Deconstructing the TPP: One size may not fit all in this trade bloc

What is TPP?

Bob Imbriani, executive vice-president, international, for logistics firm Team Worldwide, noted that the Trans-Pacific Partnership transcends existing bilateral trade agreements. “This is the beginning of global free trade,” said. “From a logistics and transportation standpoint, it is a good thing.”

The TPP agreement is comprised of 30 chapters, which aim to promote economic growth and enhance innovation, productivity and competitiveness among the 12 member countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. It also includes measures to lower trade barriers and a settlement mechanism for investor-state disputes. Equally important, the agreement has clauses to help improve the lives of the workers. This issue has fueled a backlash against the TPP agreement, hammered out last October, as potential voters in the U.S. elections voiced concerns about jobs being sent overseas because of the deal. As a result, the TPP contains language to promote the creation and retention of jobs; to raise living standards and reduce poverty; and to advocate for environmental protections.

Linking nations whose combined output accounts for one third of global GDP and about one-fifth of global exports, TPP has the potential boost traffic significantly between participating countries. Trade will be facilitated by the elimination of 18,000 duties and tariffs, according to the U.S. Coalition for TPP. The World Bank estimates that TPP will boost the GDPs of member economies, on average, by 1.1 percent by 2030.

According to a study published by ResearchAndMarkets, an on-line market research repository, TPP is also expected to encourage greater foreign investment in member states. The U.S. Coalition for TPP has argued that consistent trade rules will help service providers and traders venture into new markets. Naturally expectations vary greatly by trade lane.

In Japan, TPP should boost automotive exports, resulting in more parts moving by airfreight to the U.S., predicted Li, from DHL-GF. Shipments of auto parts from Japan to Mexico should also rise under TPP, given the investments Japanese auto makers have made. “Mexico will be hot for Japanese auto manufacturers,” one forwarder from Japan predicted.

Besides easing the flow of goods, TPP also promises to streamline customs clearance. It requires the release of express shipments within six hours after arrival, noted Ralph Carter, managing director, legal and international affairs, at FedEx Express. “The TPP is the first agreement to seriously protect an open internet and to ensure the free movement of data across borders,” he said, “which is especially critical to the continued growth of global e-commerce.”

The Australian Federation of International Freight Forwarders said its members should benefit from “enhanced commitments that support integrated logistics supply chains,” the organization said. “Australian providers of transport and logistics services in Malaysia and Vietnam will gain strong trade and investment protections for the first time.”

For their part, the integrators have repeatedly argued that TPP should make exporting easier for small- to medium-sized manufacturers. UPS customers will also benefit from the acceleration of the release of goods through customs, declared UPS CEO David Abney.