The Trans-Pacific Partnership
What is it?
The Trans Pacific Partnership (TPP) is a free trade agreement involving 12 Pacific Rim countries and is considered to be one of the most ambitious such agreements ever signed. Ratification would create the largest trade zone in the world, spanning four continents and 800 million people. The 12 nations involved produce an estimated 40% of the world’s economic output.
Which countries are involved?
- Canada
- U.S.
- Mexico
- Australia
- New Zealand
- Japan
- Vietnam
- Chile
- Malaysia
- Peru
- Brunei
- Singapore
What does it do?
The agreement aims to deepen economic ties between member countries by cutting import tariffs and providing mechanisms for developing closer relationships on economic policies and labour rules.
Which goods are affected?
In all, some 18,000 tariffs are affected, involving goods and services across nearly all market sectors. To name a few, the agreement would eliminate or reduce tariffs on agricultural products, industrial goods, textiles and clothing. The timeline for making changes to tariffs will vary, with some being affected immediately and others being subject to longer timeframes and negotiation by TPP parties.
What’s next?
The agreement will next undergo a two-year ratification period in which at least six countries - accounting for 85 percent of the combined GDP of the TPP nations - must approve the final text for the deal to be implemented.
What can I do to prepare?
You can optimize the impact of the TPP on your business by becoming informed of the implications of its ratification. Depending on the goods you import and the source countries you currently use, there may be benefits to making changes now, before the agreement comes into force. By preferentially sourcing from TPP countries, you could realize significant savings in tariffs.
Importers would be well advised to start examining the implications of TPP ratification now to determine what it means for them.
Contact us today to get the latest information on TPP and to understand what it means for you. Our experienced consultants keep up-to-date on the latest in this and all trade agreements that affect your business. For more information, visit our website, sign up for our technical updates, subscribe to our blog, or give us a call.
Information provided by: U.S. Customs Dept. - Cole International
