After seven years of negotiations, 12 Pacific Rim countries signed the Trans-Pacific Partnership (TPP) in Auckland, New Zealand on February 4, 2016, but its’ implementation is yet to begin. One of the most significant aspects of the deal promotes digital trade by securing data flows, addressing privacy concerns and combating cyber-crime. The agreement reduces red tape and streamlines customs, allowing shipments to move to and from TPP nations more quickly and efficiently. It also removes barriers in the global supply chain for American trade and transport businesses, reducing trade costs by slashing more than 18,000 tariffs.
And for the first time, a trade agreement will focus on removing the barriers that hinder small and medium businesses. U.S. businesses will have access to sell goods and services to 480 million consumers from TPP nations, which already support 15 million U.S. jobs. The TPP also ensures fair play for private companies competing against government-run providers. It widens telecom market access for communications companies and expands the market access for non-governmental service providers in the travel, banking, and insurance industries. There are no import taxes on construction products like lumber, electrical circuitry, and insulation materials and TPP eliminates the import tax for retailers of “Made-In-America” products to TPP countries. Additionally, U.S. automakers can expect import tax breaks as high as 70% for auto exports to these countries.
As the U.S. progresses through the primary election season, implementing TPP is a hot button issue even though a similar arrangement already exists between the U.S. and the European Union. This legislation is still a domestic concern for many, despite TPP members receiving $725 billion in U.S. exported goods in 2014. Other free trade agreements, such as NAFTA, give TPP a bad reputation because of the adverse outcomes felt by American workers and manufacturing. Hopefully, its dissenters will realize this could be an excellent public policy supporting job creation and retention by promoting economic growth, innovation, transparency, good governance, and environmental protections.