November 04, 2015
TPP Promises and Concerns
TPP negotiations ended on October 5, 2015, the culmination of six years of talks and negotiations between the U.S., Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. You can read more about the highlights of the agreement here.
There is some contention amongst politicians, supply chain industries and manufacturers that have roused discussion and downright dissatisfaction with the agreement. There is also fear that supporters, including the Obama administration, are making promises the TPP will not be able to fulfill.
- To bring more business to the U.S. and other countries involved by removing tariffs and other restrictions on trade. It supports 1 in 5 jobs in the U.S. (40 million). The TPP also aims to help U.S. exporters, ninety-eight percent of which are small and medium businesses.
- 18,000 individual tariffs reduced to zero.
- Governs exchange of tangible goods and intellectual property (also a concern) including drug patents.
- Although China is not a part of the TPP, it does raise rules and standards for their competition. All parties in the TPP will need to use the International Labor Organization’s basic principles on workers’ rights. With this, the TPP is hoping to pressure China into following suit.
- According to the Peterson Institute for International Economics, it is estimated that the world economy could see a boost that reaches $223 billion by 2025.
- Businesses, such as Whirlpool, that have begun bringing manufacturing to the states will rethink this move. If tariffs are gone, then other companies with lower-priced items and less overhead could compete with American-made products that cost far more to create.
- Fear of the impact it may have on TPP member countries where intellectual property laws and patent enforcement (e.g. prevent distribution of generic drugs) are concerned.
- According to leaked documents, TPP negotiations could give foreign corporations the power to go over the heads of domestic courts to challenge health, environmental and other public interest issues. Therefore, national democracies could be undermined.
- Lack of transparency of these negotiations that makes it difficult for those involved, including smaller businesses, to really understand and assess the TPP’s impact.
As the TPP agreement moves through congress, stay tuned for more information, updates, and how this may affect the supply chain in the U.S.