The Trans-Pacific Partnership (TPP) is a 12-nation Asian-Pacific trade agreement that seeks to increase economic integration among participating nations by lowering barriers to trade, improving trade facilitation and enhancing standards harmonization. Upon completion, the TPP trade area would comprise a region with $28 trillion in economic output, making up around 39 percent of the world’s total output. If the TPP is successfully implemented, tariffs will be removed on almost $2 trillion in goods and services exchanged between the signatory countries.
In this blog we look at some questions about the TPP and how it affects imports and exports for countries along the Pacific Rim. This blog post was written by Benjamin Burstein, summer intern at the AAFA (American Apparel and Footwear Association) and son of Mark Burstein, NGC’s president of sales, marketing and R&D.
Which countries are involved in the TPP?
The United States is currently negotiating the TPP with 11 other countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
How long has the TPP been in discussion?
In 2005, New Zealand, Chile, Singapore and Brunei began negotiations to engage in an unprecedented trans-pacific free trade agreement, known as the P4 (Pacific 4). In February 2008, President Bush announced that the United States would enter the P4 discussion. Over the next couple of years Peru, Australia, Vietnam, Malaysia, Canada, Mexico and Japan entered the negotiations as well.
Why will TPA help this move forward?
On June 29, President Obama signed H.R. 2146, Defending Public Safety Employees’ Retirement Act, which ultimately became the vehicle for the passage of Trade Promotion Authority. Without TPA, Congress could change significant terms of the trade agreement that is already negotiated. Knowing that sensitive provisions in trade agreements might be altered by Congress at some future date, U.S. trade negotiating partners may hold back key concessions at the bargaining table. With TPA, it is ensured that the USTR can strike the best deal that will meet the economic and political requirements to gain Congressional approval.
Another huge benefit of TPA is that Congress gave the administration over 150 specific trade policy goals that they wanted to see included. With this, Congress will now be able to publically see the true text of the TPP, which it wasn’t able to do before TPA was granted.
What is the status of the TPP negotiations?
The United States is hosting a meeting of Trans-Pacific Partnership (TPP) Trade Ministers in Maui, Hawaii from July 28-31, which was preceded by a meeting of the TPP Chief Negotiators from July 24-27. Since they last met in May, Trade Ministers from the twelve TPP countries have been working continuously. As a result, the U.S. has made considerable progress in closing gaps on remaining issues, and is continuing to work intensively to address specific issues bilaterally. The upcoming ministerial will provide an important opportunity to build on this progress to conclude the negotiation.
What industries does the TPP effect?
The industry that will be most impacted by the TPP will be the apparel and garment sector. The average effective tariff rate on apparel companies is between 20-25%, raising the price of goods and making footwear and apparel more expensive for the American public. If the TPP were to be passed, the tariffs would begin to be eliminated, resulting in lower prices for apparel and footwear.
What are the pros and cons of the TPP? Read on »
Posted by NGC on July 28, 2015