Long Road Ahead for Trans-Pacific Partnership
On Thursday, the long-awaited text of the landmark trade deal called the Trans-Pacific Partnership (TPP) was released to the public for the first time. While there's a great deal of information to unearth, analyze and react to, it's important to keep in mind that there is a significantly long road ahead for ratification of the deal. The text of the document, itself, still has to be translated into the languages of the signatories, and the deal must also still be ratified by lawmakers in each member country. In some of the countries involved, TPP needs to undergo a legal review.
What's exciting from an import/export perspective is that the member countries of the TPP account for some 40% of the global economy and include Australia, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. If the North American Free Trade Agreement (NAFTA) was a boon to U.S. and Canadian importers and exporters, TPP has the promise of creating even greater opportunity in the global economy.
From a Customs broker perspective, provided TPP is implemented as planned, there will be much work to be done to integrate new rules and systems, though the agreement will work alongside NAFTA and other Free Trade Agreements (FTAs). However, there will be significantly more tools in the toolbox for importers into the U.S. and Canada to create cost-saving relationships in the TPP nations. At Welke, we often help our clients to navigate the FTA landscape to see where they may be overpaying on duties by importing from countries that may not be included in an FTA program.
Specifically, TPP as outlined will impact a number of industries, including:
- Metals and Minerals
- Chemicals and Plastics
- Agriculture: incl. Pork, Beef, Wheat, Barley and Canola Oil
- Fish and Seafood
- Industrial Machinery and Agricultural Equipment
- Wood and Paper Products
It will also provide new government procurement opportunities in and among various TPP partner nations; address immigration and work rule barriers for technicians, professionals and other company reps; and open up e-commerce potential, among other components of the agreement.
Bottom line is, though, there's a lot of work to be done, and, in case you haven't noticed, the United States has a presidential election in 12 months, one in which the hopeful candidates have diverse opinions on the TPP. In Canada, a new Prime Minister just took over, and his comments about the previous administration's work on TPP have been less than complimentary. And there are 10 other countries that need to do their own due diligence.
For now, importers and exporters should keep an eye on what's happening, and we will continue to provide updates on our blog to help you do that. But rest assured, it's going to be a while before TPP goes into full effect.