On Monday, President Obama signed Trade Promotion Authority (TPA) into law. TPA, also known as the “fast track” bill, was seen as a crucial component in solidifying the Trans-Pacific Partnership (TPP). Although the re-authorization of TPA grants the President greater authority in his ability to negotiate and secure a trade deal–thus speeding up the TPP negotiation process–the TPP still has some tough negotiations ahead. However, the new authority Congress granted the President will now give him the power needed to ultimately conclude negotiations on the TPP.
The TPP covers almost 40 percent of the goods and services produced in the world. The United States ships more than $1.9 billion in goods to TPP countries every day. One of the main objectives of the TPP–according to USTR and the Obama administration–is to cut the “red-tape of trade,” by reducing costs and making CBP more efficient. Specifically, the TPP looks to create commitments that would ensure the quick release of goods through customs.
The TPP is not the only trade deal the Obama administration has in their sights. The U.S. Trade Representative, Michael Froman, looks to tie up the Transatlantic Trade and Investment Partnership Agreement (TTIP), the World Trade Organization’s Information Technology Agreement, the Environmental Goods Agreement, and the 24-party Trade in International Services Agreement.
In 2014, there were over 23,000 intellectual property rights seizures by U.S. Customs and Border Protection (CBP), with the property seized having an estimated MSRP value of $1.2 billion. According to a recent report published by the Office of the U.S. Trade Representative (USTR), U.S. made exports that rely heavily on IP law protection are a central source of domestic economic development, with tens of millions of Americans owing their jobs to intellectual property-intensive industries. It is no wonder why the U.S. and Japan, who jointly in 2013 brought in almost half of the worlds intellectual property revenue, are currently advocating for stronger protections for patents, trademarks, copyrights and other intellectual property while negotiating the Trans-Pacific Partnership (TPP).
Although the details of the TPP are locked behind closed doors, there is a lot of opportunity in multiple industries, innovative and high technology products as well as agricultural. The USTR has advised:
The United States exported more than $622.5 billion of manufactured products to TPP countries in 2013. With the elimination of TPP countries’ tariffs on manufactured products, including innovative and high technology products, such as industrial and electrical machinery, precision and scientific instruments, and chemicals and plastics, U.S. products will compete on a more level playing field with goods from TPP countries’ other free trade agreement (FTA) partners – including China, India, and the EU. As just one example, certain U.S. auto parts currently face a 27-percent tariff entering Vietnam. Other countries that have an FTA with Vietnam, such as China, Thailand, and Indonesia, export their auto parts to Vietnam duty free. By eliminating duties U.S. auto parts companies face, TPP would help boost their competitiveness in the Vietnamese market.
Twenty percent of U.S. farm income comes from agricultural exports and those exports support rural communities. In fact, U.S. food and agricultural exports to the world reached an all-time high in 2013 of over $148 billion. Of that total, we exported more than $58 billion to TPP countries – a figure that would increase as a result of tariff elimination under TPP. As just one example: U.S. poultry currently faces a 40-percent tariff in Malaysia. U.S. poultry would become more affordable in Malaysia under a TPP agreement that reduces these duties to zero.
If you export high tech or agricultural products, and want to stay informed on how to properly take advantage of duty free treatment once the TPP is in place, contact me anytime at email@example.com.