What's Next for the Trans-Pacific Partnership?
- Jun 2, 2016
- Neal Godt
After 7 years of negotiations, the 12 members of the Trans-Pacific Partnership (“TPP”) signed a free-trade agreement in early 2016. This agreement impacts 40% of U.S. imports/exports and whose partners account for more than $1.5 trillion worth of trade with the U.S.
The agreement’s stated purpose is to "promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labor and environmental protections."
The TPP agreement would reduce 18,000 tariffs on nearly all goods and services. It also prevents TPP countries from maintaining, expanding or creating new trade barriers to other member countries.
Some of the potential sticking points of the agreement include issues relating to intellectual property, state-owned enterprises, currency manipulation, and investor-state disputes.
Experts are split on the potential impact to the U.S. Proponents claim the TPP would increase access to U.S. products, notably from small businesses, agriculture and pharmaceutical companies. Opponents contend the TPP will decrease wages, negatively impact the environment, and increase the costs for medicines in certain countries.
One notable absence from the agreement is China. For the time being, it has determined that there is not much benefit to joining and is pursuing its own Asian trade agreements. However, China and several other Trans-Pacific countries have left the door open to joining at a later date.
The next step is for each of the 12 signatories to ratify the agreement. If this does not happen before February 4, 2018, it automatically goes into effect after ratification by at least 6 countries that collectively account for more than 85% of the GDP of all 12 members.
|Trans-Pacific Partnership Members|
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Neal Godt CPA is an Audit Partner, National Commercial Services Leader, Partner-in-Charge of the SEC and New Jersey Audit practice, serving the technology, manufacturing and distribution, and software sectors, and service related companies.
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