After completing the long-awaited Trans-Pacific Partnership agreement, the Obama administration now faces its next challenge—promoting the trade pact to the Congress and voters, especially with a presidential election year looming on the horizon.
In addition to the United States, the other TPP members—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—announced the conclusion of their negotiations in early October.
“We envision conclusion of this agreement, with its new and high standards for trade and investment in the Asia Pacific, as an important step toward our ultimate goal of open trade and regional integration across the region,” the White House’s Office of the U.S. Trade Representative said in a statement at the time.
The 30-chapter TPP, once ratified by the member countries’ respective governments, will cover a range of trade areas, including “development of production and supply chains, and seamless trade, enhancing efficiency and supporting our goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets,” USTR said.
Most industrial goods tariffs will be eliminated immediately upon the agreement’s implementation. TPP will also eliminate or reduce tariffs on many agricultural products. The trade pact’s members even agreed to promote policy reforms, such as ending agricultural export subsidies.
TPP members have agreed on a single set of streamlined rules of origin that define whether a particular good is “originating” and therefore eligible to receive TPP preferential tariff benefits.
In addition, TPP members have agreed on rules to enhance trade facilitation, improve transparency in customs procedures, and ensure integrity in customs administration. “To help counter smuggling and duty evasion, the TPP parties agree to provide information, when requested, to help each other enforce their respective customs laws,” USTR said.
The agreement also establishes measures to address sanitary and phytosanitary rules, technical barriers to trade, trade remedies, investment, cross-border trade in services, financial services, temporary entry for business people, telecommunications, electronic commerce, government procurement, state enterprises, competition policy, small businesses, and intellectual property, and dispute settlement, among others.
Many trade groups are optimistic about TPP’s benefits on their respective industries.
“First, at a time when the United States economy is flat and our wage growth is stagnant, when Canada, one of our largest trading partners, is in recession, when the world economy is still fighting to regain traction after the 2008 financial crisis, and when the World Trade Organization has downgraded its 2015 forecast for global trade, these negotiations have the potential to deliver an invigorating boost to a group of countries that represents 40 percent of global GDP and one-third of world trade,” said Richard Chriss, executive director of the American Institute for International Steel, in a statement.
“Second, economic momentum in the right direction is important. Over the past few years, we have seen what economic momentum in the wrong direction looks and feels like. An ambitious and robust TPP agreement would help build and sustain much-needed positive momentum,” he added.
“Based on the details that have been released, the TPP will provide much-needed additional market access for U.S. sugar imports from Australia. However, we need more sugar than provided by the agreement,” said the Sweetener Users Association. “While we have gained 65,000 metric tons in additional access, the effect of the 23 percent additional quota allocation is still largely unknown. What is known is that U.S. users of sugar are facing a shortfall in sugar availability that far exceeds the 65,000 metric tons in new sugar allocation clearly provided to Australia.”
This is all nice and a bit of preaching to the choir for our readers, because any industry or company dependent on international trade knows TPP will be beneficial, once implemented by the signatory countries. However, ensuring the average American understands the benefits will prove the biggest hurdle as anti-TPP politicians and lobbyists blast the airwaves with misinformation to try to stop it.
This commentary was published in the November 2015 issue of American Shipper.
