Pacific Rim countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam), which among other things, contains measures to lower trade barriers such as tariffs.

For more information about the TPP see our previous post, Fox Guide to the Trans-Pacific Partnership.

The Report

U.S. Secretary of Commerce Penny Pritzker released the Opportunities for the U.S. Service Sector Report, which highlights the positive impact of the TPP.

Secretary Pritzker’s report emphasized that the TPP will expand investment opportunities for U.S. services, including those in the telecommunications, software, retail, entertainment and delivery.

“The Trans-Pacific Partnership strengthens our nation’s standing as the world’s leading services exporter,” Secretary Pritzker said.  She further emphasized the positive impact on the service sector, by stating: “With TPP, we can grow our $233.1 billion trade surplus in services and support even more high-paying American jobs.”

Benefit for U.S. Service Suppliers

According to the Office of the United States Trade Representative, services industries account for four out of five U.S. jobs and also represent a significant and growing share of jobs in other TPP countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam).  The TPP will benefit U.S. service suppliers, both small and large, seeking to do business in TPP markets.

The report lists TPP commitments that will directly benefit U.S. services suppliers, including removing unnecessary barriers that reduce efficiency of trade in the global supply chain and increased transparency in licensing and qualification regulations and procedures for service suppliers.

To learn more about the opportunities for the U.S. service sector related to the TPP, visit http://trade.gov/fta/tpp/industries/pdfs/service.pdf.

The Story

Asia-Pacific Region
Copyright: kgtoh / 123RF Stock Photo

After many years of negotiations, the 12 countries making up the Trans-Pacific Partnership (TPP) (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam) finally reached a trade agreement on October 4, 2015.  Note that the deal still needs to be approved by Congress (after the President gives Congress a 90 day advance notice that he intends to sign it).

Why Does it Matter?

The deal opens up trade and promotes regional integration among 12 countries that collectively produce almost half of the world’s products and services. This can have a huge impact on the global economy.

The goals of the deal are to promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty; and promote transparency, good governance, and enhanced labor and environmental protections.  Geopolitical reasons of establishing a strong partnership in Asia to challenge China’s stronghold in the region is also certainly a motivating factor.

Key Features Of The Deal

  1. Comprehensive market access. The TPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services, to create new opportunities and benefits for businesses, workers, and consumers.
  2. Regional approach to commitments. The TPP facilitates the development of production and supply chains, and seamless trade, enhancing efficiency and supporting the goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets.
  3. Addressing new trade challenges. The TPP promotes innovation, productivity, and competitiveness by addressing new issues, including the development of the digital economy, and the role of state-owned enterprises in the global economy.
  4. Inclusive trade. The TPP includes commitments to help small- and medium-sized businesses understand the Agreement and take advantage of its opportunities.  It also includes commitments on trade capacity building, to ensure that all Parties are able to meet the commitments in the Agreement and take full advantage of its benefits.
  5. Platform for regional integration. The TPP is intended as a platform for regional economic integration and designed to include additional economies across the Asia-Pacific region.

What Does the Deal Mean for US Businesses?

  1. The deal reduces tariffs for American products traded in the TPP region and, therefore, opens up the TPP region for American products. It also makes it cheaper for American companies to purchase products from the TPP region.
  2. Expedited customs procedures for TPP members will ensure faster and easier shipment.
  3. More transparent, non-discriminatory rules for technical regulations will mean easier compliance with trade regulations for US companies.
  4. Investment in TPP countries will become easier and more transparent.
  5. E-commerce companies doing business in the TPP region will encounter fewer restrictions.