Benefits for U.S. Businesses in the Asia-Pacific without the TPP

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Copyright Forbes.com

Although President Donald Trump withdrew the United States from the Trans-Pacific Partnership (TPP) agreement, U.S. companies can still enjoy preferential access to the region.

The TPP trade agreement was completed in October 2015 and signed by 12 countries in February 2016. These 12 countries combined account for 40% of world trade and have a combined GDP of $27.4 trillion. Proponents have argued for the benefits of the TPP, some of which include increased access to the Asia-Pacific through the elimination of tariffs and reduction of non-tariff barriers to trade. In the end, opposition to the TPP won.

However, it is worth noting that the United States has already implemented trade agreements with a majority of the other TPP countries. More specifically, the United States has a trade agreement with Australia, Canada, Chile, Mexico, Peru, and Singapore. Therefore, U.S. companies interested in expanding to the Asia-Pacific region can still take advantage of the opportunities under existing trade agreements.

At the same time, Trump has publicly stated that the United States would renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico or withdraw completely. The current administration’s proposal to place a 20% import tariff on goods entering the United States from Mexico is already affecting U.S.-Mexican trade.

If the United States did not withdraw from the TPP, U.S. companies would have enjoyed preferential access to Brunei Darussalam, Japan, Malaysia, New Zealand, and Vietnam. President Trump announced the possibility of negotiating bilateral deals. At the moment, U.S. companies that enter these markets will face tariff and non-tariff barriers to trade.

In sum, the U.S. withdrawal from the TPP has threatened preferential access to five additional markets in the Asia-Pacific. Nevertheless, U.S. producers of goods and services enjoy tariff-free and other special access to six TPP markets. If you are company would like to export to the Asia-Pacific, contact GRIIT about the opportunities provided by the trade agreements with these six markets.

 

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